Cost-efficacy, beyond a point, is not rewarded with any increase in market share. The unfit are not selected out.
Not true, I don’t think. I have personally noticed rental rates decline in Auckland City Centre during the covid-19 period because of the abnormally low demand here, and in a Downtown LA housing boom several years ago, it was common for landlords to give away free months’ rent. If the amount of supply exceeds demand by a sufficient amount, you will see market forces work. Why wouldn’t you?
I think I have two key objections, not necessarily an exhaustive list but two fairly key objections that come to mind quickly:
(1) Is there any mechanism here for actually increasing the sum total amount of high-demand property? If not, there are still going to be a large amount of people who didn’t get to be located in high-demand areas. If so, is that mechanism intrinsic to the Propinquity City model or could it be implemented just as well within our current system of property ownership? For instance, I imagine this system would include rules about land use that would legally permit density where many people want to live. But there is no technical reason we couldn’t implement the same rules within our current system. As one can observe in areas of cities where density is in demand and is allowed, over time, density is actually developed by the market according to demand. And that’s a hell of a lot easier than developing an entirely new economic system, particularly if it also involves switching to a modular housing system.
(2) And largely as a result of my previous comment, I suspect that the increase in well-being through the implementation of this system would not be particularly large compared to more limited increases that could be obtained with more incremental land use liberalisation plans. That would limit its potential as an “effective cause area” because it would be much less tractable than other reform proposals that accomplish most of the same value as this system.
As you said, it would be very difficult to implement this in existing cities so this is limited to designing in new cities. Initially I thought this was a limitation, but then I reconsidered: in the next few decades there will be billions of people across the developing world moving into new urban areas, so there is plenty of scope for implementation if developers wanted to implement it.
It would be worth doing an analysis. I recommend, if you proceed to further develop the idea, you do an impact estimate via spreadsheet or other software. Consider the number of people likely to be impacted, the increase in well-being that would result (using QALYs or other empirical measure; be sure to consider anxiety arising from the lack of stability that people may be asked to move at any time), and the amount of political energy that would be need to be invested to achieve the calculated impact. And calculate this relative to the next best solution (maybe a classical Georgist Land Value Tax combined with liberalisation of land use would be a good baseline).
Hi Mako,
First, a quick empirical quibble:
Not true, I don’t think. I have personally noticed rental rates decline in Auckland City Centre during the covid-19 period because of the abnormally low demand here, and in a Downtown LA housing boom several years ago, it was common for landlords to give away free months’ rent. If the amount of supply exceeds demand by a sufficient amount, you will see market forces work. Why wouldn’t you?
I think I have two key objections, not necessarily an exhaustive list but two fairly key objections that come to mind quickly:
(1) Is there any mechanism here for actually increasing the sum total amount of high-demand property? If not, there are still going to be a large amount of people who didn’t get to be located in high-demand areas. If so, is that mechanism intrinsic to the Propinquity City model or could it be implemented just as well within our current system of property ownership? For instance, I imagine this system would include rules about land use that would legally permit density where many people want to live. But there is no technical reason we couldn’t implement the same rules within our current system. As one can observe in areas of cities where density is in demand and is allowed, over time, density is actually developed by the market according to demand. And that’s a hell of a lot easier than developing an entirely new economic system, particularly if it also involves switching to a modular housing system.
(2) And largely as a result of my previous comment, I suspect that the increase in well-being through the implementation of this system would not be particularly large compared to more limited increases that could be obtained with more incremental land use liberalisation plans. That would limit its potential as an “effective cause area” because it would be much less tractable than other reform proposals that accomplish most of the same value as this system.
As you said, it would be very difficult to implement this in existing cities so this is limited to designing in new cities. Initially I thought this was a limitation, but then I reconsidered: in the next few decades there will be billions of people across the developing world moving into new urban areas, so there is plenty of scope for implementation if developers wanted to implement it.
It would be worth doing an analysis. I recommend, if you proceed to further develop the idea, you do an impact estimate via spreadsheet or other software. Consider the number of people likely to be impacted, the increase in well-being that would result (using QALYs or other empirical measure; be sure to consider anxiety arising from the lack of stability that people may be asked to move at any time), and the amount of political energy that would be need to be invested to achieve the calculated impact. And calculate this relative to the next best solution (maybe a classical Georgist Land Value Tax combined with liberalisation of land use would be a good baseline).