One kind of regulation that was actually intended to harm the poor, and especially poor minorities, was zoning. The ostensible reason for zoning was to address unhealthy conditions in cities by functionally separating land uses, which is called “exclusionary zoning.” But prior to passage of the Civil Rights Act of 1968, some municipalities had race-based exclusionary land-use regulations. Early in the 20th century, several California cities masked their racist intent by specifically excluding laundry businesses, predominantly Chinese owned, from certain areas of the cities.
Today, of course, explicitly race-based, exclusionary zoning policies are illegal. But some zoning regulations nevertheless price certain demographics out of particular neighborhoods by forbidding multifamily dwellings, which are more affordable to low- or middle-income individuals. When the government artificially separates land uses and forbids building certain kinds of residences in entire districts, it restricts the supply of housing and increases the cost of the land, and the price of housing reflects those restrictions.
Moreover, when cities implement zoning rules that make it difficult to secure permits to build new housing, land that is already developed becomes more valuable because you no longer need a permit. The demand for such developed land is therefore artificially higher, and that again raises its price.
Sandy Ikeda, “Shut Out: How Land-Use Regulations Hurt the Poor”, The Freeman, 2015-02-05.
April 10, 2015
January 11, 2015
Jay Currie looks at one of the traditional way of looking at the benefits of immigration — as providing society with workers who will “do the jobs Canadians/Americans won’t do” and wonders if that’s actually true in today’s increasingly technological world:
The elite refrain seems to be that if we want to maintain our welfare system, pensions, healthcare and the like we have simply no choice but to import drafts of tax serfs to make up our declining numbers. Is that true?
Here are a few ideas to extend the independence of the Boomers and reduce the need for immigrants at any cost.
- Postpone retirement to 70 or even 75: the boomers parents are extending life expectancy rapidly. 90 is the new 70. Greater activity, a keener sense of healthy life style choices and, as Doug Coupland put it, “Vitamin D and baby aspirin and (mum’s) going to live forever.” Boomers are nuts to be thinking of retirement at 60 unless they really are too sick to work. So don’t. Pushing back the retirement and pension ages saves a lot of pension money and reduces the need to bring in more people.
- Have more children. Not something the boomers can do but our kids can and should. But to do this we need a lot of very family friendly policy. Income splitting is a cute idea but hardly a huge incentive to family formation. Big tax deductions for kids number three, four and five could help a bit. But those are governmental changes.
- Where possible transfer wealth early. There are a lot of older boomers whose parents have died and left good big whacks of dough. And those same boomers are coming to the end of their mortgages. Here is a hint: offer your kids some money. And not, ideally, as a loan. An outright gift is more useful. Don’t tie it to real estate either. There is going to be a massive correction in Canadian real estate but even if there wasn’t tying a gift to what is usually a debt and endless expense is a poor idea.
- Build houses and condos which can adapt to the changing needs and means of families. Everything from in-law suites to legally easy house splitting needs to be done to drive down the price of housing in Canada. Yes there is a correction coming but that does not change the fact there are many cities where housing is unaffordable. Build rental housing for families. Build up market rental housing. Encourage density. Make it possible to rent with a 1/5 of your average income rather than 1/2.
- Use technology in place of people. A lot of the jobs “Canadians just will not do” should not be done at all by anyone. From self cleaning toilets – already done in Japan – to robotic floor cleaners and fast food “servers” there are lots of jobs which can and will be done by robots. Pushing that sort of technology will reduce the need for more immigrants.
If you actually look at those numbers seriously and, instead of 10% use 5%, you’ll see that 900,000 low skill jobs are going to get eaten by robots and IT over the next decade. 90,000 a year. Now, look at the naturalized Canadian number for 2014 again 260,000. If half our new citizens are entering the labour force that is 130,000 new workers per year in an economy which will be shedding 90,000 jobs per year. Does that make any sense at all?
January 6, 2015
Housing is pretty effective forced savings. We pay extra on our house each month, much to the dismay of many financial types of my acquaintance. Now, in theory, I could put that money right into mutual funds. In practice, I’m probably more likely to put it into a nice table for the backyard. As Dave Ramsey says all the time, the biggest mistake people make in talking about personal finance is treating it as a math issue. It’s not. The math behind personal finance is so risibly simple that journalists can do it. The discipline, however, is very hard. So the correct comparison for homeownership is not what the buyer could have achieved by putting all that extra money into a mutual fund; it’s what they would actually have done with the extra money if they hadn’t bought a house.
So while I’m not saying that you should definitely invest in a house, I won’t say you definitely shouldn’t, either; all I would say is that you shouldn’t count on your home value too much.
Megan McArdle, “Buying a Home Isn’t Bad for You”, Bloomberg View, 2014-04-07
August 7, 2014
I have a very powerful reaction to these buildings that, I believe, has nothing to do with having been a Tolkien fan for most of my life. In fact, some of the most Tolkien-specific details – the round doors, the dragon motifs in the pub – could be removed without attenuating that reaction a bit.
To me, they feel right. They feel like home. And I’m not entirely sure why, because I’ve never lived in such antique architecture. But I think it may have something to do with Christopher Alexander’s “Timeless Way of Building”.
Alexander’s ideas are not easy to summarize. He believes that there is a timeless set of generative ur-patterns which are continuously rediscovered in the world’s most beautiful buildings – patterns which derive from an interplay among mathematical harmonies, the psychological/social needs of human beings, and the properties of the materials we build in.
Alexander celebrates folk architecture adapted to local needs and materials. He loves organic forms and buildings that merge naturally with their surroundings. He respects architectural tradition, finding harmony and beauty even in its accidents.
When I look at these buildings, and the Tolkien sketches from which they derive, that’s what I see. The timelessness, the organic quality, the rootedness in place. When I look inside them, I see a kind of humane warmth that is all too rare in any building I actually visit. […]
I think it might be that Tolkien, an eccentric genius nostalgic for the English countryside of his pre-World-War-I youth, abstracted and distilled out of its vernacular architecture exactly those elements which are timeless in Christopher Alexander’s sense. There is a pattern language, a harmony, here. These buildings make sense as wholes. They are restful and welcoming.
They’re also rugged. You can tell by looking at the Hobbit House, or that inn in New Zealand, that you’d have to work pretty hard to do more than superficial damage to either. They’ll age well; scratches and scars will become patina. And a century from now or two, long after this year’s version of “modern” looks absurdly dated, they’ll still look like they belong exactly where they are.
Eric S. Raymond, “Tolkien and the Timeless Way of Building”, Armed and Dangerous, 2014-08-02.
June 2, 2014
I talked a few times with the realtor, and they were as helpful as realtors usually are: not helpful. They couldn’t answer any important questions for me, because realtors don’t know anything important about the properties they sell. Well, that’s not entirely true. They often know very important things about the properties they sell. Those are invariably the things they’re hiding from you, hoping to entice you into standing in the decrepit shack they’re listing while they perform their Svengali perorations about its potential. Weave a tapestry of possibilities in the air that’ll have you frisking yourself in no time, looking for your checkbook before that handyman that’s interested in the property snatches it from under your nose.
Oh, I know that handyman. That guy gets around. I never learned his name, but he seemed to be interested in every property I was interested in Maine. No matter where I went — Turner, Cornish, Peru, Livermore Falls, Norway, Rumford…
Anyway, that polymath handyman with the lead foot and the nose for diamonds in the rough was always one step ahead of us, ready to stuff our defeat into the jaws of his victory. He was very interested in Turner, I hear.
Sippican Cottage, “I’m Fixing A Hole Where The Intertunnel Gets In “, Sippican Cottage, 2013-11-13
May 14, 2014
This image showed up in a post at Coyote Blog a couple of days ago, and it’s an indication of the decline in new business formation in the United States:
Increasing bureaucracy — especially at the state level — undoubtedly contributes to that depressing chart, but it’s far from the whole story:
Home equity has historically been an important source of capital for small business formation. My first large investment in my company was funded with a loan that was secured by the equity in my home. What outsiders may not realize about small business banking nowadays is that it is nothing like how banking is taught in high school civics. In that model, the small business person goes to her local banker and presents a business plan, which the banker may fund if they think it is a good risk.
In the real world, trying to get such an unsecured loan from a bank as a small business will at best result in laughter. My company is no longer what many would call “small” — we will do millions in revenue this year. But there is no way in the world that my banker of over 10 years will lend to my business unsecured — they will demand some asset they can put a lien on. So we can get financing of equipment purchases (as a capital lease on the equipment) and on factored receivables and inventory. But without any of that stuff, a new business that just needs cash for startup cash flow is out of luck — unless the owner has a personal asset, typically a house, on which the banker can place a lien.
So, without home equity, one of the two top sources of capital for small business formation disappears (the other top source is loans from friends and family, which one might also expect to dry up in a tough economy).
April 27, 2014
Soaring English house prices due to “discriminatory zoning, keeping the urban unwashed out of the home counties”
This wasn’t in the Torygraph, it was actually reported in the Guardian:
More of Surrey is now devoted to golf courses than housing, according to provocative new research that claims to dispel many of the myths associated with Britain’s housing boom.
A study by the Centre for Economic Performance at LSE suggests soaring house prices are not caused by an influx of foreign buyers but are down to restrictive planning policies that have ensured the country’s green belt is a form of “discriminatory zoning, keeping the urban unwashed out of the home counties”.
Paul Cheshire, professor emeritus of economic geography at LSE and a researcher at the Spatial Economics Research Centre, has produced data showing that restrictive planning laws have turned houses in the south-east into valuable assets in an almost equivalent way to artworks. He points out that twice as many houses were built in Doncaster and Barnsley in the five years to 2013 than in Oxford and Cambridge.
As a result of the policy that specifically safeguards green belts, Cheshire claims houses have not been built where they are most needed or most wanted – “in the leafier and prosperous bits of ex-urban England”.
“We have a longstanding and endemic crisis of housing supply and it is caused primarily by policies that intentionally constrain the supply of housing land,” Cheshire claims. “It is not surprising to find that house prices increased by a factor of 3.36 from the start of 1998 to late 2013 in Britain as a whole and by a factor of 4.24 over the same period in London.”
Once inflation is discounted, house prices have gone up fivefold since 1955. But the price of the land for houses has increased in real terms by 15-fold over the same period.
As a result, houses are becoming like investment assets, creating incentives to hold on to them in expectation of future price rises.
April 26, 2014
In Maclean’s, Tamsin McMahon describes some of the unexpected down-sides for condo dwellers:
As thousands of homebuyers flock to condos for the promise of affordable home ownership and carefree living, they’re learning that life in a condominium is far different from the suburban houses where so many of us were raised.
Never mind that owning a condo usually means sharing your walls, floors and ceilings with your neighbours. Canadian condos are rife with internal politics, neighbour infighting and power struggles stemming from the complicated network of condo boards, owners, investors, tenants and property managers.
In some buildings, the rule book governing what owners can and can’t do with their property can span 70 pages. Disputes over issues such as pets, squeaky floors and visitor parking spots are escalating into epic and costly court battles. “They are little fiefdoms,” says Don Campbell, senior analyst with the Real Estate Investment Network, who owns several condos in B.C. “Each one has a king. Many of the people who get elected to the boards have time on their hands, and this is the only place in their world where they have power. Unfortunately, that starts to go to their heads.”
As a legal entity, the condominium (sometimes called “strata”) has existed in Canada for more than 40 years, ever since a boom in high-rise construction and innovations in property law essentially allowed developers to privatize the air space above the ground and carve it into small blocks that could be sold for profit. Many of the original condos were designed to encourage low-income Canadians living in rental housing in big cities to embrace home ownership, while the middle class continued its inexorable march to the suburbs. The condo boom of the past decade has, however, been marked by a renewed interest in urban living, driven by increasing numbers of Canadians who want to live closer to where they work, along with a cultural and environmental backlash against suburban sprawl, with its commuter traffic and car-induced smog. The rising number of people putting off marriage and children, as well as seniors living longer, has also helped fuel demand for smaller homes.
To understand how quickly we’ve shifted from detached homes to condominiums, consider that condos made up less than 10 per cent of all homes built in our 10 largest cities before 1981, but more than a third of those built in the last decade — around 413,000 out of roughly 1.2 million new homes. While the majority of those are clustered in the big cities — Toronto, Montreal and Vancouver — condominiums are going up everywhere from St. John’s to Regina to Victoria. Cities as different as Guelph, Ont., and Whitehorse are now building more condos than single-detached houses. More than 1.6 million Canadian households, or 12 per cent, now live in condos. Despite the focus on the investor market, close to 70 per cent of the people living in condos are owners, not renters.
The shift toward condo living is both more recent and more profound in Canada than it has been south of the border. The U.S. National Association of Realtors estimates that, last year, 77 per cent of first-time buyers in the U.S. purchased detached homes, compared to just 53 per cent of Canadians. Meanwhile, 17 per cent of Canadian buyers say they intend to purchase condos this year, compared to just seven per cent of American buyers. We can thank our red-hot housing market for the difference: The average Canadian house price last month was $406,372, compared to a median of US$189,000 in the U.S. (The average price of a condo in Canada was $312,800 in February, compared to US$187,900 in the U.S.) Skyrocketing house prices are forcing more first-time buyers into condos in order to get a foothold in the housing market. Some aren’t prepared for the life they encounter there.
March 13, 2014
In the Toronto Star, Bob Hepburn looks at how about-to-be-declared mayoralty candidate Olivia Chow will handle the renewal of the accusations that she and Jack Layton were living in subsidized co-op housing (despite earning very high salaries) in the late 1980s:
Chow fully expects to be under constant attack from Ford Nation fanatics and the more vocal supporters of candidates John Tory, Karen Stintz and David Soknacki as a “tax-and-spend” downtown New Democrat who is supposedly out of touch with middle-class and suburban voters.
But the nastiest attacks will centre on a 1990 story about how Chow and her late husband Jack Layton were living cheaply in a subsidized downtown Toronto co-op housing building designed for low- and moderate-income families.
Chow and Layton’s combined income at the time was about $120,000. The rent on their three-bedroom apartment was just $800 a month.
Because the story is now 24 years old, many of today’s voters have never heard of it. Others, though, have a long memory, are still furious about what they call “a scandal” and won’t let it die.
“You mean the Queen of Public Housing, sponging off of the taxpayer,” one reader emailed me last week after I wrote a column about how Chow was all set to enter the race. “I would call that theft,” he added.
“What annoys me about her is how righteous she can be,” a female reader wrote yesterday after Chow had resigned her federal seat, referring to Chow’s background fighting on behalf of the poor while at the same time having lived in housing predominately meant for lower-income families.
In June, 1990, the Toronto Star published a story inside the paper, not on its front page, about how Layton, then a city councillor, and Chow, who was then a public school trustee, lived in a three-bedroom apartment at the federally subsidized Hazelburn Co-operative at Jarvis and Shuter Sts.
At the time, Layton earned $61,900 a year as a councillor plus $5,000 as a University of Toronto lecturer. Chow earned $47,000 a year as a trustee. One-third of their salaries was tax-free.
Their annual income was double what was considered as a “moderate” family income in Toronto. Provincial co-op housing officials said they knew of no other couple in Ontario living in a co-op unit whose income was as high as Chow and Layton’s.
It may have been a “manufactured” scandal, but it certainly tainted Layton’s image in local politics and it’s no surprise to find that Chow’s opponents are eager to bring the issue back to the public debate. Colby Cosh is probably right here:
Note: answer to the Chow-Layton subsidized-housing “smear” is literally “They were doing poors a favour by creating a mix of income levels."
— Colby Cosh (@colbycosh) March 13, 2014
Hell, it’s probably an accurate answer. I wouldn’t want to be the poor bastard trying to sell it.
— Colby Cosh (@colbycosh) March 13, 2014
February 17, 2014
Let’s be clear: parts of California are doing fantastically well, but other portions of the state are suffering disproportionally. Here are a few suggested legislative fixes to redress the inequalities of life faced by too many disadvantaged people in the state:
2. The Undocumented Immigrant Equity Act
The “I am Juan too Act” would assess all California communities by U.S. Census data to ascertain average per-household income levels as well as diversity percentages. Those counties assessed on average in the top 10% bracket of the state’s per-household income level, and which do not reflect the general ethnic make-up of the state, would be required to provide low-income housing for undocumented immigrants, who by 2020 would by law make up not less than 20% of such targeted communities’ general populations.
There are dozens of empty miles, for example, along the 280 freeway corridor from Palo Alto to Burlingame — an ideal place for high-density, low-income housing, served by high-speed rail. Aim: One, to achieve economic parity for undocumented immigrants by allowing them affordable housing in affluent areas where jobs are plentiful, wages are high, and opportunities exist for mentorships; and, two, to ensure cultural diversity among the non-diverse host community, bringing it into compliance with the state’s ethnic profile.
4. The Silicon Valley Transparency and Fair Jobs Act
This “Google Good Citizen Act” would set up a regional board to monitor commerce in the San Francisco, San Mateo, and Santa Clara tri-county area. The state regulatory commission would monitor offshore investment, outsourcing, and unionization. All commercial entities, with over 100 employees, would be in violation and face state fines if: 1) the number of a firm’s employees overseas accounted for 10% or more of the workforce currently employed within the tri-county Silicon Valley area; 2) more than 1% of the current capitalization of a Silicon Valley company were deposited in banks outside the United States; and 3) more than 50% of a tri-county company’s workforce were non-union. Aim: To ensure progressive Silicon Valley commercial businesses are caring progressive state citizens.
5. The California Firearms Safety Act
The “No Guns for Grandees Act” would forbid private security details to be armed with handguns or semi-automatic long guns. It would allow private security personnel to be armed only with paintball, BB or pellet guns. Aim: To prevent unnecessary armed deterrence by private security units in the hire of the affluent.
6. The Fair Housing Adjustment Act
The “Everywhere an Atherton Act” would tax all private residential square footage in excess of 1800 square feet at four times the current per square foot assessment. Aim: It would ensure state resources are equally distributed and not inordinately siphoned off to a small minority of the state population. Would encourage existing large homes to downsize through reverse remodeling.
January 26, 2014
In Spiked, Tom Slater talks about the constantly moving concept of “adulthood”:
The spike in young people staying and moving back home, although undoubtedly exacerbated by the floundering economy, nevertheless marks a profound cultural shift in the attitudes of young people towards independence. And it doesn’t take much digging to grasp the roots of it all.
The value of adulthood is battered out of young people nowadays. When last year psychologists announced they were extending the clinical definition of adolescence to 25, it felt sadly appropriate. Indeed, in all corners of society, young people are being fretted over and micromanaged with all manner of initiatives to help them negotiate the adult world. From university wellbeing services to the recent attempts of one charity to rebrand youth joblessness as a mental-health crisis, young people are imbibing the idea that they are essentially overgrown children in need of constant support and intervention.
The sense of victimhood is bolstered by the ‘jilted generation’ brigade, who insist that young people have been undone by the avarice of their baby-boomer forbears. As a result, so we’re told, young people will never be able to achieve the same success their parents’ generation enjoyed. Moving out into less-than-lush surroundings has come to be seen as a kind of concession to the oldies wot wronged us. The bizarre focus on house prices in this discussion is particularly revealing on this point. Young people have been led to believe that their parents skipped renting and started buying up houses when they were barely out of school – an idea which Grace Dent gave a thorough rinsing in the Independent this week. In this sense, Generation Y have begun to conceive of themselves as the victims of an illusory, more prosperous past, to the point where even renting a box-room in a mould-ridden house-share is an inconvenience they’re not prepared to endure.
With all of this in mind, you can almost see why they choose to stay at home and spend their disposable income on other things. If things are indeed so bleak, why not buy a car or, as is increasingly becoming the norm, save up your wages and go travelling? Young people seem to forget having your own wheels or jetting off around the world are luxuries that were never within the grasp of their supposedly cash-rich parents.
October 16, 2013
Coyote Blog looks at the widely touted flattening of income growth in the United States and wonders how much mobility (people moving from one state to another) might play a part in the overall picture:
All of this is a long introduction to some thinking I have been doing on all the “Average is Over” discussion talking about the flattening of growth in median wages. I begin with this chart:
There is a lot of interstate migration going on. And much of it seems to be out of what I think of as higher cost states like CA, IL, and NY and into lower cost states like AZ, TX, FL, and NC. One of the facts of life about the CPI and other inflation adjustments of income numbers is that the US essentially maintains one average CPI. Further, median income numbers and poverty numbers tend to assume one single average cost of living number. But everyone understands that the income required to maintain lifestyle X on the east side of Manhattan is very different than the income required to maintain lifestyle X in Dallas or Knoxville or Jackson, MS.
Could it be that even with a flat average median wage, that demographic shifts to lower cost-of-living states actually result in individuals being better off and living better?
For some items one buys, of course, there is no improvement by moving. For example, my guess is that an iPhone with a monthly service plan costs about the same anywhere you go in the US. But if you take something like housing, the differences can be enormous.
Let’s compare San Francisco and Houston. At first glance, San Francisco seems far wealthier. The median income in San Francisco is $78,840 while the median income in Houston in $55,910. Moving from a median wage job in San Francisco to a media wage job in Houston seems to represent a huge step down. If you and a bunch of your friends made this move, the US median income number would drop. It would look like people were worse off.
But something else happens when you take this nominal pay cut to move to Houston. You also can suddenly afford a much nicer, larger house, even at the lower nominal pay. In San Francisco, your admittedly higher nominal pay would only afford you the ability to buy only 14% of the homes on the market. And the median home, which you could not afford, has only about 1000 square feet of space. In Houston, on the other hand, your lower nominal pay would allow you to buy 56% of the homes. And that median home, which you can now afford, will have on average 1858 square feet of space.
September 23, 2013
Caleb McMillan has a brief history of the Canadian city after World War 2:
The end of World War 2 marks a good beginning point for this history. North American society went through some big changes and the cities reflect that. In Canada, The Canadian Mortgage and Housing Corporation was created and with it came the regulatory framework that vastly increased the government’s presence in housing. Government intervention — however — always has its unintended consequences. Post WW2, the Canadian government expanded its highway system, got involved in the mortgage business, and allowed provincial and municipal governments to plan and amalgamate city communities. Through monopoly power, central plans have a tendency to hollow out downtown cores that serve the interests of the market. The “Suburban City” is the result of government control over zoning laws and highway construction. These types of communities are sometimes very different from ones created by market means.
While high urban density can be viewed as good or bad, in terms of city functionality, density is a prerequisite for prosperity. City downtowns are market centres. Resources from the periphery are brought to market centres for trade, and within these centres live the people who deal with this market everyday. It has always been the rural farmers and trappers who were the ones on the edge of poverty — surviving the bare elements of nature to reap the rewards later in the city. The city was the centrepiece in the division of labour; a place to go to make a name of ones self. “Simple country living” that suburbia is supposed to reflect was always a Utopian dream. That somehow one could live out in the boonies yet receive the luxuries of a city.
The very idea of “simple country living” was probably an aristocratic notion that somehow took hold of the middle class imagination, because until the 20th century, only the upper classes could afford the luxury of maintaining a residence well outside the cities, yet still well-supplied with the comforts otherwise only available in the city.
This Utopian dream became a reality with the advent of the car. And with government roads, the possibility of suburbia became technically possible. But just because something is technically possible, doesn’t mean that it should necessarily be done. Market signals are the best means of discovering this information. Individual prices revealed through exchange embody information entrepreneurs use to discover consumer demand and determine scarcity. A major factor in Post WW2 Canada was exempt from this process. Roads, and the whole highway system, were already monopolized by the centralized state. The sudden profitability found in developing rural lands for residential purposes was aided by the non-market actions of building government roads.
Critics of suburban life (usually urban types themselves) are at least somewhat correct in their criticism of the suburbs:
But markets in the Suburban City are, in a way, non-existent. For many, the suburban home is an island of private life surrounded by other private islands. Everyone commutes somewhere. The suburban neighbourhood offers nothing more than residential homes, ensuring that streets remain empty and void of commercial activities. Children may play in the streets, but there is no natural adult supervision. Contrast this to a city neighbourhood, where the streets are the best places for children. With a mixture of commercial activity, residential homes, apartments and other city neighbourhoods immediately adjacent to either side — the presence of people is always guaranteed. There is a natural “eyes on the street,” where people ensure law and order through their everyday actions.
August 14, 2013
It’s been a while since I reminded everyone that the official Chinese government statistics can’t be trusted. Here’s Zero Hedge on the same topic:
How Badly Flawed Is Chinese Economic Data? The Opening Bid is $1 Trillion
Baseline Chinese economic data is unreliable. Taking published National Bureau of Statistics China data on the components of consumer price inflation, I attempt to reconcile the official data to third party data. Three problems are apparent in official NBSC data on inflation.
First, the base data on housing price inflation is manipulated. According to the NBSC, urban private housing occupants enjoyed a total price increase of only 6% between 2000 and 2011.
Second, while renters faced cumulative price increases in excess of 50% during the same period, the NBSC classifies most Chinese households has private housing occupants making them subject to the significantly lower inflation rate.
Third, despite beginning in the year 2000 with nearly two-thirds of Chinese households in rural areas, the NSBC applies a straight 80/20 urban/rural private housing weighting throughout our time sample. This further skews the accuracy of the final data.
To correct for these manipulative practices, I use third party and related NBSC data to better estimate the change in consumer prices in China between 2000 and 2011.
I find that using conservative assumptions about price increases the annual CPI in China by approximately 1%.
This reduces real Chinese GDP by 8-12% or more than $1 trillion in PPP terms.
August 10, 2013
Sometimes the very tools employed to solve problems can make the problem worse:
Progressives routinely deplore the “affordable housing crisis” in American cities. In cities such as New York and Los Angeles, about 20 to 25 percent of low-income renters are spending more than half their incomes just on housing. But it is the very laws that Progressives favor — land-use policies, zoning codes, and building codes — that ratchet up housing costs, stand in the way of alternative housing options, and confine poor people to ghetto neighborhoods. Historically, when they have been free to do so, poor people have happily disregarded the ideals of political humanitarians and found their own ways to cut housing costs, even in bustling cities with tight housing markets.
One way was to get other families, or friends, or strangers, to move in and split the rent. Depending on the number of people sharing a home, this might mean a less-comfortable living situation; it might even mean one that is unhealthy. But decisions about health and comfort are best made by the individual people who bear the costs and reap the benefits. Unfortunately today the decisions are made ahead of time by city governments through zoning laws that prohibit or restrict sharing a home among people not related by blood or marriage, and building codes that limit the number of residents in a building.
Those who cannot make enough money to cover the rent on their own, and cannot split the rent enough due to zoning and building codes, are priced out of the housing market entirely. Once homeless, they are left exposed not only to the elements, but also to harassment or arrest by the police for “loitering” or “vagrancy,” even on public property, in efforts to force them into overcrowded and dangerous institutional shelters. But while government laws make living on the streets even harder than it already is, government intervention also blocks homeless people’s efforts to find themselves shelter outside the conventional housing market. One of the oldest and commonest survival strategies practiced by the urban poor is to find wild or abandoned land and build shanties on it out of salvageable scrap materials. Scrap materials are plentiful, and large portions of land in ghetto neighborhoods are typically left unused as condemned buildings or vacant lots. Formal title is very often seized by the city government or by quasi-governmental “development” corporations through the use of eminent domain. Lots are held out of use, often for years at a time, while they await government public-works projects or developers willing to buy up the land for large-scale building.