1 00:00:00,480 --> 00:00:03,040 Welcome to Keith Knight, Don't tread on anyone in the 2 00:00:03,040 --> 00:00:06,560 Libertarian Institute. Today I'm doing joined by Doctor 3 00:00:06,600 --> 00:00:10,360 Brian Kaplan, the author of Build Baby, Build the Science 4 00:00:10,360 --> 00:00:12,560 and Ethics of Housing Regulation. 5 00:00:12,560 --> 00:00:15,600 Dr. Kaplan, where is the best place for people to buy the new 6 00:00:15,600 --> 00:00:18,600 book? I would buy it on Amazon but 7 00:00:18,600 --> 00:00:20,400 it's all over the place. Should be in Barnes and Noble 8 00:00:20,400 --> 00:00:24,640 two and bunch of other places. Awesome links will be in the 9 00:00:24,640 --> 00:00:28,320 description below. I saw this the other day here. 10 00:00:28,320 --> 00:00:32,479 According to the Empire State Building website, construction 11 00:00:32,479 --> 00:00:36,480 was completed in a record-breaking one year and 45 12 00:00:36,480 --> 00:00:38,480 days. That was in 1930. 13 00:00:38,800 --> 00:00:42,720 A another website discussing the Golden Gate Bridge in San 14 00:00:42,720 --> 00:00:47,120 Francisco says just putting up the suicide Nets on the bridge. 15 00:00:47,120 --> 00:00:53,920 Construction began in 2018 and was completed in early 2020 for. 16 00:00:53,920 --> 00:00:57,400 Can you explain to us your theory as to why it's so 17 00:00:57,400 --> 00:01:00,400 difficult to build things nowadays and be productive? 18 00:01:01,120 --> 00:01:03,480 So the Golden Gate Bridge is going to be public sector, which 19 00:01:03,480 --> 00:01:06,480 probably requires a whole bunch of additional stuff to 20 00:01:06,480 --> 00:01:09,000 understand what's going on. But yeah, for the private 21 00:01:09,000 --> 00:01:11,880 sector, it's really hard to get government permission to do 22 00:01:11,880 --> 00:01:15,640 stuff. And some of this is inspections 23 00:01:15,640 --> 00:01:18,800 and safety regulation. Most of it actually is just the 24 00:01:18,800 --> 00:01:24,360 level of breaking ground. Going from idea to digging your 25 00:01:24,360 --> 00:01:29,040 shovel into the ground for one shovel full of dirt has gotten 26 00:01:29,120 --> 00:01:35,080 way harder than it used to be. As far as the citations in your 27 00:01:35,080 --> 00:01:38,840 book, and then we'll start with chapter one, You cite Tyler 28 00:01:38,840 --> 00:01:43,520 Cowen in your notes section, who says a price is a signal wrapped 29 00:01:43,520 --> 00:01:46,440 in an incentive. What does that mean and what are 30 00:01:46,440 --> 00:01:49,680 your thoughts on that? Yeah, so I feel like that's 31 00:01:49,680 --> 00:01:52,800 actually Alex Tabarrok, although maybe it's in their textbook so 32 00:01:52,800 --> 00:01:56,800 they both say it. But here's the idea, you take a 33 00:01:56,800 --> 00:02:00,360 look at a price, you see that it costs $1000 to go and get a 34 00:02:00,360 --> 00:02:04,480 particular flights from, say, I don't know, Lanzarote in the 35 00:02:04,480 --> 00:02:08,199 Canary Islands to Barcelona on a certain day at a certain time, 36 00:02:08,680 --> 00:02:10,199 right? The first thing is, well, Gee, 37 00:02:10,199 --> 00:02:12,520 why is it so expensive? Probably that's showing that 38 00:02:12,520 --> 00:02:15,920 there's just very few seats that are available in that particular 39 00:02:15,920 --> 00:02:19,880 route to that particular time. But the idea that it's a signal 40 00:02:19,880 --> 00:02:23,080 wrapped in incentive says it's not just telling you, oh, by the 41 00:02:23,080 --> 00:02:24,520 way, there's not a lot of seats here. 42 00:02:24,680 --> 00:02:26,600 Because if that was all that was saying, then someone might say, 43 00:02:26,600 --> 00:02:30,520 well, there may not be a lot, but I want it for me, me, me, 44 00:02:30,520 --> 00:02:33,480 me, me, me. The incentive combines the 45 00:02:33,480 --> 00:02:36,520 scarcity with, well, if you want it to be you, then you're going 46 00:02:36,520 --> 00:02:38,600 to pay $1000. That's what you have to cough 47 00:02:38,600 --> 00:02:41,640 up. Do you really care that much? 48 00:02:41,640 --> 00:02:45,400 If so, great, pay the money. If not, then you're going to 49 00:02:45,400 --> 00:02:48,840 back away and leave that seat sitting around for someone who 50 00:02:48,840 --> 00:02:54,040 wants it more than you do. And as far as the law of supply 51 00:02:54,040 --> 00:02:56,760 and demand, could you briefly explain that? 52 00:02:56,880 --> 00:02:59,040 I think I know what it is, but I just want to make sure. 53 00:02:59,520 --> 00:03:03,880 All right, Well, the Law Supply says that when the price of a 54 00:03:03,880 --> 00:03:06,360 good goes up, sellers are more interested in selling it. 55 00:03:06,760 --> 00:03:09,120 The law of demand says that when the price of a good goes up, 56 00:03:09,400 --> 00:03:11,200 buyers are less interested in buying it. 57 00:03:11,440 --> 00:03:13,320 When you combine those two things, you get the law of 58 00:03:13,320 --> 00:03:17,600 supply and demand, which says that at excessively high prices, 59 00:03:17,600 --> 00:03:20,280 then people want to produce more than people want to buy. 60 00:03:20,520 --> 00:03:22,960 At excessively low prices, people want to buy more than is 61 00:03:22,960 --> 00:03:25,760 getting produced. And somewhere in between there 62 00:03:25,760 --> 00:03:29,040 is the Goldilocks price, where the quantity that people want 63 00:03:29,040 --> 00:03:31,080 and the quantity that people people want to buy and the 64 00:03:31,080 --> 00:03:33,600 quantity people want to sell is exactly equal. 65 00:03:34,920 --> 00:03:38,800 So when it comes to housing, I know a lot of people who want to 66 00:03:38,800 --> 00:03:43,520 purchase houses or even remodel their business, and yet it 67 00:03:43,520 --> 00:03:47,800 doesn't seem like the market is providing in the way we would 68 00:03:47,960 --> 00:03:49,800 like it to. You'd think there's a profit 69 00:03:49,800 --> 00:03:52,040 incentive. And because we don't see a lot 70 00:03:52,040 --> 00:03:56,480 of building or a big decrease in the cost of housing, it's most 71 00:03:56,480 --> 00:04:00,160 likely the result of greedy construction companies who are 72 00:04:00,160 --> 00:04:03,320 not interested in providing a product for the masses. 73 00:04:03,320 --> 00:04:04,840 Is there anything wrong with that mindset? 74 00:04:05,920 --> 00:04:08,000 I mean, just back up to begin with. 75 00:04:08,000 --> 00:04:10,760 So you take a look and you see that price of housing really 76 00:04:10,760 --> 00:04:13,240 high. And then one reaction is, all 77 00:04:13,240 --> 00:04:17,399 right, well, maybe that's just the intersection of supply and 78 00:04:17,399 --> 00:04:19,440 demand, Gilly. It's really desirable. 79 00:04:19,440 --> 00:04:22,000 It's really hard to build it. So end of story. 80 00:04:22,000 --> 00:04:25,640 Nothing too surprising there. And that's actually where I say 81 00:04:25,640 --> 00:04:28,160 you should start. But then there's the question, 82 00:04:28,160 --> 00:04:31,320 well, have we been too quick with our story here? 83 00:04:31,760 --> 00:04:33,800 It may well be that we're at the intersection of supply and 84 00:04:33,800 --> 00:04:37,040 demand, but the supply in particular may have been 85 00:04:37,040 --> 00:04:39,960 artificially constricted or restrained. 86 00:04:40,320 --> 00:04:43,520 So imagine that you're taking a look and you see, wow, it's 87 00:04:43,520 --> 00:04:45,840 really expensive to go to the circus. 88 00:04:46,120 --> 00:04:48,720 And you find out that the government has arrested 90% of 89 00:04:48,720 --> 00:04:49,880 the people that work in the circus. 90 00:04:49,880 --> 00:04:52,200 Like, all right. Well, on the one hand, supply 91 00:04:52,200 --> 00:04:53,800 and demand says the price is going to be really high. 92 00:04:53,800 --> 00:04:55,440 On the other hand, the government didn't have to arrest 93 00:04:55,440 --> 00:04:58,280 all the circus workers. And if you release them, then 94 00:04:58,280 --> 00:05:01,440 circus prices would once again go way down. 95 00:05:01,800 --> 00:05:04,720 That's a fanciful example, but it's highly relevant in the case 96 00:05:04,720 --> 00:05:07,440 of housing. And here's what we can say. 97 00:05:08,520 --> 00:05:11,800 We've got data on housing prices going back a really long time. 98 00:05:12,440 --> 00:05:16,440 And in earlier periods, housing markets seem to work the way 99 00:05:16,440 --> 00:05:18,280 that markets in general normally work. 100 00:05:18,600 --> 00:05:21,920 Namely, in the short run, when there's an increase in demand, 101 00:05:21,920 --> 00:05:25,720 housing prices go up. But in the long run, the very 102 00:05:25,720 --> 00:05:28,320 fact that housing prices are high means the prices are above 103 00:05:28,320 --> 00:05:30,840 average cost. And prices being above average 104 00:05:30,840 --> 00:05:34,160 cost is a single rapid incentive, as we were saying 105 00:05:34,160 --> 00:05:37,440 before, to enter that market and start building a lot more 106 00:05:37,440 --> 00:05:39,040 housing. Think of it like this. 107 00:05:39,040 --> 00:05:42,800 Anytime that the price that you can sell a product for exceeds 108 00:05:42,800 --> 00:05:46,760 the average cost of production, that is a license to print 109 00:05:46,760 --> 00:05:48,440 money. If you can just go and produce 110 00:05:48,440 --> 00:05:51,120 that good with the normal level of confidence and sell it to the 111 00:05:51,120 --> 00:05:55,640 typical consumer. In the past, housing markets 112 00:05:55,640 --> 00:05:58,040 worked as I described, where there'd be an increase in 113 00:05:58,040 --> 00:06:01,080 demand, prices would go up, but then there'd be a pile of entry 114 00:06:01,080 --> 00:06:03,440 pile, new construction, bring prices back down to cost. 115 00:06:03,880 --> 00:06:07,480 Starting in the 70s and 80s, that seemed to stop working in 116 00:06:07,480 --> 00:06:10,280 housing markets. And instead the general tendency 117 00:06:10,280 --> 00:06:13,600 with some interruptions is for housing prices just keep going 118 00:06:13,600 --> 00:06:16,440 up, up, up, up. And let me remind you, this is 119 00:06:16,520 --> 00:06:19,720 this is adjusting for inflation. It's the easiest thing in the 120 00:06:19,720 --> 00:06:20,880 world to say, wow, there's been inflation. 121 00:06:20,880 --> 00:06:23,200 So what's the big surprise? Like the surprise is that 122 00:06:23,200 --> 00:06:25,280 housing prices have gone up a lot more than inflation. 123 00:06:25,280 --> 00:06:27,800 That's the surprise. That's what should puzzle you 124 00:06:28,680 --> 00:06:30,400 now is what's to going on? What's going on? 125 00:06:30,640 --> 00:06:33,480 Well, anytime you see the price is permanently above average 126 00:06:33,480 --> 00:06:37,200 cost, like that's kind of weird. Why isn't entry happening? 127 00:06:37,720 --> 00:06:39,800 And then a natural thing to look for with as well. 128 00:06:40,120 --> 00:06:42,960 Is there some way in which entry is difficult or just not 129 00:06:42,960 --> 00:06:45,720 allowed? And that is where we really can 130 00:06:45,720 --> 00:06:48,520 go and point fingers at government and say not only is 131 00:06:48,520 --> 00:06:52,120 entry difficult, not allowed, but the number of different ways 132 00:06:52,120 --> 00:06:55,520 that government strangles housing supply, it boggles the 133 00:06:55,520 --> 00:06:58,200 imagination. The ones that I talked about, 134 00:06:58,200 --> 00:07:00,360 most of the books, I think they are the most significant. 135 00:07:00,720 --> 00:07:04,680 It's really hard to build tall buildings, extraordinarily hard 136 00:07:04,680 --> 00:07:07,400 talking at the level of maybe decades to go and get 137 00:07:07,400 --> 00:07:09,520 permission. Even if you can get permission, 138 00:07:09,520 --> 00:07:12,400 maybe it's just one building a year, which is what was going on 139 00:07:12,400 --> 00:07:13,840 in San Francisco for quite a while. 140 00:07:13,840 --> 00:07:16,760 Before that it was 0 and now it may be going back to zero. 141 00:07:16,760 --> 00:07:20,000 A little unclear there. Fairly hard to build multi 142 00:07:20,000 --> 00:07:24,600 family housing where you put a lot of homes into a smaller 143 00:07:24,600 --> 00:07:27,480 area. Furthermore, even when you're 144 00:07:27,480 --> 00:07:31,440 talking about single family homes, which most land, most 145 00:07:31,440 --> 00:07:33,560 residential land in the US is reserved for single family 146 00:07:33,560 --> 00:07:35,200 homes. Even there there's a lot of 147 00:07:35,200 --> 00:07:37,600 regulation because it's totally standard for government to go 148 00:07:37,600 --> 00:07:40,040 and say you have to give everybody a minimum amount of 149 00:07:40,040 --> 00:07:42,920 land nowadays, often it's an acre. 150 00:07:43,440 --> 00:07:46,000 So you can have one home per acre, right? 151 00:07:46,000 --> 00:07:48,040 Well, when you do that to developer who might have been 152 00:07:48,040 --> 00:07:52,040 happy to build 100 homes in an area now into only building 25 153 00:07:52,040 --> 00:07:55,320 homes. As a result, very strictest 154 00:07:55,320 --> 00:07:58,760 supply of housing, price of housing stays high relative to 155 00:07:58,760 --> 00:08:02,760 cost, and that means that consumers wind up losing out. 156 00:08:03,120 --> 00:08:07,320 But not just consumers. You can also say the regulation 157 00:08:07,320 --> 00:08:10,760 winds up being bad, often even for current owners, because 158 00:08:10,760 --> 00:08:13,680 they're prevented from selling out to a developer who could 159 00:08:13,680 --> 00:08:16,560 then go and give them a pile of money to go and allow other 160 00:08:16,560 --> 00:08:18,800 people to make better use of their land. 161 00:08:20,360 --> 00:08:26,120 You talk about the benefits of cheap housing, Henry Haslett 162 00:08:26,120 --> 00:08:28,440 said. The art of economics consists in 163 00:08:28,440 --> 00:08:31,280 looking not merely at the immediate but at the longer 164 00:08:31,280 --> 00:08:34,360 effects of any actor policy. It consists in tracing the 165 00:08:34,360 --> 00:08:38,240 consequences of that policy, not merely for one group, but for 166 00:08:38,240 --> 00:08:41,679 all groups. When it comes to the benefits of 167 00:08:41,799 --> 00:08:45,240 cheap and affordable housing, what are some of the ones you 168 00:08:45,240 --> 00:08:48,400 touch on and what are some other ways it would benefit current 169 00:08:48,400 --> 00:08:52,200 homeowners who are usually the ones protesting any building 170 00:08:52,200 --> 00:08:55,040 operations knowing that it will likely decrease the value of 171 00:08:55,200 --> 00:08:58,480 their current home? All right, so let's just start 172 00:08:58,480 --> 00:09:03,920 with the obvious benefits of housing deregulation, right? 173 00:09:04,200 --> 00:09:07,160 Very typical estimates would conservatively say that in the 174 00:09:07,160 --> 00:09:10,320 modern US, the average home price is now at double its cost 175 00:09:10,320 --> 00:09:12,200 of production, probably more, actually. 176 00:09:12,520 --> 00:09:14,760 It varies by area. Yes, it's really bad in San 177 00:09:14,760 --> 00:09:16,320 Francisco and in the middle of nowhere. 178 00:09:16,320 --> 00:09:19,000 In farm farm territory, maybe there's barely any effect at 179 00:09:19,000 --> 00:09:22,840 all, but still, averaging over the entire economy, looks like 180 00:09:22,840 --> 00:09:24,760 regulation is at least double prices. 181 00:09:25,120 --> 00:09:29,480 Which means that if we imagine a long run deregulated future, you 182 00:09:29,720 --> 00:09:33,680 can expect the price of houses would fall, or price of a square 183 00:09:33,680 --> 00:09:37,600 foot of housing, let's put it that way, would fall by say 50%. 184 00:09:38,240 --> 00:09:40,680 And what does that mean? Well, minimum means that there 185 00:09:40,680 --> 00:09:43,200 is not just a large fall in housing prices, but there's a 186 00:09:43,200 --> 00:09:44,960 large rise in standard of living. 187 00:09:45,680 --> 00:09:48,560 Simple reason, housing is a large share of your budget. 188 00:09:48,960 --> 00:09:52,720 So if a large ticket item in your budget falls in price by 189 00:09:52,720 --> 00:09:55,720 large amount, that amounts to higher living standard. 190 00:09:55,720 --> 00:09:58,760 People on average spend about 20% of the budget on housing the 191 00:09:58,760 --> 00:10:02,000 modern US. So if you have that 20%, you're 192 00:10:02,000 --> 00:10:05,760 basically reducing the cost of living by 10%, which means that 193 00:10:05,760 --> 00:10:07,880 your standard of living would rise by 11%. 194 00:10:07,880 --> 00:10:10,920 All right, so that's the direct, obvious part. 195 00:10:10,920 --> 00:10:15,760 It's big that is really important to tell people about, 196 00:10:15,760 --> 00:10:17,800 but if that was all I had to say, I probably wouldn't have 197 00:10:17,800 --> 00:10:19,600 written whole book about it just wouldn't have been enough 198 00:10:19,600 --> 00:10:22,280 material. What got me excited was I 199 00:10:22,280 --> 00:10:26,080 realized there's just a lot of other problems that most people 200 00:10:26,080 --> 00:10:28,840 not only do not connect to housing, but often think of them 201 00:10:28,840 --> 00:10:31,640 as just hopeless and beyond solution. 202 00:10:32,160 --> 00:10:35,360 And what I say is not only hopeless and beyond solution, 203 00:10:35,360 --> 00:10:38,520 there's a one policy that can simultaneously make a big dent 204 00:10:38,520 --> 00:10:41,720 and a whole bunch of problems that seem unrelated to each 205 00:10:41,720 --> 00:10:44,440 other and unrelated housing. What am I talking about? 206 00:10:44,440 --> 00:10:46,760 Well, housing deregulation. That's the idea. 207 00:10:47,120 --> 00:10:50,880 What kinds of problems can we make a big dent in using housing 208 00:10:50,880 --> 00:10:54,560 deregulation? Well, how about the problem of 209 00:10:54,560 --> 00:10:56,360 inequality? It's gotten worse. 210 00:10:56,360 --> 00:10:58,440 All right. Well, pretty simple story. 211 00:10:58,440 --> 00:11:01,320 Housing's a necessity. Poor people spend a larger share 212 00:11:01,320 --> 00:11:03,640 of their income housing. If we could just cut the price 213 00:11:03,640 --> 00:11:07,920 of housing by 50%, this wouldn't just benefit people on average, 214 00:11:07,920 --> 00:11:10,480 it would give an especially large percentage gain to the 215 00:11:10,480 --> 00:11:13,960 poor, smaller gain to the rich. By definition, that reduces 216 00:11:13,960 --> 00:11:17,040 inequality. Another interesting perspective 217 00:11:17,040 --> 00:11:19,400 on this. If you've heard of the work of 218 00:11:19,400 --> 00:11:22,000 Thomas Piketty, capital of the 21st Century, you know this 219 00:11:22,000 --> 00:11:25,200 stuff, right, Keith? Unfortunately, yes. 220 00:11:25,520 --> 00:11:30,560 Well, he has a whole story about how there's just a general 221 00:11:30,560 --> 00:11:35,240 tendency of free markets to lead to more and more inequality over 222 00:11:35,240 --> 00:11:39,800 time, because in an economy where the rate of growth is less 223 00:11:39,800 --> 00:11:41,920 than the interest rate, all a rich person has to do is just 224 00:11:41,920 --> 00:11:44,800 not spend and let their money expand and they will get a 225 00:11:44,800 --> 00:11:46,680 larger and larger share. There's been a bunch of 226 00:11:46,680 --> 00:11:49,160 criticisms of this, and all those criticisms are reasonable. 227 00:11:49,480 --> 00:11:53,240 But an additional criticism is that his measure of capital 228 00:11:53,600 --> 00:11:57,960 includes housing. And if you break it down by what 229 00:11:57,960 --> 00:12:01,600 normal people think of as capital and this housing 230 00:12:01,600 --> 00:12:05,840 subcategory, turns out that for a bunch of countries, the rising 231 00:12:06,240 --> 00:12:08,480 income share of housing does all the work. 232 00:12:08,960 --> 00:12:11,760 So rather than it being the natural workings of free 233 00:12:11,760 --> 00:12:15,600 markets, it is the unnatural workings of a housing market 234 00:12:15,600 --> 00:12:17,840 where government strangles it. And then this winds up giving 235 00:12:17,840 --> 00:12:22,000 free markets a bad name. Some of the other benefits of 236 00:12:22,000 --> 00:12:25,840 housing deregulation. Also, housing regulation would 237 00:12:25,840 --> 00:12:29,080 raise social mobility. In the past there was a really 238 00:12:29,080 --> 00:12:32,600 easy way for anyone who wanted to get a better standard living 239 00:12:32,600 --> 00:12:35,360 for themselves could generally do, and that's just move from 240 00:12:35,360 --> 00:12:37,200 wherever you are to a high wage part of the country. 241 00:12:37,760 --> 00:12:40,520 This used to work really well because housing prices used to 242 00:12:40,520 --> 00:12:42,720 not be very different in different parts of the country. 243 00:12:43,160 --> 00:12:46,200 Now housing prices in high income areas are usually very 244 00:12:46,200 --> 00:12:50,440 high, to the point where a low income person who moves to a 245 00:12:50,440 --> 00:12:53,440 higher wage part of the country normally has a lower standard of 246 00:12:53,440 --> 00:12:57,080 living afterwards because the extra housing cost absorbs more 247 00:12:57,080 --> 00:13:02,120 than 100% of the gain. So that's another one. 248 00:13:02,560 --> 00:13:04,400 I could talk about other ones if you want. 249 00:13:04,920 --> 00:13:08,120 Just the last thing is you were mentioning this idea that it's 250 00:13:08,120 --> 00:13:11,880 generally homeowners who are resistant to any kind of 251 00:13:11,880 --> 00:13:14,080 deregulation. I think that's quite misleading, 252 00:13:14,080 --> 00:13:15,520 actually. It's probably true. 253 00:13:15,520 --> 00:13:18,320 The people who show up at meetings are likely to be local 254 00:13:18,320 --> 00:13:21,520 homeowners. But first of all, they're a tiny 255 00:13:21,520 --> 00:13:24,000 share of local homeowners. They're the weirdos. 256 00:13:24,000 --> 00:13:26,800 They're not a random number of homeowners. 257 00:13:26,800 --> 00:13:29,600 Most homeowners have as little interest in local politics as 258 00:13:29,600 --> 00:13:32,520 the typical tenant. Furthermore, when you look at 259 00:13:32,520 --> 00:13:35,160 public opinion, there is very strong opposition housing 260 00:13:35,160 --> 00:13:39,000 deregulation among tenants too. And if you're saying wondering, 261 00:13:39,000 --> 00:13:42,080 well why in the world would that be, there's a bunch of reasons. 262 00:13:42,320 --> 00:13:45,560 One big part is that about 2/3 of Americans just deny basic 263 00:13:45,560 --> 00:13:47,840 supply and demand. And when you say that allowing 264 00:13:47,840 --> 00:13:50,800 more building will reduce prices, about 2/3 of Americans 265 00:13:50,800 --> 00:13:53,120 just say no, it won't. It's just ideology. 266 00:13:53,640 --> 00:13:56,160 It's like, it's not ideology, it's common sense and it's 267 00:13:56,160 --> 00:13:57,880 science. If you're running a lemonade 268 00:13:57,880 --> 00:14:00,080 stand and you can't sell your lemonade, you cut the freaking 269 00:14:00,080 --> 00:14:02,320 price. Obviously it's not an ideology, 270 00:14:02,320 --> 00:14:04,800 it's not a philosophy to say cut the price of lemonade to get 271 00:14:04,800 --> 00:14:08,000 more sales. Same thing goes if you do 272 00:14:08,000 --> 00:14:10,760 deregulate housing. More gets built and of course 273 00:14:11,080 --> 00:14:13,920 prices fall. Not because builders feel 274 00:14:13,920 --> 00:14:17,400 grateful that you gave a pat on the head and sign their forms, 275 00:14:17,760 --> 00:14:21,080 but because when you build a lot more stuff, the only way to sell 276 00:14:21,080 --> 00:14:23,360 it or and get tenants is to cut the price. 277 00:14:25,080 --> 00:14:30,160 I should have specified in my experience because of what I 278 00:14:30,360 --> 00:14:33,920 work with in Chandler AZ basically all of the people who 279 00:14:33,920 --> 00:14:37,160 object to any new buildings it's just home owner after home owner 280 00:14:37,160 --> 00:14:40,240 saying my the value of my price is going to go down. 281 00:14:40,600 --> 00:14:43,560 I should differentiate the between personal experience and 282 00:14:43,560 --> 00:14:44,800 empirical data. Thank you. 283 00:14:45,080 --> 00:14:47,440 You say like. I don't want to just totally 284 00:14:47,440 --> 00:14:49,560 dismiss it. I mean, but is that really what 285 00:14:49,560 --> 00:14:51,400 they say? So I've talked to a lot of 286 00:14:51,400 --> 00:14:55,360 people who, well, not talked to a a moderate number of people 287 00:14:55,360 --> 00:14:57,840 who actually go to meetings, they say is no one ever talks 288 00:14:57,840 --> 00:15:00,440 about property values. They're much more likely to talk 289 00:15:00,440 --> 00:15:02,840 about there's a bird nest that would have to be disturbed. 290 00:15:03,280 --> 00:15:05,920 Now, you may say that's a thinly veiled attempt to protect their 291 00:15:05,920 --> 00:15:07,520 property values. Maybe. 292 00:15:07,880 --> 00:15:10,960 Then again, maybe what they say is the real reason. 293 00:15:11,160 --> 00:15:12,680 Here's something that's pretty striking to me. 294 00:15:13,120 --> 00:15:18,200 Normally any time there is NIMBY not in my backyard activity, 295 00:15:18,720 --> 00:15:23,440 it's based upon something that I can see with my own eyes while 296 00:15:23,440 --> 00:15:27,440 standing on my property. But if it were really about 297 00:15:27,440 --> 00:15:30,440 protecting your financial interests, you should actually 298 00:15:30,440 --> 00:15:34,360 be much more concerned about someone building a pile of new 299 00:15:34,360 --> 00:15:39,280 housing a mile away from you then about one person going and 300 00:15:39,640 --> 00:15:41,600 putting in a duplex across the street. 301 00:15:42,000 --> 00:15:44,760 That's just going to be a very modest increase in housing 302 00:15:44,760 --> 00:15:46,120 supply. You should be really worried 303 00:15:46,120 --> 00:15:48,000 about big increases housing supply. 304 00:15:48,320 --> 00:15:52,200 Seems to me it's much more about this visceral sense of I'm 305 00:15:52,200 --> 00:15:55,760 looking at something I don't like, which also explains why 306 00:15:55,760 --> 00:15:59,240 tenants are against it too. Because a tenant can also look 307 00:15:59,240 --> 00:16:01,480 at something and say, I don't like that. 308 00:16:01,960 --> 00:16:05,880 The actually economically sophisticated thing of saying, 309 00:16:06,120 --> 00:16:07,840 well, they're building more things, which leads to more 310 00:16:07,840 --> 00:16:09,920 competition, which reduce the price, reduce my price. 311 00:16:10,320 --> 00:16:13,120 That's something that is so far from the thoughts of most 312 00:16:13,120 --> 00:16:15,360 people, even though that's how markets work. 313 00:16:15,760 --> 00:16:20,520 Most people are politically working from a just gut level 314 00:16:20,520 --> 00:16:23,960 reaction of I don't like it, it bothers me. 315 00:16:23,960 --> 00:16:25,440 No, must be stopped. Yeah. 316 00:16:27,640 --> 00:16:30,880 The other benefits you mentioned, crime, birth rates 317 00:16:30,880 --> 00:16:34,080 and construction jobs. Walk us through that, why we 318 00:16:34,080 --> 00:16:36,400 should care about those and what those have to do with housing 319 00:16:36,400 --> 00:16:37,600 deregulation. All right, let's. 320 00:16:37,600 --> 00:16:41,440 Start with the construction jobs really primarily thinking about 321 00:16:41,440 --> 00:16:44,800 benefits for non college males. Just to back up. 322 00:16:45,360 --> 00:16:48,840 There's a lot of evidence that non college males are one of the 323 00:16:48,840 --> 00:16:52,320 worst fearing demographic groups in society in recent decades. 324 00:16:53,080 --> 00:16:56,400 Usual story is that there's been a big decline in manufacturing 325 00:16:57,160 --> 00:16:59,680 course. Non college males could just go 326 00:16:59,680 --> 00:17:03,160 and move into the expanding sectors of the economy, but 327 00:17:03,160 --> 00:17:05,319 overall they haven't been that successful at doing it. 328 00:17:05,760 --> 00:17:08,880 The typical guy who wants who's a non college male isn't going 329 00:17:08,880 --> 00:17:12,440 to become a coder and isn't very comfortable with service sector 330 00:17:12,440 --> 00:17:15,920 work, doesn't want to go and be a waiter, doesn't want to go and 331 00:17:16,240 --> 00:17:19,400 give massages. So then what are they going to 332 00:17:19,400 --> 00:17:21,400 do? There's the whole national 333 00:17:21,400 --> 00:17:24,119 conservative movement, which is all about using protectionism 334 00:17:24,119 --> 00:17:26,480 just to turn back the clock and make the economy work the way 335 00:17:26,480 --> 00:17:29,240 that it used to in order to save non college males. 336 00:17:29,680 --> 00:17:33,120 I have a piece called Revive Construction, Not the Rust Belt 337 00:17:33,120 --> 00:17:35,760 that I wrote, just walking through and saying, look, even 338 00:17:35,760 --> 00:17:38,520 in the most optimistic cases, this is not going to create a 339 00:17:38,520 --> 00:17:41,040 lot of jobs. Because the main reason why 340 00:17:41,040 --> 00:17:44,240 manufacturing employment is fallen is just that we've got a 341 00:17:44,240 --> 00:17:49,080 large increase in productivity per worker combined with we have 342 00:17:49,080 --> 00:17:52,800 almost reached the satiation point for manufactured goods. 343 00:17:53,240 --> 00:17:56,400 Think about it this way, Keith. Suppose that five free 344 00:17:56,400 --> 00:17:58,240 television sets showed up on your doorstep. 345 00:17:58,880 --> 00:18:01,560 You can't resell them. What do you say? 346 00:18:02,040 --> 00:18:03,840 Thank you for five free televisions. 347 00:18:05,080 --> 00:18:08,880 Maybe what's more likely, it's like I don't need or want 5 348 00:18:08,880 --> 00:18:11,360 televisions. I don't have the space for them. 349 00:18:11,360 --> 00:18:14,320 I've got all the televisions I want, maybe one or two of them. 350 00:18:14,320 --> 00:18:16,480 You might say it's better than my TV, I'll install it. 351 00:18:16,960 --> 00:18:20,040 But the basic story is that consumers are pretty satiated 352 00:18:20,040 --> 00:18:22,800 for manufactured goods precisely because we've gotten so good at 353 00:18:22,800 --> 00:18:27,880 making them in abundance. On the other hand, there is an 354 00:18:27,880 --> 00:18:30,480 immense pent up demand for more housing. 355 00:18:30,480 --> 00:18:33,160 If you tell the typical person, you know, a house twice as big 356 00:18:33,160 --> 00:18:36,120 for the same price of what you're paying now, lot of 357 00:18:36,120 --> 00:18:38,160 people, probably a large majority of people would say, 358 00:18:38,160 --> 00:18:43,520 sounds great to me, let's do it. Putting all this together, we 359 00:18:43,520 --> 00:18:46,760 can see that right now we've got about 10 million jobs in the 360 00:18:46,760 --> 00:18:50,200 construction sector, large majority of them done by non 361 00:18:50,200 --> 00:18:53,480 college males. So even modest deregulation 362 00:18:53,480 --> 00:18:57,960 would plausibly create millions of new traditionally macho non 363 00:18:57,960 --> 00:18:59,920 college male jobs. And a really serious 364 00:18:59,920 --> 00:19:03,400 deregulation could easily double the size of the sector, which is 365 00:19:03,400 --> 00:19:05,720 a big boon to this group that a lot of people are concerned 366 00:19:05,720 --> 00:19:08,720 about that seems to be doing badly, has a lot of additional 367 00:19:08,720 --> 00:19:10,960 effects for working class families and so on. 368 00:19:11,520 --> 00:19:13,680 So that's my quick story for that. 369 00:19:14,200 --> 00:19:18,080 See then crime or this is one that is not obvious. 370 00:19:18,080 --> 00:19:20,160 I didn't really think about it till I've read more about it. 371 00:19:20,520 --> 00:19:24,600 But here's the story. A shockingly high share of urban 372 00:19:24,600 --> 00:19:28,440 land is vacant in America. So like 15% of urban land is 373 00:19:28,440 --> 00:19:32,280 vacant. Vacant land routinely becomes a 374 00:19:32,280 --> 00:19:36,200 breeding ground for crime. So some researchers said, oh, 375 00:19:36,200 --> 00:19:39,680 maybe if we could get vacant lands down somehow, then we 376 00:19:39,680 --> 00:19:42,600 could go and reduce crime. The city of Philadelphia, they 377 00:19:42,600 --> 00:19:45,320 actually let them do an experiment where they took pile 378 00:19:45,320 --> 00:19:50,120 of vacant lots and let them randomly assign half for just 379 00:19:50,120 --> 00:19:52,520 beautification. So let's clean up the trash, 380 00:19:52,520 --> 00:19:55,000 plant some grass, trees, benches, little picket fence, 381 00:19:55,000 --> 00:19:57,920 make it look nice. And they found a noticeable 382 00:19:57,920 --> 00:20:00,680 decline in crime and that in the surrounding neighborhoods as a 383 00:20:00,680 --> 00:20:03,440 result. This very paper specifies 384 00:20:03,440 --> 00:20:04,880 saying, look, we're not talking gentrification. 385 00:20:04,880 --> 00:20:06,200 We're not talking about building anything. 386 00:20:06,200 --> 00:20:08,320 Don't get really mad at us. We just want to plant some 387 00:20:08,320 --> 00:20:10,240 grass. But you read this thing, it's 388 00:20:10,240 --> 00:20:13,240 like. Why is so much land vacant? 389 00:20:14,600 --> 00:20:18,160 Very likely the number one cause is you can't get permission from 390 00:20:18,160 --> 00:20:20,160 the government to do anything on the land. 391 00:20:20,960 --> 00:20:23,120 What if we did let people build stuff? 392 00:20:23,320 --> 00:20:25,600 Almost certainly that would reduce crime a lot more than 393 00:20:25,600 --> 00:20:28,600 grass right now, the last one, fertility. 394 00:20:28,600 --> 00:20:31,400 This one has been more controversial, but I'm still 395 00:20:31,400 --> 00:20:34,400 going to say that the argument's strong and I think the evidence 396 00:20:34,400 --> 00:20:37,200 is there too. Simplest way of thinking about 397 00:20:37,200 --> 00:20:40,080 it is this. When housing prices are high, 398 00:20:40,280 --> 00:20:41,840 people keep living with their parents. 399 00:20:42,800 --> 00:20:44,800 When people live with their parents, they are highly 400 00:20:44,800 --> 00:20:47,280 unlikely to get married and they're even less likely to have 401 00:20:47,280 --> 00:20:49,320 kids. If we could get the price of 402 00:20:49,320 --> 00:20:52,720 housing down a lot, people would go and get their own place at a 403 00:20:52,720 --> 00:20:57,200 younger age. Raising the both, raising the 404 00:20:57,200 --> 00:20:59,600 the the rate of family formation, also making happy 405 00:20:59,600 --> 00:21:03,080 sooner, which then likely will also lead to people having more 406 00:21:03,080 --> 00:21:05,480 kids. There is more to it than that, 407 00:21:05,480 --> 00:21:08,320 but I think that's a totally reasonable story and especially 408 00:21:08,320 --> 00:21:11,400 if you just think about it in terms of the price of a square 409 00:21:11,400 --> 00:21:14,120 foot of living space. I know there's some people like, 410 00:21:14,120 --> 00:21:17,600 well, people in downtown skyscrapers very rarely have 411 00:21:17,600 --> 00:21:19,120 many kids. And I'll say, well, that 412 00:21:19,120 --> 00:21:22,360 probably has a lot to do with how getting an apartment in a 413 00:21:22,360 --> 00:21:24,920 downtown skyscraper is very expensive for a square foot. 414 00:21:25,240 --> 00:21:28,360 What if you could get 2002 thousand square foot apartment 415 00:21:28,360 --> 00:21:30,120 in a skyscraper for $1000 a month? 416 00:21:31,320 --> 00:21:34,760 Seems very plausible people to have kids in a place like that. 417 00:21:34,760 --> 00:21:37,760 So I say that is more than worth a try. 418 00:21:37,760 --> 00:21:41,320 It's totally likely that this would also get fertility up. 419 00:21:41,320 --> 00:21:44,320 Without denying that this is not the sole reason why fertility is 420 00:21:44,320 --> 00:21:47,000 down if you know the data. In the 1950s people live in 421 00:21:47,000 --> 00:21:48,360 small homes and had a ton of kids. 422 00:21:48,360 --> 00:21:53,360 So it's not just housing. But housing is still one obvious 423 00:21:53,360 --> 00:21:55,760 lever to push on in order to make the problem of low 424 00:21:55,760 --> 00:22:00,640 fertility less bad. The book is Build Baby, Build 425 00:22:00,640 --> 00:22:04,360 the Science and Ethics of Housing Regulation link in the 426 00:22:04,400 --> 00:22:07,280 description below. You cite an economist in the 427 00:22:07,280 --> 00:22:11,480 book who says next to carpet bombing, rent control is the 428 00:22:11,480 --> 00:22:14,240 best way to destroy a neighborhood or something like 429 00:22:14,240 --> 00:22:15,080 that. I'm sorry, I don't have. 430 00:22:15,160 --> 00:22:17,560 That what? Does that? 431 00:22:17,680 --> 00:22:21,400 What does rent control have to do with destabilizing an 432 00:22:21,400 --> 00:22:23,680 environment like that? Aren't you just helping the 433 00:22:23,680 --> 00:22:26,520 renters, making sure that they're not exploited? 434 00:22:27,480 --> 00:22:28,520 Right. Well, let's go back to that 435 00:22:28,520 --> 00:22:30,880 supply and demand thing. Remember, the whole idea is 436 00:22:30,880 --> 00:22:33,920 supply and demand. There's a price so low that 437 00:22:33,920 --> 00:22:36,840 you'll have an enormous number of people who want it, but 438 00:22:36,840 --> 00:22:38,280 hardly anyone wants to supply it. 439 00:22:38,800 --> 00:22:41,240 There's also a price so high, the enormous number of people 440 00:22:41,240 --> 00:22:43,360 who want to supply it, but hardly anyone wants to buy it. 441 00:22:43,800 --> 00:22:46,600 In between, there is a Goldilocks price, where the two 442 00:22:46,600 --> 00:22:48,960 things are the same. The number of people who want to 443 00:22:48,960 --> 00:22:50,760 buy equals the number of people who want to sell, or the 444 00:22:50,760 --> 00:22:52,720 quantity people want to buy equals the quantity people want 445 00:22:52,720 --> 00:22:55,960 to sell. The standard problem with 446 00:22:55,960 --> 00:22:59,480 housing right now is that we got really low construction, really 447 00:22:59,480 --> 00:23:01,880 low supply. You got a whole lot of people, 448 00:23:01,880 --> 00:23:05,600 but not that much housing. Under these circumstances, what 449 00:23:05,600 --> 00:23:07,960 happens if government goes and pushes down the price of 450 00:23:07,960 --> 00:23:10,360 housing? Well, there's two effects. 451 00:23:10,560 --> 00:23:13,080 One is it the lower price. People want a lot more housing. 452 00:23:13,400 --> 00:23:15,280 They want to go and buy a lot more housing. 453 00:23:15,840 --> 00:23:18,360 On the other hand, at that lower price, people want to build even 454 00:23:18,360 --> 00:23:21,200 less housing. Therefore, what rent control 455 00:23:21,200 --> 00:23:22,880 does is create housing shortages. 456 00:23:23,280 --> 00:23:26,440 This is the standard story that economists of almost all 457 00:23:26,440 --> 00:23:27,600 political persuasions will give you. 458 00:23:34,240 --> 00:23:38,440 Now, this senior Lindbeck point is where you look a bit further 459 00:23:38,440 --> 00:23:42,720 in the future, per Haslett, and say, well, in the very short 460 00:23:42,720 --> 00:23:45,440 run, it's not like buildings collapse the instant you post 461 00:23:45,440 --> 00:23:48,120 rent control through. But two things happen when you 462 00:23:48,120 --> 00:23:50,240 post rent control. First of all, there's going to 463 00:23:50,240 --> 00:23:55,280 be a lot less new construction. Second of all, there is a 464 00:23:55,280 --> 00:23:59,600 greatly reduced incentive to maintain existing real estate. 465 00:24:00,200 --> 00:24:02,160 All right, you can have a pile of regulation, normally rent 466 00:24:02,160 --> 00:24:04,680 control, Rd. control authorities do, where once they impose rent 467 00:24:04,680 --> 00:24:07,560 control, they also start telling you all the maintenance that you 468 00:24:07,560 --> 00:24:10,040 have to do. But owners are fighting you 469 00:24:10,040 --> 00:24:14,400 every step of the way because why should I go and provide them 470 00:24:14,400 --> 00:24:19,240 with really good maintenance when I can easily fill all of my 471 00:24:19,240 --> 00:24:24,080 buildings at the legal price without doing so, right? 472 00:24:24,080 --> 00:24:27,200 Which you may say, that's those evil, horrible landlords. 473 00:24:27,600 --> 00:24:30,400 Are they? They invest in figuring they can 474 00:24:30,400 --> 00:24:32,400 make some money and then the government takes it away and 475 00:24:32,400 --> 00:24:35,480 then you're mad because they no longer feel very motivated. 476 00:24:36,000 --> 00:24:39,520 I think that's a totally reasonable and fair reaction. 477 00:24:42,120 --> 00:24:47,320 When it comes to homelessness, a common response is there are 478 00:24:47,760 --> 00:24:51,400 many homeless people but there are even more empty homes. 479 00:24:51,600 --> 00:24:54,880 Therefore, the state should facilitate in giving these empty 480 00:24:54,880 --> 00:24:58,040 homes to the homeless people in order to resolve the homeless 481 00:24:58,040 --> 00:25:00,040 problem. What, if anything, is wrong 482 00:25:00,040 --> 00:25:03,680 about that approach? Yeah, there's one where you 483 00:25:03,680 --> 00:25:07,720 really have to step back and say, why is any building ever 484 00:25:07,720 --> 00:25:12,000 vacant ever? Why is it that the day that 485 00:25:12,000 --> 00:25:15,400 someone finishes an apartment unit, someone doesn't show up 486 00:25:15,400 --> 00:25:18,480 two seconds after it passes approval? 487 00:25:18,920 --> 00:25:21,920 And when you think about it, it's like, yeah, well, it takes 488 00:25:21,920 --> 00:25:24,080 time. It takes time to go and match 489 00:25:24,080 --> 00:25:27,760 people up to buildings. People are leaving places all 490 00:25:27,760 --> 00:25:29,880 the time. People are looking for places 491 00:25:29,880 --> 00:25:31,880 all the time. People are building things. 492 00:25:31,880 --> 00:25:33,920 People are pulling them off the market for maintenance. 493 00:25:34,800 --> 00:25:38,080 And once you've seen this, you realize, OK, so it is totally 494 00:25:38,080 --> 00:25:41,160 normal for there to be even a positive vacancy rate. 495 00:25:41,800 --> 00:25:45,000 A world with no vacancy rate would be just a bizarre, crazy 496 00:25:45,000 --> 00:25:46,640 world. It would be a science fiction 497 00:25:46,640 --> 00:25:50,880 situation where people instantly pop up from teleport into new 498 00:25:50,880 --> 00:25:52,320 buildings. That's not the way the real 499 00:25:52,320 --> 00:25:55,440 world works, nor would it be a good idea for it to do so. 500 00:25:55,440 --> 00:25:58,160 All right, So once you realize that it makes sense for there to 501 00:25:58,160 --> 00:26:00,440 be vacancy rate. And by the way, it's the same 502 00:26:00,440 --> 00:26:03,560 principle for unemployment, 0% unemployment. 503 00:26:03,560 --> 00:26:07,280 What would that be like would mean that the second job opening 504 00:26:07,280 --> 00:26:09,600 is announced, it's filled, right? 505 00:26:09,600 --> 00:26:12,840 Which also means that you don't have the time to go and try to 506 00:26:12,840 --> 00:26:15,960 find the right match for the job, which is crazy. 507 00:26:16,440 --> 00:26:19,720 It makes sense for there to be a positive vacancy rate and makes 508 00:26:19,720 --> 00:26:22,360 sense for there to be a positive unemployment rate, right? 509 00:26:22,360 --> 00:26:25,440 Once you realize this, then saying why don't we just go and 510 00:26:25,440 --> 00:26:28,880 put homeless in every vacant place, you realize how crazy 511 00:26:28,880 --> 00:26:30,560 that is. It's almost like saying, why 512 00:26:30,560 --> 00:26:33,280 don't we just go and shove the unemployed into whatever job 513 00:26:33,280 --> 00:26:36,720 opening there is. Well, all that with all that you 514 00:26:36,720 --> 00:26:39,040 wind up doing there is that, well, two things. 515 00:26:39,280 --> 00:26:41,480 First of all, people would be really reluctant to announce a 516 00:26:41,480 --> 00:26:45,360 vacancy or a job opening for fear that there would be someone 517 00:26:45,360 --> 00:26:49,160 that is not actually beneficial for them will be voices on them. 518 00:26:49,600 --> 00:26:53,640 And the second thing is it's like, well, to actually find 519 00:26:53,640 --> 00:26:57,000 people, we need to go and make even more vacancies, have even 520 00:26:57,000 --> 00:26:59,800 more of, you know, do even more hiring in order to go because 521 00:26:59,800 --> 00:27:01,280 they're going to go and shove a bunch of people that are 522 00:27:01,280 --> 00:27:02,880 useless. We really want to get somebody 523 00:27:02,880 --> 00:27:03,880 good. We're going to have to go and 524 00:27:03,880 --> 00:27:06,280 get a step ahead of that, which is an even crazier reaction. 525 00:27:06,280 --> 00:27:11,080 But you can see the logic of it. It's like if the government will 526 00:27:11,080 --> 00:27:13,840 say that I have to go and date a bunch of people I don't want to 527 00:27:13,840 --> 00:27:16,920 date, if I've got any free nights in my calendar, then it's 528 00:27:16,920 --> 00:27:19,440 like, well, Gee, maybe I better go and free up all my nights 529 00:27:19,440 --> 00:27:21,480 just to have a prayer. Snowballs change in hell of 530 00:27:21,480 --> 00:27:23,520 finding someone I actually like, right? 531 00:27:23,520 --> 00:27:28,080 So there's that too. What are zoning restrictions? 532 00:27:30,240 --> 00:27:32,160 Well, there's really two ways of thinking about it. 533 00:27:32,400 --> 00:27:35,760 So there's the very general way that a lot of economists use 534 00:27:35,760 --> 00:27:38,320 this, and for a lot of economists, it's just like it's 535 00:27:38,320 --> 00:27:40,480 whatever goes and holds back instruction. 536 00:27:40,880 --> 00:27:44,200 When economists talk about the zoning tax, there isn't really a 537 00:27:44,200 --> 00:27:46,960 zoning tax. The zoning tax just means the 538 00:27:46,960 --> 00:27:50,280 total burden of all the regulation that's out there that 539 00:27:50,280 --> 00:27:52,920 is preventing prices from being what average cost? 540 00:27:53,680 --> 00:27:56,840 In a more technical legal sense, zoning refers to a subset of 541 00:27:56,840 --> 00:27:59,160 housing regulation, which is basically about separation of 542 00:27:59,160 --> 00:28:03,320 uses and similar related things. So it would also probably count 543 00:28:03,640 --> 00:28:06,920 like setbacks, but mainly it's the separation of residences 544 00:28:07,200 --> 00:28:09,640 from commercial real estate from industry. 545 00:28:11,800 --> 00:28:14,280 One quote from the book, you say. 546 00:28:14,520 --> 00:28:18,800 I know this is hard to believe, but builders try to maximize 547 00:28:18,800 --> 00:28:22,520 profits by cutting prices. How does that work? 548 00:28:22,520 --> 00:28:24,200 How do you know it's true? Well, let's. 549 00:28:24,200 --> 00:28:27,920 Go back to the lemonade stand if you're having trouble selling 550 00:28:27,920 --> 00:28:30,000 all your lemonade. You're looking at it now. 551 00:28:30,000 --> 00:28:32,880 I made 10 gallons of lemonade. I've only sold one gallon. 552 00:28:33,240 --> 00:28:36,560 The obvious common sense thing that even a child figures out 553 00:28:36,560 --> 00:28:40,040 very quickly is if I cut the price, my lemonade, I will sell 554 00:28:40,040 --> 00:28:42,720 more cups. Now they may say, huh, well, 555 00:28:42,720 --> 00:28:44,280 doesn't that mean that I'll lose money? 556 00:28:44,520 --> 00:28:46,920 It's like, well, you do want to be careful that you don't cut it 557 00:28:46,920 --> 00:28:50,360 so much that you lose money. But normally, no, normally you 558 00:28:50,360 --> 00:28:52,520 go and you cut your price and that's a way of making more 559 00:28:52,520 --> 00:28:54,240 money. And obviously you could try 560 00:28:54,240 --> 00:28:56,960 selling your your lemonade for $1000 a cup and see how much 561 00:28:56,960 --> 00:28:59,960 money you make. Same idea is going on with 562 00:28:59,960 --> 00:29:03,880 builders that if you build a lot of new units, you might be 563 00:29:03,880 --> 00:29:06,960 tempted to say, well, I want to go and get top dollar for every 564 00:29:06,960 --> 00:29:08,480 unit. But if you're stubborn about 565 00:29:08,480 --> 00:29:10,920 that, you're likely just to be sitting on a giant pile of 566 00:29:10,920 --> 00:29:13,200 vacant units. The way that you fill those 567 00:29:13,200 --> 00:29:16,800 units is going to be by cutting the price so you can actually 568 00:29:16,800 --> 00:29:18,640 attract in tenants from other places. 569 00:29:20,720 --> 00:29:23,840 Now, by the way, Keith, so if I could just go and make one 570 00:29:23,840 --> 00:29:27,040 point. So this is the podcast of the 571 00:29:27,200 --> 00:29:30,320 Libertarian Institute. So I'd say the question I would 572 00:29:30,320 --> 00:29:33,040 ask myself, so why is it that this is an issue libertarian 573 00:29:33,040 --> 00:29:37,200 should care about so much? And my answer is that, look, 574 00:29:37,200 --> 00:29:39,680 we've got a an incredible universe of government 575 00:29:39,680 --> 00:29:43,480 regulations that are messing the world up, but there are some 576 00:29:43,480 --> 00:29:46,440 regulations where you can go and say, all right, well, we could 577 00:29:46,440 --> 00:29:48,480 privatize the lighthouses. Wouldn't that be wonderful? 578 00:29:48,480 --> 00:29:50,800 And I think the honest answer is, all right, sounds like a 579 00:29:50,800 --> 00:29:53,080 fine idea, but I don't see how it's really going to affect the 580 00:29:53,080 --> 00:29:55,560 lives of too many people. I don't see how it really affect 581 00:29:55,560 --> 00:29:57,720 my life. A world where we deregulate, 582 00:29:57,720 --> 00:30:00,120 regulate, where we deregulate lighthouses would look pretty 583 00:30:00,120 --> 00:30:01,960 similar to the world that I'm already familiar with. 584 00:30:02,600 --> 00:30:05,880 What I want to do in these books is say these are regulations 585 00:30:05,880 --> 00:30:08,720 that dramatically change what it is like to live in modern 586 00:30:08,720 --> 00:30:11,280 society. These are regulations that stop 587 00:30:11,280 --> 00:30:14,200 the future. I want to go and say there's a 588 00:30:14,200 --> 00:30:19,480 whole futuristic world that is technologically and managerially 589 00:30:19,480 --> 00:30:21,480 completely feasible. It's just government that is 590 00:30:21,480 --> 00:30:23,520 blocking it, that is holding up production. 591 00:30:23,520 --> 00:30:26,400 There's a giant stranglehold on the future right now. 592 00:30:26,880 --> 00:30:30,600 And housing is one such area. Housing is an area where we have 593 00:30:31,320 --> 00:30:33,720 a far more advanced technology than they had 90 years ago, and 594 00:30:33,720 --> 00:30:35,080 they built the Empire State Building. 595 00:30:35,360 --> 00:30:38,760 And yet in practice we are way worse at building anything like 596 00:30:38,760 --> 00:30:39,960 that. Why? 597 00:30:39,960 --> 00:30:43,160 Because the government is stopping us from using what we 598 00:30:43,160 --> 00:30:45,520 know, and we know a lot more than they did, to build a 599 00:30:45,520 --> 00:30:48,800 dramatically improve world. So a lot of what I'm doing in 600 00:30:48,800 --> 00:30:51,400 this book is not just to say housing. 601 00:30:51,400 --> 00:30:53,480 Housing is another issue where government goes. 602 00:30:53,480 --> 00:30:56,880 And no, I don't want to do that. I want to say we could have a 603 00:30:56,880 --> 00:31:00,320 world where housing was half the cost of what it currently is. 604 00:31:00,800 --> 00:31:04,320 A world where someone with a very modest income could live in 605 00:31:04,320 --> 00:31:07,040 a mansion. This would be a normal thing 606 00:31:07,040 --> 00:31:09,400 that would be happening with a pile of add on benefits. 607 00:31:09,400 --> 00:31:12,400 Just imagine this, this greatly improved world. 608 00:31:12,680 --> 00:31:15,400 A world that is richer, the world that is more equal. 609 00:31:15,400 --> 00:31:17,800 A world with better mobility, a world with higher fertility, a 610 00:31:17,800 --> 00:31:21,080 world with lower crime, a world where all where the plight of 611 00:31:21,080 --> 00:31:23,360 the non college male is greatly alleviated. 612 00:31:23,360 --> 00:31:25,800 All these things imagine all happening simultaneously. 613 00:31:25,800 --> 00:31:29,160 We just get serious about this one crummy kind of regulation 614 00:31:29,400 --> 00:31:33,720 and we take a fire. We, we, we take a flamethrower 615 00:31:33,720 --> 00:31:36,120 to it. That is the motivation for the 616 00:31:36,120 --> 00:31:37,600 book. You know, if we could just take 617 00:31:37,600 --> 00:31:40,120 a flamethrower to this particular kind of regulation, 618 00:31:40,120 --> 00:31:45,600 we can live in a futuristic world of not utopia, but a lot 619 00:31:45,600 --> 00:31:47,400 more utopia that we're looking at now. 620 00:31:47,840 --> 00:31:50,160 And why not? There really is no good reason 621 00:31:50,160 --> 00:31:53,560 not to do it other than people are just really stubborn about 622 00:31:53,560 --> 00:31:57,160 this stuff. When it comes to empirical 623 00:31:57,160 --> 00:32:01,240 evidence, have you found any areas in, Let's just take 624 00:32:01,440 --> 00:32:04,520 America or I guess we could compare countries as well, where 625 00:32:04,640 --> 00:32:07,960 more heavily regulated geographical areas have much 626 00:32:07,960 --> 00:32:12,000 higher prices than other areas where there is much less 627 00:32:12,000 --> 00:32:17,040 regulation, they experience much lower cost of construction and 628 00:32:17,040 --> 00:32:20,640 therefore housing. Any empirical examples we can 629 00:32:20,640 --> 00:32:21,480 refer to? Yeah, I'd say. 630 00:32:21,520 --> 00:32:24,480 It's almost all the empirical evidence you can look at San 631 00:32:24,480 --> 00:32:28,600 Francisco versus Texas, All right, That's it's really easy. 632 00:32:28,600 --> 00:32:31,480 You can see San Francisco, they strangle construction and prices 633 00:32:31,480 --> 00:32:34,000 are through the roof. Texas, the regulation's much 634 00:32:34,000 --> 00:32:36,680 lighter and tech and prices are way lower. 635 00:32:37,440 --> 00:32:39,200 There's, you know, there are papers that I cite in the book 636 00:32:39,200 --> 00:32:42,160 that go over this in a lot more detail, but really this is the 637 00:32:42,160 --> 00:32:44,520 single best predictor of what housing prices will be. 638 00:32:44,520 --> 00:32:49,360 It's just regulation, not the the pure desirability of the 639 00:32:49,360 --> 00:32:51,560 location, right? They're like, there's an area 640 00:32:51,560 --> 00:32:53,720 that's highly desirable, but it's easier, but it's easy to 641 00:32:53,720 --> 00:32:55,160 build. We have the technology just make 642 00:32:55,160 --> 00:32:57,200 a massive amount of housing in that area. 643 00:32:57,680 --> 00:32:59,920 The problem is when government doesn't allow you to do it. 644 00:33:00,320 --> 00:33:03,000 So yeah. So if in fact, it were possible 645 00:33:03,000 --> 00:33:06,040 to just go and buy up homes in San Francisco, bulldoze them and 646 00:33:06,040 --> 00:33:09,880 put up skyscrapers, prices would crash and a vastly larger number 647 00:33:09,880 --> 00:33:14,040 of people could live in style in San Francisco right now. 648 00:33:14,040 --> 00:33:15,800 Like, now I know there's people who are really worried about low 649 00:33:15,800 --> 00:33:18,040 fertility rates, who think that this is just going to crash 650 00:33:18,040 --> 00:33:20,480 fertility. Say, look where I'm not talking 651 00:33:20,480 --> 00:33:23,760 about having five times as many people live in San Francisco 652 00:33:23,760 --> 00:33:26,760 under current conditions. I'm talking about five times as 653 00:33:26,760 --> 00:33:29,720 many people live in San Francisco in a lot more living 654 00:33:29,720 --> 00:33:32,400 space than they have right now. It's a totally different 655 00:33:32,920 --> 00:33:34,480 hypothetical that I'm talking about. 656 00:33:34,480 --> 00:33:36,400 I'm not trying to get people to live like people in San 657 00:33:36,400 --> 00:33:39,080 Francisco currently do. I'm trying to turn San Francisco 658 00:33:39,080 --> 00:33:44,720 into a area that has a suburban feel from the inside, even 659 00:33:44,720 --> 00:33:46,760 though of course it won't be suburban when you're out on the 660 00:33:46,760 --> 00:33:51,400 streets. As far as good examples of 661 00:33:51,400 --> 00:33:54,800 deregulation in other industries do any come to mind? 662 00:33:55,640 --> 00:33:57,840 So deregulation, other industries, all the really 663 00:33:57,840 --> 00:34:03,200 famous ones are of course aviation and transportation 664 00:34:03,200 --> 00:34:05,560 generally. So there used to be the Civil 665 00:34:05,560 --> 00:34:10,520 Aeronautics Board whose job it was to strangle the supply of 666 00:34:10,679 --> 00:34:14,400 flights and they got rid of, we got rid of that and planned the 667 00:34:14,400 --> 00:34:17,760 price of flying went way down. Similarly, there was the 668 00:34:17,760 --> 00:34:20,400 Interstate Commerce Commission, which used to heavily regulate 669 00:34:20,400 --> 00:34:24,360 the regulate the price of trucking and rail, right. 670 00:34:24,360 --> 00:34:26,520 That was good. That was greatly reduced. 671 00:34:26,520 --> 00:34:30,239 And again, prices for those things went down also. 672 00:34:30,239 --> 00:34:32,800 Those are two very standard examples. 673 00:34:33,040 --> 00:34:37,199 Absolutely. What was the Euclid decision 674 00:34:37,199 --> 00:34:40,600 that the Supreme Court faced? Right. 675 00:34:41,880 --> 00:34:46,719 Since the 1200s, Keith, it has been possible under Anglo 676 00:34:46,719 --> 00:34:50,920 American law to sue your neighbor for going and putting 677 00:34:51,239 --> 00:34:55,960 smoke or or odors on your property for spraying water. 678 00:34:56,320 --> 00:35:00,560 So physical harm to your property has for almost 1000 679 00:35:00,560 --> 00:35:04,200 years been a standard thing that you could take a lawsuit about 680 00:35:04,440 --> 00:35:07,160 and where there would also generally be some local 681 00:35:07,160 --> 00:35:11,080 regulation about. But for until around until like 682 00:35:11,080 --> 00:35:14,240 the early 1900s, the general idea was it's got to be a 683 00:35:14,240 --> 00:35:16,600 physical invasion. It's got to be a sound, it's got 684 00:35:16,600 --> 00:35:20,560 to be a smell, it's got to be smoke, something like water. 685 00:35:20,880 --> 00:35:24,000 It's got to be something like that in order for the government 686 00:35:24,040 --> 00:35:26,520 to get involved either in the courts or the regulation. 687 00:35:27,600 --> 00:35:32,320 Then in the early 20th century, some local government started 688 00:35:32,320 --> 00:35:34,840 saying, you know, just building an apartment is like that. 689 00:35:36,160 --> 00:35:39,360 From the point of view of single family owners, someone building 690 00:35:39,360 --> 00:35:43,640 an apartment is like going and putting a pig farm next to you 691 00:35:43,640 --> 00:35:48,440 that leads to choking odor. All right, initially people took 692 00:35:48,440 --> 00:35:51,640 this to courts and courts, well, seems really different from 693 00:35:51,640 --> 00:35:55,760 what's been done before, before you actually have some kind of 694 00:35:55,760 --> 00:35:58,440 substantial physical harm. But anyway, got all this. 695 00:35:58,600 --> 00:36:01,120 The Supreme Court, Supreme Court said no, no, we agree with this 696 00:36:01,120 --> 00:36:04,960 local government and apartment is like putting a giant pile of 697 00:36:04,960 --> 00:36:08,960 smoke on somebody. This opened up the slippery 698 00:36:08,960 --> 00:36:12,960 slope for massive regulation of everything at the level of local 699 00:36:12,960 --> 00:36:16,840 real estate and gradually gave us the world that we know, and I 700 00:36:16,840 --> 00:36:21,960 say should hate today. What is status quo bias? 701 00:36:23,560 --> 00:36:27,160 It is a general psychological tendency of people to feel like 702 00:36:27,160 --> 00:36:29,280 the grass is browner on the other side, to think that the 703 00:36:29,280 --> 00:36:33,760 way things are right now is fine and any change that you can have 704 00:36:33,760 --> 00:36:37,920 is going to likely be worse, right? 705 00:36:37,920 --> 00:36:41,800 This is a very general, normal human psychological tendency, 706 00:36:42,320 --> 00:36:45,680 which of course sometimes the change is worse, right? 707 00:36:45,680 --> 00:36:49,680 However, the one big feature of the modern economy is that 708 00:36:49,680 --> 00:36:51,840 change generally is an improvement. 709 00:36:52,480 --> 00:36:55,800 If you live long enough to remember, say, the 1980s, I know 710 00:36:55,800 --> 00:36:58,040 you have a teeth, but I do, right? 711 00:36:58,040 --> 00:37:02,000 You can see there's some things that are worse, but overall the 712 00:37:02,000 --> 00:37:04,240 level improvement boggles the imagination. 713 00:37:04,240 --> 00:37:06,400 It's just amazing how much better things have gotten. 714 00:37:06,880 --> 00:37:10,880 And yet, when you do talk about change, people normally do let 715 00:37:10,880 --> 00:37:13,440 their mind run to very dark places. 716 00:37:14,240 --> 00:37:18,440 The end is nigh. When it comes to things like 717 00:37:18,440 --> 00:37:23,320 housing, healthcare and college, it seems like those are the big 718 00:37:23,320 --> 00:37:25,720 three scary things that keep growing in cost. 719 00:37:25,880 --> 00:37:29,520 Whereas we do see declines in price of things like computers, 720 00:37:29,520 --> 00:37:32,240 televisions, printers, microphones, furniture, 721 00:37:32,240 --> 00:37:35,360 clothing. Do you have any theory as to why 722 00:37:35,360 --> 00:37:38,720 some things increase in price and others decrease in price 723 00:37:38,840 --> 00:37:40,640 adjusted for inflation? Right. 724 00:37:40,640 --> 00:37:43,800 So all those things fit a very simple model, which is 725 00:37:43,800 --> 00:37:47,120 government strangles supply and subsidizes demand. 726 00:37:47,840 --> 00:37:53,280 That's true for housing. So the housing, we've got a lot 727 00:37:53,280 --> 00:37:55,280 of regulations making hard to build stuff and yet government 728 00:37:55,280 --> 00:37:59,280 subsidizes mortgages and other. And there's also, you know, 729 00:37:59,280 --> 00:38:01,920 affordable incomes and affordable income stuff. 730 00:38:01,920 --> 00:38:04,600 So, you know, strangling supply, subsidizing demand. 731 00:38:04,600 --> 00:38:07,680 The same is true, of course, for medicine where it's really hard 732 00:38:07,680 --> 00:38:10,600 to enter medicine, really hard to innovate, but government 733 00:38:10,600 --> 00:38:13,800 picks up most of the bill. Same thing with education. 734 00:38:14,080 --> 00:38:17,040 It is hard to go and get permission to, especially to get 735 00:38:17,040 --> 00:38:19,000 an accredited new Institute of Education. 736 00:38:19,000 --> 00:38:20,920 But government picks up most of the tab. 737 00:38:22,080 --> 00:38:24,640 A lot of people will be very quick to say, well, there's some 738 00:38:24,640 --> 00:38:29,120 kind of cost disease here. My main story there is, look, 739 00:38:29,360 --> 00:38:31,800 right, that's part of the story, but a big part of the story is 740 00:38:31,800 --> 00:38:34,960 just that you've got heavy government funding and with 741 00:38:34,960 --> 00:38:38,240 heavy government funding then particularly for health and 742 00:38:38,240 --> 00:38:40,880 education, that just greatly messed up the market. 743 00:38:40,880 --> 00:38:43,440 I think what's going on here honestly is that the 744 00:38:43,440 --> 00:38:48,120 strangulation of supply is much worse for housing, moderate for 745 00:38:48,400 --> 00:38:52,120 health, and then for education. It's not that bad, actually. 746 00:38:52,440 --> 00:38:55,480 On the other hand, in terms of the subsidies for the subsidies, 747 00:38:55,480 --> 00:38:57,840 the subsidies of government subsidies are heaviest for 748 00:38:57,840 --> 00:39:01,720 education, then next biggest for health, and then finally for 749 00:39:01,720 --> 00:39:03,160 housing. The subsidies are modest. 750 00:39:03,160 --> 00:39:07,160 So housing, the industry where supply is really strangled, 751 00:39:07,160 --> 00:39:09,040 demand is only moderately bumped up. 752 00:39:09,040 --> 00:39:12,440 But yeah, they're all in the same general vicinity of 753 00:39:12,440 --> 00:39:14,400 strangle supply. Pump up demand. 754 00:39:14,640 --> 00:39:21,040 Call yourself a hero. When it comes to, let me see, 755 00:39:21,040 --> 00:39:25,320 what else do we have the most burdensome regulations that you 756 00:39:25,320 --> 00:39:27,320 came across. You touched on them earlier with 757 00:39:27,320 --> 00:39:30,040 reference to the height that buildings can be. 758 00:39:30,400 --> 00:39:33,680 But I really want you to walk through some specifics if 759 00:39:33,680 --> 00:39:37,400 there's any that come to mind, because I think when you talk to 760 00:39:37,400 --> 00:39:39,960 the average person, they go housing regulation is so you 761 00:39:39,960 --> 00:39:42,560 make sure these big buildings don't just collapse in on each 762 00:39:42,560 --> 00:39:44,440 other. So we either have that or we 763 00:39:44,440 --> 00:39:46,440 have, you know, no regulation at all. 764 00:39:46,600 --> 00:39:50,280 What are some that are so blatantly so burdensome and so 765 00:39:50,280 --> 00:39:53,520 costly that it just boggles the mind? 766 00:39:53,920 --> 00:39:55,920 Right, so. For skyscrapers, almost none of 767 00:39:55,920 --> 00:39:59,520 the actual regulation is for safety, to prevent them against 768 00:39:59,520 --> 00:40:01,200 collapse. There's already building 769 00:40:01,200 --> 00:40:05,200 inspections in the 1920s and 30s, surely in New York City. 770 00:40:05,560 --> 00:40:07,880 That didn't stop the new The Empire State Building from being 771 00:40:07,920 --> 00:40:11,920 constructed in record time. No, the real issue is not 772 00:40:11,920 --> 00:40:16,360 safety, it's having to go through a massive pile of oh, 773 00:40:16,360 --> 00:40:18,280 but I don't like this, I don't like that, I don't like the 774 00:40:18,280 --> 00:40:19,680 other thing. Many different levels. 775 00:40:19,920 --> 00:40:21,360 That's the thing that's making it take years. 776 00:40:21,360 --> 00:40:24,920 Was just a matter of safety. You submit your plans, they say 777 00:40:24,920 --> 00:40:27,320 this is standard stuff, you get approved, you build it, they 778 00:40:27,320 --> 00:40:29,200 inspect it, it's fine and you're done. 779 00:40:30,440 --> 00:40:31,520 So I was talking to one architect. 780 00:40:31,520 --> 00:40:33,120 He said, well, basically the kind of stuff you're talking 781 00:40:33,120 --> 00:40:36,200 about, Brian, is the stuff that double S the cost and this other 782 00:40:36,200 --> 00:40:38,400 stuff is probably raising at another 20%. 783 00:40:39,840 --> 00:40:42,560 I am definitely libertarian enough to say we don't need any 784 00:40:42,560 --> 00:40:45,560 of the government safety regulation either because 785 00:40:45,760 --> 00:40:48,080 private business does not want to build build buildings that 786 00:40:48,080 --> 00:40:50,040 collapse. And they will actually self 787 00:40:50,040 --> 00:40:53,800 monitor both because it would be terrible for the reputation of 788 00:40:53,800 --> 00:40:56,000 buildings collapse and they also they would get sued into 789 00:40:56,000 --> 00:40:58,440 oblivion for doing it. So I'm just not concerned and 790 00:40:58,720 --> 00:41:00,920 never mind tenants also are going to want to go and 791 00:41:00,920 --> 00:41:03,760 investigate a little bit and say, huh, I'll have is this is 792 00:41:03,760 --> 00:41:06,080 this building been inspected by inspected by who? 793 00:41:06,480 --> 00:41:09,640 These are all natural things, normal market forces to protect 794 00:41:09,640 --> 00:41:11,560 us anyway. So that's one. 795 00:41:11,840 --> 00:41:14,800 Another huge one is just being unable to build multi family 796 00:41:14,800 --> 00:41:17,320 homes at all. So apartments, townhomes, 797 00:41:17,320 --> 00:41:21,520 anything where you are sharing a wall with another family. 798 00:41:22,440 --> 00:41:25,720 About 80% of US residential land is set aside for single family 799 00:41:25,720 --> 00:41:27,600 only homes. So single family detached. 800 00:41:27,600 --> 00:41:31,760 All right, which means that you are only allowed to put a 801 00:41:31,760 --> 00:41:34,000 relatively small number of homes in a given area. 802 00:41:34,560 --> 00:41:37,120 And probably the one that is most ridiculous and where the 803 00:41:37,120 --> 00:41:41,200 argument is so flimsy is just minimum lot size. 804 00:41:41,520 --> 00:41:43,680 You can't put more than one house on an acre. 805 00:41:45,040 --> 00:41:47,600 It's a common local regulation. Why not? 806 00:41:47,840 --> 00:41:50,400 Will that cause buildings to collapse if you put four homes 807 00:41:50,400 --> 00:41:52,160 on an acre? It's ridiculous. 808 00:41:52,440 --> 00:41:56,080 It's just a matter of local government says, well, we just 809 00:41:56,080 --> 00:41:58,040 don't think that this is the right kind of neighborhood to 810 00:41:58,040 --> 00:42:00,920 have right now. If you're to push further, 811 00:42:01,280 --> 00:42:05,240 sometimes there is a actual story of we're just trying to go 812 00:42:05,240 --> 00:42:07,720 and reduce parking and driving problems. 813 00:42:08,160 --> 00:42:11,840 This is one where there is a much more obvious solution than 814 00:42:11,840 --> 00:42:16,120 strangling construction. And that is how about we go and 815 00:42:16,120 --> 00:42:20,240 we write an app which your works on one of these things, all 816 00:42:20,800 --> 00:42:22,920 right? And the app goes and charges you 817 00:42:22,920 --> 00:42:25,840 a higher price for going and driving and parking during peak 818 00:42:25,840 --> 00:42:28,280 times. Unfair to the poor? 819 00:42:29,040 --> 00:42:31,360 Not at all. Compared to the status quo. 820 00:42:31,360 --> 00:42:34,520 It's a lot better to be poor and to have housing be at half its 821 00:42:34,520 --> 00:42:36,640 current price. And then if you are planning on 822 00:42:36,640 --> 00:42:40,640 driving or parking, which you probably won't anyway, you pay a 823 00:42:40,880 --> 00:42:43,560 higher price just for those services. 824 00:42:43,920 --> 00:42:45,920 On the other hand, the current system, you charge people 825 00:42:45,920 --> 00:42:48,880 through the nose for housing and then make the parking driving 826 00:42:48,880 --> 00:42:52,000 free and also super congested during peak time. 827 00:42:52,000 --> 00:42:56,080 So thanks a lot. I just went to Arizona State 828 00:42:56,080 --> 00:42:59,240 University today for the first time in years and they actually 829 00:42:59,240 --> 00:43:03,200 have QR codes where you could pay for parking which they did 830 00:43:03,200 --> 00:43:06,320 not have beforehand and the line was much longer. 831 00:43:06,320 --> 00:43:09,200 Even if it costs more, which it actually doesn't, I would pay a 832 00:43:09,200 --> 00:43:12,440 little more to not wait in the line and have people get out of 833 00:43:12,440 --> 00:43:14,160 their car and swipe the card and everything. 834 00:43:14,160 --> 00:43:16,760 So it is happening in some areas. 835 00:43:17,040 --> 00:43:18,440 So this is a. Case where it's working right. 836 00:43:18,440 --> 00:43:21,400 So this is a case where they they've raised the price and 837 00:43:21,400 --> 00:43:23,320 made it more convenient simultaneously and then it's 838 00:43:23,320 --> 00:43:24,880 easier to get a spot. Is that correct? 839 00:43:25,040 --> 00:43:27,120 Oh yeah. It, it, it was so much easier 840 00:43:27,120 --> 00:43:30,600 than than than I remember. But yeah, the an app is one way, 841 00:43:30,600 --> 00:43:33,680 but even the QR codes that you just put your phone over, that 842 00:43:33,680 --> 00:43:35,640 has made it so much easier. Right, 'cause it's. 843 00:43:35,640 --> 00:43:38,160 Worth pointing out that in the old days there was something 844 00:43:38,160 --> 00:43:41,960 that was at least potentially a problematic about toll 845 00:43:41,960 --> 00:43:44,440 collection, which is the back when you had to stop at a toll 846 00:43:44,440 --> 00:43:46,040 booth. Then at least you got to say 847 00:43:46,040 --> 00:43:48,360 maybe the toll booth is actually slowing up traffic. 848 00:43:48,680 --> 00:43:52,520 But now with modern technology that's all thing of the past. 849 00:43:52,520 --> 00:43:56,920 And yet we have barely moved to any greater use of tolls because 850 00:43:57,320 --> 00:44:01,520 of this absurd norm that it's just wrong for anyone have to 851 00:44:01,520 --> 00:44:04,200 pay to park and drive. Like housing could be through 852 00:44:04,200 --> 00:44:08,360 the roof, but you charge me a nickel to park and that's evil. 853 00:44:11,880 --> 00:44:15,120 You say in the book regulation is popular because it's easy to 854 00:44:15,120 --> 00:44:19,320 get people angry with negatives endured than positives denied. 855 00:44:19,720 --> 00:44:22,880 How does this get to the heart of why so many people cheer on 856 00:44:22,880 --> 00:44:26,680 regulation so much? The best way to think about 857 00:44:27,160 --> 00:44:30,200 housing regulation is that almost all would exist because 858 00:44:30,200 --> 00:44:32,760 normal human beings think the world would be worse without it. 859 00:44:33,680 --> 00:44:37,000 Often they can even go and correctly state some problems 860 00:44:37,000 --> 00:44:38,880 saying look, you built a skyscraper, it'll block my 861 00:44:38,880 --> 00:44:39,920 light. I don't like that. 862 00:44:40,760 --> 00:44:46,360 All well and good, but before you say this is a good reason to 863 00:44:46,360 --> 00:44:50,720 ban or just to make people wait 10 years, you should say, well, 864 00:44:50,720 --> 00:44:53,360 wait a second, all right? All you're doing right now is 865 00:44:53,360 --> 00:44:56,480 coming up with problems. You're listing complaints. 866 00:44:57,120 --> 00:45:00,480 All right, that's fine. But how about we also come up 867 00:45:00,480 --> 00:45:03,640 with a list of good things will happen if there's additional 868 00:45:03,640 --> 00:45:07,040 construction. Once you do that, it is really 869 00:45:07,040 --> 00:45:09,920 easy to go and name a lot of good things that come from 870 00:45:09,920 --> 00:45:12,360 additional construction like or people live here. 871 00:45:12,360 --> 00:45:14,720 There are going to be more restaurants that will be able to 872 00:45:14,720 --> 00:45:17,480 be that will be that will stay in business and solve a better 873 00:45:17,480 --> 00:45:19,760 choice of restaurants. Larger population, they'll 874 00:45:19,760 --> 00:45:23,000 probably be more better jobs, larger population. 875 00:45:23,000 --> 00:45:26,000 It'll be easier for me to find kids within walking distance. 876 00:45:26,480 --> 00:45:28,480 In fact, when you start thinking about this more, it's like, all 877 00:45:28,480 --> 00:45:31,120 right, so there's positives, there's negatives. 878 00:45:32,480 --> 00:45:35,760 Well, obvious question. What's the net? 879 00:45:36,040 --> 00:45:39,360 What is the net effect? Even if people ask that 880 00:45:39,360 --> 00:45:41,880 question, I think that's a big step forward from the status quo 881 00:45:41,880 --> 00:45:44,840 where people only complain. But I can actually do a lot 882 00:45:44,840 --> 00:45:51,000 better than that and say, look, we have hard evidence that most 883 00:45:51,000 --> 00:45:56,000 people value the package of all the good stuff of population and 884 00:45:56,000 --> 00:45:59,600 all the bad stuff of population more than they value the package 885 00:45:59,600 --> 00:46:02,680 of very little the good stuff of population and very little of 886 00:46:02,680 --> 00:46:04,920 the bad stuff. Here's the simple argument. 887 00:46:05,240 --> 00:46:08,120 Think about your typical complaining New Yorker. 888 00:46:08,520 --> 00:46:10,720 Oh, it's terrible here. There's the traffic, there's the 889 00:46:10,720 --> 00:46:12,600 parking, there's a noise, blah, blah, blah, blah, blah. 890 00:46:13,000 --> 00:46:17,960 All right, Well, guess what? There is a small town in Kansas 891 00:46:17,960 --> 00:46:19,960 that you can move to where you won't have any of these problems 892 00:46:19,960 --> 00:46:24,720 anymore and it's cheaper and you telework. 893 00:46:25,320 --> 00:46:27,560 All right, give me any reason why you aren't going to move 894 00:46:27,560 --> 00:46:29,480 there now. Because you haven't. 895 00:46:29,960 --> 00:46:31,760 All right, small chance. The person was like, I had no 896 00:46:31,760 --> 00:46:33,640 idea I can move to Kansas and solve all my problems. 897 00:46:33,640 --> 00:46:36,880 But more likely they will say, Nah, I don't want to live there. 898 00:46:36,880 --> 00:46:38,080 That's terrible. Yeah. 899 00:46:38,080 --> 00:46:41,440 Why is it terrible? Because though you do avoid the 900 00:46:41,440 --> 00:46:44,640 negatives of population, you also lose the positives of 901 00:46:44,640 --> 00:46:46,440 population. You lose your restaurant, you 902 00:46:46,440 --> 00:46:50,720 lose your culture opportunities. You lose the opportunity to meet 903 00:46:50,720 --> 00:46:52,920 a lot of other people. So. 904 00:46:53,280 --> 00:46:56,640 And you pay a large premium to get that package. 905 00:46:57,040 --> 00:47:00,520 So I'd say it is bizarre for government to go and try to 906 00:47:00,520 --> 00:47:04,160 reduce the number of people living in areas, reducing 907 00:47:04,160 --> 00:47:07,640 congestion, when on balance, it looks like people actually are 908 00:47:07,640 --> 00:47:09,080 willing to pay a premium for this. 909 00:47:09,480 --> 00:47:11,800 This is a typical thing that democracy does, which is they 910 00:47:11,800 --> 00:47:16,000 respond to what people say instead of their demonstrated 911 00:47:16,000 --> 00:47:19,120 behavior. As I say in the book that I'm 912 00:47:19,120 --> 00:47:22,920 writing right now, a different book, free markets do the bad. 913 00:47:22,920 --> 00:47:25,120 You know, free markets do the good things that sound bad. 914 00:47:25,120 --> 00:47:27,800 Government does the bad do the governments do the bad things 915 00:47:27,800 --> 00:47:30,160 that sound good. The good thing is just to build 916 00:47:30,160 --> 00:47:33,200 a ton of housing, even though a lot of people complain. 917 00:47:33,720 --> 00:47:35,920 And the bad thing is there's what government does, which is 918 00:47:35,920 --> 00:47:39,560 listen to complaints and then try to go and use laws to stop 919 00:47:39,560 --> 00:47:43,680 it, never considering. What about the actual net effect 920 00:47:43,680 --> 00:47:47,480 on human welfare? Is that you think one of the 921 00:47:47,680 --> 00:47:51,760 downsides of political democracy as opposed to people having 922 00:47:51,760 --> 00:47:56,920 power within the market, that they actually get a vote that 923 00:47:56,920 --> 00:48:00,360 decides something, whereas their opinions can be ignored in the 924 00:48:00,360 --> 00:48:02,560 voluntary sector at a lower cost? 925 00:48:04,720 --> 00:48:07,360 I'm looking used by the last thing you said, but but yes, I 926 00:48:08,200 --> 00:48:11,520 mean, I mean, honestly, like one of the main themes of my work is 927 00:48:11,520 --> 00:48:13,880 that markets are a lot better than democracy. 928 00:48:13,880 --> 00:48:17,360 Democracy has a Halo around it. Oh, it's just so great. 929 00:48:17,360 --> 00:48:18,640 It's democratic. Yes. 930 00:48:18,640 --> 00:48:22,760 The actual lived experience of democracy, as everybody knows, 931 00:48:22,760 --> 00:48:27,200 is bad. Someone pointed out that 932 00:48:28,080 --> 00:48:31,960 professors always talk about a great democracy is except they 933 00:48:31,960 --> 00:48:34,440 hate every departmental meeting. It's like, oh God, departmental 934 00:48:34,440 --> 00:48:36,560 meeting is so dysfunctional. Yeah, well, guess what? 935 00:48:36,560 --> 00:48:38,400 That's how actual democracy is too. 936 00:48:38,400 --> 00:48:40,600 Regular democracy, it's just functional. 937 00:48:40,600 --> 00:48:44,680 It's a giant group therapy session where people go and 938 00:48:44,800 --> 00:48:48,480 scream at each other and then government acts on the basis of 939 00:48:48,480 --> 00:48:51,440 the loudest complainers. What a great system. 940 00:48:51,800 --> 00:48:55,560 The markets, on the other hand, live by the adage of actions 941 00:48:55,560 --> 00:48:59,160 speak louder than words. Markets go and you don't have to 942 00:48:59,160 --> 00:49:01,360 give a speech in favor of what you want to do. 943 00:49:01,360 --> 00:49:04,440 You just do it. Markets let people do things 944 00:49:04,440 --> 00:49:07,640 like, oh, I'm going to go and risk my life to see a movie. 945 00:49:09,000 --> 00:49:11,920 It's like, what do you mean? Well, if you, if you just 946 00:49:11,920 --> 00:49:14,200 stopped going to movies and stayed home instead, then you 947 00:49:14,200 --> 00:49:16,600 would reduce your risk of dying in an auto accident on the way 948 00:49:16,600 --> 00:49:20,240 to the movie theater, which always exists through people's 949 00:49:20,240 --> 00:49:21,400 actions. What are they're saying? 950 00:49:21,400 --> 00:49:24,720 They're saying I'd rather take a tiny risk of death so I could go 951 00:49:24,720 --> 00:49:28,360 and see Dune 2 because otherwise I'm going to be living this 952 00:49:28,360 --> 00:49:31,640 crummy life where I don't have any fun or get to do anything or 953 00:49:31,640 --> 00:49:33,040 I'm stuck at home. I don't want to. 954 00:49:33,040 --> 00:49:35,880 And you know, during COVID, you might remember all this if it 955 00:49:35,880 --> 00:49:38,720 saves one life. Ridiculous. 956 00:49:39,360 --> 00:49:42,120 Human beings risk their lives all the time. 957 00:49:42,120 --> 00:49:43,960 They risk the lives of their children all the time. 958 00:49:44,200 --> 00:49:47,600 Because safety is not the only thing that matters in life, nor 959 00:49:47,600 --> 00:49:49,120 should it be the only thing that matters. 960 00:49:49,800 --> 00:49:53,200 People with their actions are trying to go and get a favorable 961 00:49:53,200 --> 00:49:57,200 package of safety and entertainment and joy and 962 00:49:57,200 --> 00:50:00,680 variety and everything else. And what does government do? 963 00:50:00,880 --> 00:50:04,600 Government focuses on giving people the stuff that they are 964 00:50:04,600 --> 00:50:07,960 proud to say they want, instead of the stuff for their actions 965 00:50:07,960 --> 00:50:10,000 demonstrate that they actually care about. 966 00:50:11,200 --> 00:50:13,880 Last question, I know you got to go in 3 minutes. 967 00:50:13,880 --> 00:50:17,560 Again, the book is Build Baby, Build The Science and Ethics of 968 00:50:17,560 --> 00:50:21,360 Housing Regulation. You mention how something like 969 00:50:21,360 --> 00:50:24,760 an HOA is different from city planning, regardless of the 970 00:50:24,880 --> 00:50:27,360 voluntarism violence difference there. 971 00:50:27,920 --> 00:50:30,920 But you say one of the big differences is the slippery 972 00:50:30,920 --> 00:50:35,040 slope difference between the private sector and the coercive 973 00:50:35,040 --> 00:50:37,240 sector. What is the slippery slope have 974 00:50:37,240 --> 00:50:40,120 to do with anything? Well, you specifically what I 975 00:50:40,120 --> 00:50:44,200 just said is that while there are some very restrictive HOA's, 976 00:50:44,440 --> 00:50:47,920 there is a whole range of levels of strictness. 977 00:50:48,400 --> 00:50:53,360 So I live in one where we pay, let's see, it's like under. 978 00:50:53,400 --> 00:50:57,320 So we pay I think $200.00 per year and all they do is mow and 979 00:50:57,320 --> 00:51:00,720 maintain a few common areas. That's it, right? 980 00:51:00,720 --> 00:51:03,440 There's other people who pay thousands of dollars per year 981 00:51:03,440 --> 00:51:07,080 and there's a long and detailed list of what you may or may not 982 00:51:07,080 --> 00:51:09,480 do. The nice thing about this is 983 00:51:09,480 --> 00:51:13,320 that there's a range of options compared to the public sector 984 00:51:13,320 --> 00:51:17,240 where it's generally going to be of equal strictness for a very 985 00:51:17,240 --> 00:51:19,480 large area. There just isn't the same 986 00:51:19,480 --> 00:51:21,880 flexibility that you get. And of course with HO as there's 987 00:51:21,880 --> 00:51:24,440 also fine, I want to do something weirder, I'm going to 988 00:51:24,520 --> 00:51:28,000 just buy a place that is not in any HOA and then I can go and do 989 00:51:28,000 --> 00:51:29,840 what I want. So that's part of it. 990 00:51:29,840 --> 00:51:33,560 The other thing is that HO as at least have a stronger motive to 991 00:51:33,560 --> 00:51:38,200 consider the cost, right? So if we go and do this, people 992 00:51:38,200 --> 00:51:40,760 might like it, but it's going to cost a lot of money, so maybe we 993 00:51:40,760 --> 00:51:42,480 shouldn't. Governments, on the other hand, 994 00:51:42,480 --> 00:51:45,160 very rarely consider costs. So that's the other issue. 995 00:51:45,440 --> 00:51:49,840 Now, in terms of the slippery slope, the general idea here is 996 00:51:49,840 --> 00:51:53,280 that you start off with one particular thing that government 997 00:51:53,280 --> 00:51:57,240 does, or it could be AHOA, and then once you do that, you 998 00:51:57,240 --> 00:51:59,000 establish president. Why not do a little more? 999 00:51:59,000 --> 00:52:00,880 Why not do a little more? Why not do a little more? 1000 00:52:01,240 --> 00:52:05,400 Again, if cost doesn't matter, then you are likely to 1001 00:52:05,400 --> 00:52:08,600 eventually end up where we are with actual regulation, which is 1002 00:52:08,600 --> 00:52:12,920 just completely out of control. With an HOA, at least there is 1003 00:52:12,920 --> 00:52:15,400 this pressure of cost and also exit. 1004 00:52:15,400 --> 00:52:18,680 It's like people don't like that these rules, they're too strict. 1005 00:52:18,960 --> 00:52:21,440 So people don't want to live anymore here, live here anymore. 1006 00:52:21,640 --> 00:52:24,480 Maybe we should be a little bit more relaxed so that someone can 1007 00:52:24,480 --> 00:52:25,960 go and have a pink door if they want. 1008 00:52:27,000 --> 00:52:29,280 Thanks to everyone for watching Keith and I Don't Tread on 1009 00:52:29,280 --> 00:52:31,120 Anyone and the Libertarian Institute. 1010 00:52:31,120 --> 00:52:32,440 Doctor Kaplan, thank you for your time. 1011 00:52:32,440 --> 00:52:33,320 Thank you very much.