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Dave Stuhlsatz's avatar

That line: "...a ruinous competition to build..." sums up nearly all the misconceptions about the conditions prior to the Great Recession and a large part of the malaise we're suffering through now. A ruinous competition to grow food, make steel, and provide clean water to hundreds of millions of people is a fundamental principle of modern society.

The Club of Rome cultists who cheer the decline in the U.S. fertility rate are at least more consistent in their ideology than racist Boomers who oppose upzoning and immigration. That these two groups are united in opposition to reform of land-use regulation is one of the strangest political marriages in America. My only consolation is that this voting bloc is older and dying.

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Stacy Young's avatar

Another great post, KE. A frame I find useful for poking at Waldman's "Futility Thesis 2" (that builders left to their own devices will throttle supply anyway): generic market structure analysis.

As is the case for the vast majority of products in modern economies, the market for housing is Monopolostic Competition. So: many existing suppliers (and relatively low barriers to new entry) offering similar but differentiated products to buyers. Vectors of differentiation provide the individual firm a bit of pricing power but only a bit.

Left to their own devices, the hallmarks of this sort of market is fierce competition between sellers and abundant choice (in both quantity & quality) for buyers. Holding together the kind of cartel necessary to throttle supply in this sort of market is a mathematical impossibility: too many actors to coordinate and the rewards for defection are far too great.

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