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I’ve been thinking a lot about the Mansion Tax, the 60 day directive in LA. I’ve also been thinking a lot about bubbles, net worth calculations, wealth distributions, income, etc.
There has been a lot of chewing on economic trends in society over the decades, and a lot of ideas about how to even things out a bit more, in what is obviously a very not equal distribution of resources. People have thoughts about wealth taxes, but of course they are uncollectible, and have all kinds of problems. Obviously, bubbles really suck, but if you don’t allow people to enjoy the fruits of innovation, you won’t have any and other people will and you will be outcompeted. There’s a whole lot of Yeah That Won’t Work.
And yet.
What we are seeing over the last few weeks / months are really interesting trends. Inflation transfers money from retirees / rentiers to those who have jobs with cost of living adjustments / pay rises. It also reduces indebtedness, in its own way, a wealth transfer. A much bigger wealth transfer than any wealth tax plus redistribution scheme is ever likely to imagine. The collapse of a variety of bubbles — crypto, meme stocks, blah blah — and the near total shutdown of the housing market has also closed down a bunch of things that were causing a variety of people to feel very, very wealthy. They don’t feel wealthy now. Some of them are being extradited.
We _want_ more housing. But maybe we don’t want all the housing to always go to the most expensive housing. What Bass and the Mansion Tax are trying to get started is a pipeline of money to encourage producing housing for the masses. We really need that, if we want to deal with homelessness. When wealthy people are competing with people with high incomes to buy all the really nice housing that can possibly be produced, there _is_ trickle down to the masses. But probably not enough. We are way behind. I don’t think the Mansion Tax and the 60 day directive are going to be enough. However, one reason why developers shied away from affordable housing is because the red tape is brutal. If there isn’t a competing alternative that can be built instead, and the red tape is less brutal, maybe a slow shift begins.
I don’t know how Biden thinks about the economy, but in general, Democrats think about raising the floor (increasing the minimum wage and improving conditions for workers in general), raising the median (increasing the size of the middle class) and generally evening things, usually through tax and redistribute.
In the post-WW2 era, we produced an enormous amount of new housing stock in suburbs as part of white flight, which meant that within cities, there was reduction of density in old housing stock. We took advantage of that situation to reduce the amount of lower quality housing stock. Over and over again. We sort of took for granted that there would always be an excess of new, higher quality housing stock replacing the older housing stock, so we could just legislate out of existence the old and crappy stuff and there would still be plenty. A variety of trends (de-institutionalization, among others) disrupted that. And by 2008, we kinda just quit making any new housing stock. That’s turned around, but there is pent up demand in the form of delayed housing formation, and also a lot of the older housing stock is not where the jobs are (altho that has further evolved in recent years).
Left alone, residential construction will tend to optimize for profit : build houses where things aren’t that regulated, and where there is money to buy them. That tends to increase sprawl, and it tends to be Sun Belt. But there are limits, and we have been running up against them in the form of traffic congestion in Sun Belt sprawl and in the form of Not Enough Housing Units in coastal cities.
National political parties tend to not get particularly involved in any of this, which is entirely understandable. Also, I’m not sure they can stay out of it any longer.
There has been a lot of chewing on economic trends in society over the decades, and a lot of ideas about how to even things out a bit more, in what is obviously a very not equal distribution of resources. People have thoughts about wealth taxes, but of course they are uncollectible, and have all kinds of problems. Obviously, bubbles really suck, but if you don’t allow people to enjoy the fruits of innovation, you won’t have any and other people will and you will be outcompeted. There’s a whole lot of Yeah That Won’t Work.
And yet.
What we are seeing over the last few weeks / months are really interesting trends. Inflation transfers money from retirees / rentiers to those who have jobs with cost of living adjustments / pay rises. It also reduces indebtedness, in its own way, a wealth transfer. A much bigger wealth transfer than any wealth tax plus redistribution scheme is ever likely to imagine. The collapse of a variety of bubbles — crypto, meme stocks, blah blah — and the near total shutdown of the housing market has also closed down a bunch of things that were causing a variety of people to feel very, very wealthy. They don’t feel wealthy now. Some of them are being extradited.
We _want_ more housing. But maybe we don’t want all the housing to always go to the most expensive housing. What Bass and the Mansion Tax are trying to get started is a pipeline of money to encourage producing housing for the masses. We really need that, if we want to deal with homelessness. When wealthy people are competing with people with high incomes to buy all the really nice housing that can possibly be produced, there _is_ trickle down to the masses. But probably not enough. We are way behind. I don’t think the Mansion Tax and the 60 day directive are going to be enough. However, one reason why developers shied away from affordable housing is because the red tape is brutal. If there isn’t a competing alternative that can be built instead, and the red tape is less brutal, maybe a slow shift begins.
I don’t know how Biden thinks about the economy, but in general, Democrats think about raising the floor (increasing the minimum wage and improving conditions for workers in general), raising the median (increasing the size of the middle class) and generally evening things, usually through tax and redistribute.
In the post-WW2 era, we produced an enormous amount of new housing stock in suburbs as part of white flight, which meant that within cities, there was reduction of density in old housing stock. We took advantage of that situation to reduce the amount of lower quality housing stock. Over and over again. We sort of took for granted that there would always be an excess of new, higher quality housing stock replacing the older housing stock, so we could just legislate out of existence the old and crappy stuff and there would still be plenty. A variety of trends (de-institutionalization, among others) disrupted that. And by 2008, we kinda just quit making any new housing stock. That’s turned around, but there is pent up demand in the form of delayed housing formation, and also a lot of the older housing stock is not where the jobs are (altho that has further evolved in recent years).
Left alone, residential construction will tend to optimize for profit : build houses where things aren’t that regulated, and where there is money to buy them. That tends to increase sprawl, and it tends to be Sun Belt. But there are limits, and we have been running up against them in the form of traffic congestion in Sun Belt sprawl and in the form of Not Enough Housing Units in coastal cities.
National political parties tend to not get particularly involved in any of this, which is entirely understandable. Also, I’m not sure they can stay out of it any longer.