Quote:
Originally Posted by Hali87
It's not just that it's unfair that the affluent get nicer units (that seems generally reasonable or at least "to be expected"). I would say the biggest problem is that on one hand most (nearly all?) of the new developments lately have been geared towards higher-income/wealth people, while at the same time a very large proportion of lower-end ("affordable") buildings have been renovated to make them higher-end than they previously were, so that the owners can charge higher rent. In a free-market economy that is logical, but in practice it is problematic, because increasingly there is nowhere for lower-income, non-property-owning people to live.
I have no inherent problem with developments that are "not affordable" as long as there are also enough developments that are affordable being built (or at least preserved) to balance that out. Right now it's pretty clear that there aren't.
There is of course the (valid) argument that the overall scarcity of units drives prices up for everyone, but that is not really all that is happening here.
Things can continue the way they are with the likely result being that the people who could only afford lower-end apartments will simply leave (as I effectively had to) or become homeless (as many obviously have already) to be replaced by people who have more money and can afford higher rents, or are willing to cram more people into each unit. To some people I guess that is perfectly fine and just how cities work in a global economy (or even actually pretty great when you just look at the numbers), but it really stings when you are the one who can't afford to live there anymore.
|
I know it can be pretty upsetting to hear people talk dispassionately about an issue you're personally dealing with and I am sorry about that. I didn't mean to be insensitive and I definitely want housing affordability to be addressed because the situation is hurting a lot of people. And I definitely don't think the flaws of capitalism are "perfectly fine" as I'm a major critic of it. I just think we need to critique people (and governments, etc.) for things they're responsible for and are capable of changing. Under the current system, as long as builders' full development capacity is absorbed by high profit upscale projects, the only options for affordable housing beyond trickle down are for governments to develop public housing directly, for it to subsidize some units in private sector developments, or to directly assist people financially who are being priced out.
The first two options which would be referred to as supply side policies would both have problems. With developing public housing, in addition to the funding it takes time to build up the administrative infrastructure and it would be extremely difficult to find workers and equipment to do the building. During a building boom the government would have to compete for labour, equipment, materials, etc. with the private sector. In other words, the capacity of the construction industry is likely quite saturated. There isn't separate spare capacity sitting on the sidelines waiting for the government to activate it.
With the option of subsidizing new unit construction, that can work to a degree but the government would either need to pay very large sums of money to lower the cost of units in premium developments. And unfortunately sudden, large new expenditures are always a tough sell politically. Or they could force developers to cede some of their profits by eating the cost of lower prices units as a condition of development approval. The second option isn't scalable since if you did it with enough units to really make a dent in the housing shortage the lower profits would greatly reduce the incentive for developers to build and the rate of construction would slow. Which would be quite counter-productive. A major fact that we can't really escape is that the money paid by affluent buyers and renters is driving the construction. And if the affluent don't get most or all of the new units they aren't going to pay, so that money would have to come from somewhere else. And new construction is expensive, so having them pay to expand the housing stock is money not being drained from general revenue which is needed for many other things.
I personally prefer demand-side solutions which tend to involve giving lower income people the money to enable them to compete in the market. Yes that would further increase prices overall but the government could adjust the assistance accordingly. And more money in the market would mean even more units would be built. Anyone who's seen a supply curve understands that supply increases as the price increases. Demand side solutions would also give people more freedom to choose where to live compared to people being restricted to certain "affordable" units whose availability may (would) be limited forcing them to live where an available unit happened to be rather than where they wanted. Plus, people are smart and would find the most affordable options knowing that the less they paid the more they'd have left over.
Not that there wouldn't also be drawbacks, of course. Landlords often require people to show proof of income and may discriminate against people receiving assistance. Also, the means testing to determine who needs the assistance can be invasive and infringe upon people's privacy which is an issue with current welfare programs. Or if it was done as a totally new program it would be expensive and cumbersome to set up the administration. And if it was done through an existing program such as a negative income tax it may not cover everyone. So there really aren't any perfect or even particularly great options under the current system since that would mean addressing inequality. But obviously we need to do something. Perhaps a mix of approaches is appropriate.
Prev
Linear Mode
