Many different landlords can make many different decisions, whereas one Housing Bureau will either make one decision for everyone, or make unequal decisions in a corrupt way.
In our economy we have all three of:
individual landlords making decisions about property that they directly own
groups of people pooling capital to buy property, then hiring professional managers to make decisions on behalf of the group (c.f. REIT)
property (e.g., public housing projects, parks) that is owned by various government departments/agencies, and managed by bureaucrats
The point is that 2 and 3 aren’t that different in terms of “corruption”. In both cases, we (at least in theory) made a deliberate trade-off to accept greater principal-agent costs (“corruption”) for some expected benefit the arrangement brings, e.g., greater diversification / spreading of risk in the case of 2. Why isn’t the same true for letting the government own everything or a lot more things? (Not sure who you’re arguing against, but presumably there’s a steelman-version of them that argues that we should accept the “corruption” in that case too because the benefits are greater.)
the people who would rent out the additional floors I add to the house generally don’t comment at the public meeting, whereas the retiree who would have to deal with more cars on the road or a blocked view of the Bay does.
This isn’t as bad as it sounds, because one of these is a priced externality, and the other one is an unpriced externality. That is, since you would get rent from the renter, you already have an incentive to speak on their behalf at the meeting. The alternative to such meetings is either you just ignore the unpriced externality (the retiree’s blocked view) when you make your decision or the externality has to be handled some other way, like the retiree paying you for a “no additional floor” covenant, or suing you through the court system, both of which also involve coordination costs (that can add up quickly when there are many externalities). Again it’s not that clear, at least from this post, that the current system (where everyone who may be affected speaks at the meeting and then some bureaucrat makes a decision that at least supposedly takes all of them into account) isn’t actually optimal given the constraints we face.
ETA: Consider if there is in fact a bunch of negative externalities that together outweigh the benefits of building another floor. Without this meeting how would all those affected people realistically coordinate (supposing none of them individually has enough incentive) to stop you?
The point is that 2 and 3 aren’t that different in terms of “corruption”.
My impression is that this is mostly because of external competitive pressures; my impression is that when the Housing Bureau is the primary source of housing, it is mysteriously the case that better connected people get better housing. When you can buy your own house or enter the affordable housing lottery, most of the rich choose to buy their own house. (It might still be the case that the politically well-connected poor end up with disproportionately many affordable housing slots compared to the unconnected poor, but that’s less of a corrupting force because the stakes are smaller overall.)
Like, a system where people are free to coordinate at whatever level makes local sense seems like it’s obviously superior, and there are ways in which having corporations allows you to hit better points in the ‘aggregated individual benefit minus coordination cost’ space.
Consider if there is in fact a bunch of negative externalities that together outweigh the benefits of building another floor. Without this meeting how would all those affected people realistically coordinate (supposing none of them individually has enough incentive) to stop you?
The basic question here for me is something like “rule of law” vs. “rule of men”; for example, Washington DC has the Height Act that prohibits buildings above a certain height (actually related to the street width, but in general it’s about 11 stories tall). This gives DC its particular character, and ensures the major government buildings remain impressive compared to their surroundings. When embarking on a construction project in DC, there’s no question about how high the government will let you build; it simply won’t be above the height cap.
Similarly, a rule that banned backyard cottages in general, or third floors in general, might make sense, as would a law that caused property taxes to be proportional to demand on public services (like traffic and sewer and trash) or to be periodically reassessed (so that improvements in the property lead to increased taxes) instead of simply reassessed at sale. Similarly it could make sense to tax ongoing construction proportional to the length of the construction. That way the externalities would be priced in, either with a clear policy restriction or a tax based on the estimated cost.
Instead, there’s a system which has increased uncertainty and coordination cost. Does it make sense to canvass your neighbors before making a change, in order to reduce their opposition? Well, what if you’re looking to buy a property in order to improve it? Now pricing a lot becomes much more uncertain, as it also involves estimating the development-friendliness of all neighborhoods in question. This also makes the rules apply unevenly between people; quite possibly more attractive people have an easier time convincing the commitee and their neighbors to let them build than uglier people, for example.
In our economy we have all three of:
individual landlords making decisions about property that they directly own
groups of people pooling capital to buy property, then hiring professional managers to make decisions on behalf of the group (c.f. REIT)
property (e.g., public housing projects, parks) that is owned by various government departments/agencies, and managed by bureaucrats
The point is that 2 and 3 aren’t that different in terms of “corruption”. In both cases, we (at least in theory) made a deliberate trade-off to accept greater principal-agent costs (“corruption”) for some expected benefit the arrangement brings, e.g., greater diversification / spreading of risk in the case of 2. Why isn’t the same true for letting the government own everything or a lot more things? (Not sure who you’re arguing against, but presumably there’s a steelman-version of them that argues that we should accept the “corruption” in that case too because the benefits are greater.)
This isn’t as bad as it sounds, because one of these is a priced externality, and the other one is an unpriced externality. That is, since you would get rent from the renter, you already have an incentive to speak on their behalf at the meeting. The alternative to such meetings is either you just ignore the unpriced externality (the retiree’s blocked view) when you make your decision or the externality has to be handled some other way, like the retiree paying you for a “no additional floor” covenant, or suing you through the court system, both of which also involve coordination costs (that can add up quickly when there are many externalities). Again it’s not that clear, at least from this post, that the current system (where everyone who may be affected speaks at the meeting and then some bureaucrat makes a decision that at least supposedly takes all of them into account) isn’t actually optimal given the constraints we face.
ETA: Consider if there is in fact a bunch of negative externalities that together outweigh the benefits of building another floor. Without this meeting how would all those affected people realistically coordinate (supposing none of them individually has enough incentive) to stop you?
My impression is that this is mostly because of external competitive pressures; my impression is that when the Housing Bureau is the primary source of housing, it is mysteriously the case that better connected people get better housing. When you can buy your own house or enter the affordable housing lottery, most of the rich choose to buy their own house. (It might still be the case that the politically well-connected poor end up with disproportionately many affordable housing slots compared to the unconnected poor, but that’s less of a corrupting force because the stakes are smaller overall.)
Like, a system where people are free to coordinate at whatever level makes local sense seems like it’s obviously superior, and there are ways in which having corporations allows you to hit better points in the ‘aggregated individual benefit minus coordination cost’ space.
The basic question here for me is something like “rule of law” vs. “rule of men”; for example, Washington DC has the Height Act that prohibits buildings above a certain height (actually related to the street width, but in general it’s about 11 stories tall). This gives DC its particular character, and ensures the major government buildings remain impressive compared to their surroundings. When embarking on a construction project in DC, there’s no question about how high the government will let you build; it simply won’t be above the height cap.
Similarly, a rule that banned backyard cottages in general, or third floors in general, might make sense, as would a law that caused property taxes to be proportional to demand on public services (like traffic and sewer and trash) or to be periodically reassessed (so that improvements in the property lead to increased taxes) instead of simply reassessed at sale. Similarly it could make sense to tax ongoing construction proportional to the length of the construction. That way the externalities would be priced in, either with a clear policy restriction or a tax based on the estimated cost.
Instead, there’s a system which has increased uncertainty and coordination cost. Does it make sense to canvass your neighbors before making a change, in order to reduce their opposition? Well, what if you’re looking to buy a property in order to improve it? Now pricing a lot becomes much more uncertain, as it also involves estimating the development-friendliness of all neighborhoods in question. This also makes the rules apply unevenly between people; quite possibly more attractive people have an easier time convincing the commitee and their neighbors to let them build than uglier people, for example.