Noah, I think you're wrong about PHIMBY. I'd LOVE for it to be a "Why not do both?" thing, and to whatever extent that it is, I *do* agree with you.
But the plain fact is -- as Matt pointed out -- that the PHIMBYs themselves are NOT selling this as a "Why not do both?". Rather, it's a lot of tankies and other crypto-socialists engaging in blatant checkism -- just get government to write a big enough check, and the problem will go away, right? They're explicitly saying that NO regulatory reform is needed, because they're just going to fix everything with [definitely NOT Soviet] housing blocks.
Public housing keeps running into the same roadblocks as private housing. The problem isn't whether it's public or private, it's the roadblocks. And happily, we will GET both by destroying the roadblocks! But public housing has such a politically toxic reputation in the US that it doesn't have a snowball's chance of destroying the roadblocks for us. No, WE need to destroy the roadblocks for IT.
I don't think there are actually any PHIMBYs in existence. If you look at who is actually pushing for public housing in the U.S., it's all just YIMBYs.
I agree! It’s a tiny minority who are trying to obviate the need for regulatory reform, because they see that as benefiting rich capitalists that they hate.
So why take them seriously at face value, instead of calling them out for their disingenuousness?
Hmm. Not trying to be difficult here, I just think we're mostly having a disagreement over nomenclature. I mean, yeah, you can call the PHIMBYs a subset of YIMBYs. Or say that YIMBYs are pushing PHIMBYism.
But however you want to describe and categorize it, I think we can agree that (1) there's a group of people who are pushing a "Public Housing Doesn't Need Zoning Reform" (PHDNZR) message, and (2) they're a tiny minority of the broader pro-housing movement.
And on top of I think we *should* agree that (3) despite whatever virtues of public housing we can agree with them in the abstract, their specific PHDNZR position is counterproductive to the pro-housing movement because it's just patently bleeping obvious that public housing suffers from the same core regulatory problem as private housing.
I don’t think “government builds apartments on government land and then sells both to a private company to run” is exactly what PHIMBYs in either form have in mind.
Inherent in the idea of “public housing” is that the rent is below market rate by government mandate. I think the reason public housing gets pushed a lot is that people don’t actually believe building more will make rent lower. It’s just arguing for rent control with extra steps.
Addendum: The PHIMBYs are also saying EXPLICITLY that there’s no need for regulatory reform precisely because public housing will fix everything. That’s inherently zero sum. And it’s THEM framing it that way, NOT the YIMBYs.
He was just responding to their actual rhetoric, though, not treating it as an abstract proposal.
If you’re a communist and a fascist tells you they want universal healthcare TOO, you don’t just take them at face value and ignore all the other talk about killing Jews.
I know that’s an extreme framing of it, but I felt it appropriate for the contrast it offered, not any putative nor implied similarities to PHIMBYs.
I have a maybe coherent theory of greedflation. It goes like this:
All companies are always trying to raise prices. However, they usually raise prices at different times. This means that all their competitors are not raising prices, and they are forced to lower them again.
However, when inflation strikes, it causes an indirect synchronization effect. The news of high inflation gives all companies in a market a signal to raise prices at the same time. Because all the companies in a market raised prices at once, the usual competitive forces that would push the price back down are not as quick to respond.
So while companies are not uniquely greedy in times of inflation, the inflation signal creates a temporary coordination effect.
"One puzzle is why consumers have played ball. Usually, economists would expect any business that raised its prices to lose customers to competitors that don’t, or not by as much.
But these aren’t normal times. In rare situations—such as an economy’s reopening after a pandemic—widespread knowledge that costs are rising allows businesses to raise their prices knowing that their competitors will act in the same way, according to a paper by Isabella Weber, assistant professor of economics at the University of Massachusetts, Amherst, and her colleague, Evan Wasner.
That is a pattern the two economists said has played out in an analysis of recent earning calls in which executives at U.S. businesses present their financial results to analysts.
“We do have to think about pricing differently,” said Ms. Weber. “A cost shock, or bottlenecks can create an implicit agreement among firms that raise their prices, so they can expect others to act likewise.”
And I would expect all of that to be made worse by any domains that are oligopolies with market power concentrated in a few companies - so any "implicit agreement" becomes far easier - and harder for the consumer to get away from.
It's like a macroeconomic version of the "luxury apartment effect." Notice how all apartments under construction are "luxury" apartments? Notice how all existing apartments are also calling themselves "luxury" apartments?
You don't want to be the landlord not calling your property a luxury apartment.
I think this is basically right. The companies act like a cartel. It happens implicitly, there is no need to believe in conspiracy theories about the companies getting together in an evil villain's lair to agree on higher prices.
BUT over the long run, someone breaks with the cartel. Someone realizes they can lower prices to capture market share. And then everyone lowers prices to compete, until we are back at an equilibrium supply/demand price.
If fact, this happens in the *literal* cartels all the time (Oil being the primary example). There is a reason that the prisoner's dilemma comes up in econ 101 so often.
On the other hand, particularly in relatively oligopolistic markets, companies can foresee the predictable race to the bottom that ensues from defecting from the cartel - why opt for an unchanged relative market share (given that the pre-pandemic-coordination market share was a known quantity) at reduced profitability at time B instead of holding the line at the same market share with higher profitability at time A? Unless you think you have some secret sauce now that you didn't prepandemic, being the first mover in a race to the bottom seems like it's a poor decision - only winning move is not to play.
Sales are an iterated game, though. The point of defecting when the other party cooperates is that you’re only playing the once. In open-ended iterated games AIUI tit-for-tat with initial cooperation is generally optimal or close to optimal.
OPEC needs formal enforcement coordination because certain parties have a lower cost of production that would give them a systematic advantage over other parties in a non-cartelized system (so they have an incentive to defect), but even those parties enjoy the supracompetitive option to sell less for more. In this case we (and the competitors) *know* what the competitive landscape looked like prepandemic, so barring a changeup in major competitors (eg new entrants) or a coup in supplier costs, Hydrox and Oreos can both enjoy supracompetitive profits while (in the short to medium term) retaining relatively high confidence that they aren’t harming their conpetitiveness as long as postpandemic market share looks like prepandemic marketshare.
For a future article, I would like your thoughts on this article by Stacy Mitchell in the NYT: The Real Reason Your Groceries Are Getting So Expensive (see https://www.nytimes.com/2023/05/29/opinion/inflation-groceries-pricing-walmart.html). In the article, he argues that lack of anti-trust enforcement, particularly lack of enforcement of the Robinson-Patman Act, is to blame. And I don't think it just applies to groceries. We used to have independent gas stations too! Anyway, your thoughts would be appreciated.
Barry Ritholtz, who founded Ritholtz Wealth Management and curates financial-related news in his Big Picture blog, had a post last week: "POS* Tip Demands Are Driving Inflation Higher"
*-Point of sale, not the other thing. Then again, I ain't so sure. :)
Ritholtz, striking a rather populist tone, says: "I have a new thesis I have been noodling around with: All of those Square credit card processing machines you use to pay for coffee or sandwiches or small retail purchases are driving inflation higher. Demands for worker tips in non-tipping industries are having a meaningful impact on prices and CPI."
Economics substack writings very much concentrate on the g7 nations. Yet, day after day, the UN organise in the global south, conferences that identify challenges the global south faces. Here it is LLDC, Land locked developing countries in Africa.
Is it really a thing and if so are they going about it the right way. It is another "challenges facing Africa" story.
Readers may be interested in an economics approach, say the scenario of massive productivity growth for several years followed by massive layoffs and mass unemployment leading to either social unrest or UBI.
This is another Bruenigism, but the purpose of UBI/welfare is to support non-workers like the elderly and children, who are universally poorer than workers even occasionally unemployed ones.
And giving unemployed people welfare encourages them to become employed again more than it supports them in their unemployment. Though, mass unemployment is not a very believable scenario anyway… productivity growth does the opposite of that!
There is no reason the economy cannot absorb persons displaced by technologies, but the jobs may not pay as well. The scenario posed, massive productivity growth implies a large increase in redistributable income through some kind of EITC that phases out a much higher incomes.
Imagine when David Graeber's "Bullshit Jobs" are all replaced by GPT-5. And as America already overproduces lawyers, when a lawyer can be 5x or 10x more productive with Harvey.ai or Spellbook, well then we need a lot less transactional lawyers in the economy.
Sure, but the income being paid for those jobs and the people doing them do not disappear. Where do they go? To new jobs. But the problem could be that the new jobs pay less. Total income has increased but the distribution is more unequal. In principle its exactly the same as inventing new widget making machine or importing cheaper widgets from China. Income goes up but who gets it?
I do agree that many American cities had NIMBY qualities that were hidden before 2008 and have been brought to light since then, but I don't think they have become more like LA because they are increasingly valuable job centers. They are more like LA because their housing production numbers look more like LA. I will be laying out the details of this paper over the course of a few substack posts. Here is part 1.
Wondering what you think about these onerous new NIH rules and their effects on international collaboration. For foreign subrecipients, a provision requiring the foreign subrecipient to provide copies of all lab notebooks, all data, and all documentation that supports the research outcomes as described in the progress report. These supporting materials must be provided to prime recipient with each scientific update (no less than once every three months) in line with the timelines outlined in the agreement.
NOT-OD-23-133: NIH Updated Policy Guidance for Subaward/Consortium Written Agreements
NIH Funding Opportunities and Notices in the NIH Guide for Grants and Contracts: NIH Updated Policy Guidance for Subaward/Consortium Written Agreements NOT-OD-23-133. NIH
This is really interesting, and a little disquieting. I'm going to keep an eye on this until I have a better idea of what the new rules are doing. Thanks for the tip!
At the beginning of the year you teased a series of posts on the economies of US states, and said it was coming "very soon". Any updates? I remain eager to read these.
Perhaps I am opening a wound, but until I took a close look at Cinnamon's face, I never knew that rabbit could have a facial expression. She was so beautiful, curious, and innocent. Clearly, a rabbit among rabbits. I'd like to hear about her.
“We need to be focusing on helping a bunch of companies that might be the next Nvidia or the next TSMC, instead of just throwing a bunch of government money at big incumbents.”
I couldn’t agree more. Lest we forget, INTL help d develop EUV, then handed it off to the Dutch. INTL’s problem is it’s suspended in amber, unwilling to get its hands dirty in the chip-fab sector. Why be a lowly industrial operation and actually make things, when you can design chips and look down on everybody from on high? INTL’s problem to this day is it’s corporate culture. This isn’t a start-up fab developing its culture because it must stay flexible to compete and adapt to rapidly evolving products and competition. INTL should have been required, as part of receiving subsidies, it must start with a trailing-edge chip fab. You can’t just spend $180 million for ASML’s 3nm machine and expect to crank-out chips with a 99.9% yield. This is TSMC’s strengths: decades of experience working with clients, not dictating to them.
Mr. Smith: Vacant public land in useful locations is not abundant. For instance, in Los Angeles County the state inventory maps show mostly infill sites, inadequate for the ~500,000 housing units that are needed. As a result, vacant public land will provide only an incremental improvement in housing supply.
If supply is the name of the game (as Mr. Erdmann’s research suggests), then upzoning remains the surest approach.
Regarding counter-cyclical benefits to public investment, this could be accommodated through Federal/State financing programs for qualifying developments.
Best wishes
Ed Salisbury
P.S. Standalone (low-income) public housing projects have a bad history in the United States, and physically reinforce ‘otherness’. Integrating low-income housing into the urban/suburban fabric seems far preferable.
Vienna has been successful with public housing because it builds mixed housing with the quality and management being what the upper classes would want. Combining the need to deal with tenants who expect and demand good conditions with the percentage limits for rent and you are likely to have affordable, good housing. Mixing the income levels with tenants who tend to stay even when they get better jobs and the social separation between classes decreases. The quality of the construction is likely higher as well because of the expectations of the better off tenants as well Furthermore, the government bids out contracts to private companies to build their housing.
I am quite sure that there are other details on what the Viennese do to be, but that is the gist. Due to both the lack of experience and the heavy corruption in the United States, I am sure that there would be difficulties at first, but since Vienna has been doing this since the 1920s, I think we can be successful.
Noah, I disagree with your arguments in favor of public housing. First, it’s important to note that public housing advocates are explicitly not promoting a housing authority that develops and sells properties. In Seattle, our new public housing authority is prohibited from ever divesting of properties. Public ownership is the goal, not housing development. This creates a real headwind to operating an efficient developer.
Second, I’m unconvinced by the counter-cyclical arguments. The housing authority would be subject to the same vagaries of capital markets. Market liquidity, borrowing costs, returns, etc would all be indistinguishable from a private provider.
Third, it’s a distraction from actually creating regulatory reform. The opportunity costs for these public dollars would be really high when you’ve not solved the root issue.
Noah, I think you're wrong about PHIMBY. I'd LOVE for it to be a "Why not do both?" thing, and to whatever extent that it is, I *do* agree with you.
But the plain fact is -- as Matt pointed out -- that the PHIMBYs themselves are NOT selling this as a "Why not do both?". Rather, it's a lot of tankies and other crypto-socialists engaging in blatant checkism -- just get government to write a big enough check, and the problem will go away, right? They're explicitly saying that NO regulatory reform is needed, because they're just going to fix everything with [definitely NOT Soviet] housing blocks.
Public housing keeps running into the same roadblocks as private housing. The problem isn't whether it's public or private, it's the roadblocks. And happily, we will GET both by destroying the roadblocks! But public housing has such a politically toxic reputation in the US that it doesn't have a snowball's chance of destroying the roadblocks for us. No, WE need to destroy the roadblocks for IT.
I don't think there are actually any PHIMBYs in existence. If you look at who is actually pushing for public housing in the U.S., it's all just YIMBYs.
https://cayimby.org/ab-2053/
Self-declared "PHIMBYs" are actually just NIMBYs who do absolutely nothing to support public housing.
I agree! It’s a tiny minority who are trying to obviate the need for regulatory reform, because they see that as benefiting rich capitalists that they hate.
So why take them seriously at face value, instead of calling them out for their disingenuousness?
I don't take them at face value. I don't even engage with them at all. YIMBYs are the ones pushing public housing (and they are right).
Hmm. Not trying to be difficult here, I just think we're mostly having a disagreement over nomenclature. I mean, yeah, you can call the PHIMBYs a subset of YIMBYs. Or say that YIMBYs are pushing PHIMBYism.
But however you want to describe and categorize it, I think we can agree that (1) there's a group of people who are pushing a "Public Housing Doesn't Need Zoning Reform" (PHDNZR) message, and (2) they're a tiny minority of the broader pro-housing movement.
And on top of I think we *should* agree that (3) despite whatever virtues of public housing we can agree with them in the abstract, their specific PHDNZR position is counterproductive to the pro-housing movement because it's just patently bleeping obvious that public housing suffers from the same core regulatory problem as private housing.
That's all. Anyways, cheers!
I don’t think “government builds apartments on government land and then sells both to a private company to run” is exactly what PHIMBYs in either form have in mind.
Inherent in the idea of “public housing” is that the rent is below market rate by government mandate. I think the reason public housing gets pushed a lot is that people don’t actually believe building more will make rent lower. It’s just arguing for rent control with extra steps.
Addendum: The PHIMBYs are also saying EXPLICITLY that there’s no need for regulatory reform precisely because public housing will fix everything. That’s inherently zero sum. And it’s THEM framing it that way, NOT the YIMBYs.
Regulatory reform in the housing market at the top? I am totally agreement in "Why not both" however. Yglesias was a bit boolean there.
He was just responding to their actual rhetoric, though, not treating it as an abstract proposal.
If you’re a communist and a fascist tells you they want universal healthcare TOO, you don’t just take them at face value and ignore all the other talk about killing Jews.
I know that’s an extreme framing of it, but I felt it appropriate for the contrast it offered, not any putative nor implied similarities to PHIMBYs.
I am invoking Godwin's law here.
Not Poe’s?
Love seeing this cross substack action!
I have a maybe coherent theory of greedflation. It goes like this:
All companies are always trying to raise prices. However, they usually raise prices at different times. This means that all their competitors are not raising prices, and they are forced to lower them again.
However, when inflation strikes, it causes an indirect synchronization effect. The news of high inflation gives all companies in a market a signal to raise prices at the same time. Because all the companies in a market raised prices at once, the usual competitive forces that would push the price back down are not as quick to respond.
So while companies are not uniquely greedy in times of inflation, the inflation signal creates a temporary coordination effect.
I like this theory!
There's apparently a paper on this from Weber and Wasner out of Umass Amherst - referenced in this WSJ article:
https://www.wsj.com/articles/why-is-inflation-so-sticky-it-could-be-corporate-profits-b78d90b7
"One puzzle is why consumers have played ball. Usually, economists would expect any business that raised its prices to lose customers to competitors that don’t, or not by as much.
But these aren’t normal times. In rare situations—such as an economy’s reopening after a pandemic—widespread knowledge that costs are rising allows businesses to raise their prices knowing that their competitors will act in the same way, according to a paper by Isabella Weber, assistant professor of economics at the University of Massachusetts, Amherst, and her colleague, Evan Wasner.
That is a pattern the two economists said has played out in an analysis of recent earning calls in which executives at U.S. businesses present their financial results to analysts.
“We do have to think about pricing differently,” said Ms. Weber. “A cost shock, or bottlenecks can create an implicit agreement among firms that raise their prices, so they can expect others to act likewise.”
And I would expect all of that to be made worse by any domains that are oligopolies with market power concentrated in a few companies - so any "implicit agreement" becomes far easier - and harder for the consumer to get away from.
It's like a macroeconomic version of the "luxury apartment effect." Notice how all apartments under construction are "luxury" apartments? Notice how all existing apartments are also calling themselves "luxury" apartments?
You don't want to be the landlord not calling your property a luxury apartment.
I think this is basically right. The companies act like a cartel. It happens implicitly, there is no need to believe in conspiracy theories about the companies getting together in an evil villain's lair to agree on higher prices.
BUT over the long run, someone breaks with the cartel. Someone realizes they can lower prices to capture market share. And then everyone lowers prices to compete, until we are back at an equilibrium supply/demand price.
If fact, this happens in the *literal* cartels all the time (Oil being the primary example). There is a reason that the prisoner's dilemma comes up in econ 101 so often.
On the other hand, particularly in relatively oligopolistic markets, companies can foresee the predictable race to the bottom that ensues from defecting from the cartel - why opt for an unchanged relative market share (given that the pre-pandemic-coordination market share was a known quantity) at reduced profitability at time B instead of holding the line at the same market share with higher profitability at time A? Unless you think you have some secret sauce now that you didn't prepandemic, being the first mover in a race to the bottom seems like it's a poor decision - only winning move is not to play.
That's kind of like asking why the prisoners don't just cooperate. It's not that simple.
Sales are an iterated game, though. The point of defecting when the other party cooperates is that you’re only playing the once. In open-ended iterated games AIUI tit-for-tat with initial cooperation is generally optimal or close to optimal.
OPEC needs formal enforcement coordination because certain parties have a lower cost of production that would give them a systematic advantage over other parties in a non-cartelized system (so they have an incentive to defect), but even those parties enjoy the supracompetitive option to sell less for more. In this case we (and the competitors) *know* what the competitive landscape looked like prepandemic, so barring a changeup in major competitors (eg new entrants) or a coup in supplier costs, Hydrox and Oreos can both enjoy supracompetitive profits while (in the short to medium term) retaining relatively high confidence that they aren’t harming their conpetitiveness as long as postpandemic market share looks like prepandemic marketshare.
Interesting take.
Ok, but ultimately, so what? How does understanding this phenomon help the Fed know when and how much to move any one of its policy instruments?
A weird corollary to this is that tracking, documenting, and publicizing inflation maybe contributes slightly to the effect of inflation itself.
For a future article, I would like your thoughts on this article by Stacy Mitchell in the NYT: The Real Reason Your Groceries Are Getting So Expensive (see https://www.nytimes.com/2023/05/29/opinion/inflation-groceries-pricing-walmart.html). In the article, he argues that lack of anti-trust enforcement, particularly lack of enforcement of the Robinson-Patman Act, is to blame. And I don't think it just applies to groceries. We used to have independent gas stations too! Anyway, your thoughts would be appreciated.
Barry Ritholtz, who founded Ritholtz Wealth Management and curates financial-related news in his Big Picture blog, had a post last week: "POS* Tip Demands Are Driving Inflation Higher"
https://ritholtz.com/2023/05/tip-demands-inflation-higher/
*-Point of sale, not the other thing. Then again, I ain't so sure. :)
Ritholtz, striking a rather populist tone, says: "I have a new thesis I have been noodling around with: All of those Square credit card processing machines you use to pay for coffee or sandwiches or small retail purchases are driving inflation higher. Demands for worker tips in non-tipping industries are having a meaningful impact on prices and CPI."
Economics substack writings very much concentrate on the g7 nations. Yet, day after day, the UN organise in the global south, conferences that identify challenges the global south faces. Here it is LLDC, Land locked developing countries in Africa.
Is it really a thing and if so are they going about it the right way. It is another "challenges facing Africa" story.
https://open.substack.com/pub/africabrief/p/eca-african-lldcs-face-challenges?utm_source=share&utm_medium=android
Hey Noah - this is awesome. New format? I love it.
Thanks!
A disagreement with Matt? FIGHT! FIGHT! FIGHT!
But my guess is that you'd both come to a rational consensus.
The existential risks posed by A.I.
https://www.nytimes.com/2023/05/30/technology/ai-threat-warning.html
Readers may be interested in an economics approach, say the scenario of massive productivity growth for several years followed by massive layoffs and mass unemployment leading to either social unrest or UBI.
This is another Bruenigism, but the purpose of UBI/welfare is to support non-workers like the elderly and children, who are universally poorer than workers even occasionally unemployed ones.
And giving unemployed people welfare encourages them to become employed again more than it supports them in their unemployment. Though, mass unemployment is not a very believable scenario anyway… productivity growth does the opposite of that!
There is no reason the economy cannot absorb persons displaced by technologies, but the jobs may not pay as well. The scenario posed, massive productivity growth implies a large increase in redistributable income through some kind of EITC that phases out a much higher incomes.
Imagine when David Graeber's "Bullshit Jobs" are all replaced by GPT-5. And as America already overproduces lawyers, when a lawyer can be 5x or 10x more productive with Harvey.ai or Spellbook, well then we need a lot less transactional lawyers in the economy.
*poof* Those jobs are gone.
Sure, but the income being paid for those jobs and the people doing them do not disappear. Where do they go? To new jobs. But the problem could be that the new jobs pay less. Total income has increased but the distribution is more unequal. In principle its exactly the same as inventing new widget making machine or importing cheaper widgets from China. Income goes up but who gets it?
I do agree that many American cities had NIMBY qualities that were hidden before 2008 and have been brought to light since then, but I don't think they have become more like LA because they are increasingly valuable job centers. They are more like LA because their housing production numbers look more like LA. I will be laying out the details of this paper over the course of a few substack posts. Here is part 1.
https://kevinerdmann.substack.com/p/home-price-trends-point-to-a-worsening
Here is the twitter thread.
https://twitter.com/KAErdmann/status/1663973555435089920
Thanks, Kevin!!
Here's Part 2.
https://kevinerdmann.substack.com/p/home-price-trends-point-to-a-worsening-03f
And the twitter thread:
https://twitter.com/KAErdmann/status/1664334227415113728
Here's Part 3.
https://kevinerdmann.substack.com/p/home-price-trends-point-to-a-worsening-bd8
And the twitter thread:
https://twitter.com/KAErdmann/status/1664718836975763456
Hi Noah,
Wondering what you think about these onerous new NIH rules and their effects on international collaboration. For foreign subrecipients, a provision requiring the foreign subrecipient to provide copies of all lab notebooks, all data, and all documentation that supports the research outcomes as described in the progress report. These supporting materials must be provided to prime recipient with each scientific update (no less than once every three months) in line with the timelines outlined in the agreement.
grants.nih.govgrants.nih.gov
NOT-OD-23-133: NIH Updated Policy Guidance for Subaward/Consortium Written Agreements
NIH Funding Opportunities and Notices in the NIH Guide for Grants and Contracts: NIH Updated Policy Guidance for Subaward/Consortium Written Agreements NOT-OD-23-133. NIH
This is really interesting, and a little disquieting. I'm going to keep an eye on this until I have a better idea of what the new rules are doing. Thanks for the tip!
At the beginning of the year you teased a series of posts on the economies of US states, and said it was coming "very soon". Any updates? I remain eager to read these.
That's a good reminder!
Suggestion.
Finally, an article abou.t SUCCESS in teaching poor kids to read!
https://www.nytimes.com/2023/05/31/opinion/mississippi-education-poverty.htm
Thanks! Bumped this up to the main post!
Perhaps I am opening a wound, but until I took a close look at Cinnamon's face, I never knew that rabbit could have a facial expression. She was so beautiful, curious, and innocent. Clearly, a rabbit among rabbits. I'd like to hear about her.
Great list!
“We need to be focusing on helping a bunch of companies that might be the next Nvidia or the next TSMC, instead of just throwing a bunch of government money at big incumbents.”
I couldn’t agree more. Lest we forget, INTL help d develop EUV, then handed it off to the Dutch. INTL’s problem is it’s suspended in amber, unwilling to get its hands dirty in the chip-fab sector. Why be a lowly industrial operation and actually make things, when you can design chips and look down on everybody from on high? INTL’s problem to this day is it’s corporate culture. This isn’t a start-up fab developing its culture because it must stay flexible to compete and adapt to rapidly evolving products and competition. INTL should have been required, as part of receiving subsidies, it must start with a trailing-edge chip fab. You can’t just spend $180 million for ASML’s 3nm machine and expect to crank-out chips with a 99.9% yield. This is TSMC’s strengths: decades of experience working with clients, not dictating to them.
Mr. Smith: Vacant public land in useful locations is not abundant. For instance, in Los Angeles County the state inventory maps show mostly infill sites, inadequate for the ~500,000 housing units that are needed. As a result, vacant public land will provide only an incremental improvement in housing supply.
If supply is the name of the game (as Mr. Erdmann’s research suggests), then upzoning remains the surest approach.
Regarding counter-cyclical benefits to public investment, this could be accommodated through Federal/State financing programs for qualifying developments.
Best wishes
Ed Salisbury
P.S. Standalone (low-income) public housing projects have a bad history in the United States, and physically reinforce ‘otherness’. Integrating low-income housing into the urban/suburban fabric seems far preferable.
Vienna has been successful with public housing because it builds mixed housing with the quality and management being what the upper classes would want. Combining the need to deal with tenants who expect and demand good conditions with the percentage limits for rent and you are likely to have affordable, good housing. Mixing the income levels with tenants who tend to stay even when they get better jobs and the social separation between classes decreases. The quality of the construction is likely higher as well because of the expectations of the better off tenants as well Furthermore, the government bids out contracts to private companies to build their housing.
I am quite sure that there are other details on what the Viennese do to be, but that is the gist. Due to both the lack of experience and the heavy corruption in the United States, I am sure that there would be difficulties at first, but since Vienna has been doing this since the 1920s, I think we can be successful.
Excellent format filled with interesting stories
Noah, I disagree with your arguments in favor of public housing. First, it’s important to note that public housing advocates are explicitly not promoting a housing authority that develops and sells properties. In Seattle, our new public housing authority is prohibited from ever divesting of properties. Public ownership is the goal, not housing development. This creates a real headwind to operating an efficient developer.
Second, I’m unconvinced by the counter-cyclical arguments. The housing authority would be subject to the same vagaries of capital markets. Market liquidity, borrowing costs, returns, etc would all be indistinguishable from a private provider.
Third, it’s a distraction from actually creating regulatory reform. The opportunity costs for these public dollars would be really high when you’ve not solved the root issue.