> ... The things we build in huge quantities, like computers and TVs, drop rapidly in price. The things we don’t, like housing, schools, and hospitals, skyrocket in price. What’s the American dream? The opportunity to have a home of your own, and a family you can provide for. We need to break the rapidly escalating price curves for housing, education, and healthcare, to make sure that every American can realize the dream, and the only way to do that is to build.
What if building in itself isn't the answer to increasing affordability and ensuring supply of things that matter? What if incentives are the key?
Things the author says drop rapidly in price:
- computers
- TVs
Things the author says skyrocket in price:
- housing
- schools
- hospitals
The former group includes small-ticket items that are often bought with "cash." These are also items with an inherently low regulatory burden.
The latter group includes big-ticket items bought on credit, or paid for by someone else (health insurer). Often, there's a government backstop involved. And these industries have a very heavy regulatory burden.
What if the key to making necessities like housing and education more affordable was to get the federal government out of the business of guaranteeing loans and backstopping reckless investors?
Compare, as another example, the price curve for LASIK laser eye surgery which is purchased out of pocket, to the price curve for every surgical procedure reimbursed by insurance.
Are you claiming that most of the cost in building housing is in labour costs?
At least in places with housing shortages, like the Bay Area and NYC, it seems to me that the high costs comes from the government slowing down (or refusing to allow) new housing construction.
I think a similar problem is evident in healthcare, with certificate of need laws and AMA's restrictions on number of doctors.
> Our forefathers and foremothers built roads and trains, farms and factories
Yes, and most of these were also built by slaves or people in slave-like conditions. It's incredibly easy to build things when you have nearly free labor.
Schools and hospitals also suffer from Baumol's cost disease. As the production of computers, TVs, food, clothing, and other items gets more efficient, the relative cost of industries with low productivity growth skyrockets. Also including symphonies, theater companies, etc., and this leads to them becoming unaffordable in the presence of substitute goods, like movie tickets and recorded music.
Housing, schools, and hospitals also have ongoing costs and costs which don't have meaningful economies of scale. A nurse can only watch so many patients. A teacher can only tend to so many kids.
>What if the key to making necessities like housing and education more affordable was to get the federal government out of the business of guaranteeing loans and backstopping reckless investors?
I would like my representatives to have a say in what is a reckless investors or not.
And I'm not really interested in schooling or health becoming more profitable as a vessel for investment in free market.
I would rather have decent, cheap public education for my kids and something else than whatever we're having for health. That the goal.
Unfortunalty, I don't think it's a great fit for a friction-less market. We're not selling financial instrument, we're trying to give young citizen everywhere a decent education, and have access to health.
What if building in itself isn't the answer to increasing affordability and ensuring supply of things that matter? What if incentives are the key?
Things the author says drop rapidly in price:
- computers
- TVs
Things the author says skyrocket in price:
- housing
- schools
- hospitals
The former group includes small-ticket items that are often bought with "cash." These are also items with an inherently low regulatory burden.
The latter group includes big-ticket items bought on credit, or paid for by someone else (health insurer). Often, there's a government backstop involved. And these industries have a very heavy regulatory burden.
What if the key to making necessities like housing and education more affordable was to get the federal government out of the business of guaranteeing loans and backstopping reckless investors?