The transistor as seen from 1953; the shifting South Asian monsoon; Noah Smith against NIMBYism; Dan Davies, Ethan Mollick, Daniel Bessner, & Stuart Buck...
I can see why the Stuart Buck piece interested you. Industrial research labs are a part of your recipe for modern economic growth. One of the unintended consequences off breaking up the Bell system in the Eighties was kneecapping Bell Labs. It is an interesting question whether Nokia, Samsung, and TSMC would be as pivotal in telecoms today, if Bell Labs had somehow been preserved as the national treasure it was.
The business at substack about writers being able to limit postings to paid subscribers only has existed since I set up That's Another Fine Mess three years ago. It's how I keep the bullshitters at bay. So this "new" announcement is BS. I'll bet you a year's free subscription to TAFM (which doesn't participate in Notes, since if I wanted to fuck around in Twitter I'd go there, not here) that Substack has done this because Notes has already "gone south" like Twitdom. And their "offer" to let writers "invest" in Substack (at the high price point now, rather than the price the other insiders got) is also bullshit.
Do not trust these Silly Con Valley otherwise-unemployables, whether they are fucking up FleeceBlock, or Twitter or Substack or You Name It, further than you can see any of the little con artists with your eyes closed.
The problem with Noah Smith's views on gentrification is that they are at odds with everyone's experience. He may be right that gentrification doesn't raise rents, though I've yet to see any convincing research on this. The truth is that there are usually other forces involved that raise rents, but those forces result in gentrification and result in people living in an area being priced out. Arguing that umbrellas don't cause rain is correct, but if you see everyone outside walking around with umbrellas up, then the odds are it is raining.
Much of the problem flows from central place theory. Businesses want to locate in areas with suitable resources such as a market for their product, skilled workers, raw goods suppliers and appropriate regulation. Once the nucleus forms, locating one's business elsewhere turns out to be more, not less, expensive. If the business sector is growing for any number of reasons, then rents are going to rise in certain areas for the same reason economic growth causes inflation.
In the short and medium runs, it doesn't matter how much new housing is built. New housing costs more than old housing, and no profit making enterprise is going to build new housing unless it can get suitably higher rents or prices for it. We've seen this in Seattle and Austin, both booming cities with lots of new housing. (Granted, I could only see six operating cranes from my hotel window in Seattle last week, so perhaps things are slowing a bit.)
Smith is a good writer and often insightful, but he is not a particularly good observer. There's a reason people think that luxury development causes high rents. That's what people experience. If a luxury development is going up nearby, you should be reviewing your options rather than waiting for your eviction or non-renewal notice just as surely as you should expect to get deal with rain if you see umbrellas out.
You're making the exact "umbrellas cause rain" mistake here that Noah is critiquing. Yes, you tend to see higher rents in neighborhoods where buildings are going up, but that's because developers will slog through the bureaucracy to build there, because rents are rising. Even if they hadn't built there, rents still would've risen, because once you attract a lot of well-paid people to a region, they _will_ find ways to spend their money on places to live, regardless of what you build. If you don't build, then that demand squeezes out incumbent residents with lower incomes.
There are _several_ high-quality studies that find that new construction lowers the trajectory of rents nearby. Not that it lowers rents in absolute terms, but that it leads to lower rental costs _relative_ to what the rent would've been without the construction. Obviously you can't run two alternate timelines on the same block, but you can do your best to identify comparable census tracts (i.e. chunks of a few blocks) in the same city that didn't get new buildings and look at what happened to rents there. And the answer, according to most people that have tried it, is that rent goes up MORE if you don't build. Noah linked a couple of them in his piece. The Bloomberg piece cited an outlying study that found the opposite. Smarter people than any of us (like Chris Elmendorf or Paavo Monkkonen or Evan Mast) can argue about how exactly it reached that conclusion.
There basically is no American city that has built enough to keep up with demand -- to prevent housing cost as a percent of income from creeping ever-upwards. If you want to see what that looks like, you have to look somewhere like Tokyo (or Japan more broadly, where their zoning is basically "anything not explicitly banned is permitted", rather than the American style "anything not explicitly permitted is banned -- and even if it's permitted we're going to subject you to discretionary review and let the neighbors veto").
It's usually true that new housing costs more than old, and commands higher rents. (Maybe not in fancy "prewar" neighborhoods--the surviving old housing is grotesquely overbuilt, and thus nicer.) But many of the people who move into new housing are the same people who have just moved out of old housing somewhere else, lowering demand for old housing and thus its rent.
OTOH, I agree with your argument that fancy new housing typically raises rents nearby. But that's a local effect. Globally, I think it reduces rents, at least in the medium-to-long term.
I can see why the Stuart Buck piece interested you. Industrial research labs are a part of your recipe for modern economic growth. One of the unintended consequences off breaking up the Bell system in the Eighties was kneecapping Bell Labs. It is an interesting question whether Nokia, Samsung, and TSMC would be as pivotal in telecoms today, if Bell Labs had somehow been preserved as the national treasure it was.
Yes indeed. But I do not have an answer to that question...
The business at substack about writers being able to limit postings to paid subscribers only has existed since I set up That's Another Fine Mess three years ago. It's how I keep the bullshitters at bay. So this "new" announcement is BS. I'll bet you a year's free subscription to TAFM (which doesn't participate in Notes, since if I wanted to fuck around in Twitter I'd go there, not here) that Substack has done this because Notes has already "gone south" like Twitdom. And their "offer" to let writers "invest" in Substack (at the high price point now, rather than the price the other insiders got) is also bullshit.
Do not trust these Silly Con Valley otherwise-unemployables, whether they are fucking up FleeceBlock, or Twitter or Substack or You Name It, further than you can see any of the little con artists with your eyes closed.
The problem with Noah Smith's views on gentrification is that they are at odds with everyone's experience. He may be right that gentrification doesn't raise rents, though I've yet to see any convincing research on this. The truth is that there are usually other forces involved that raise rents, but those forces result in gentrification and result in people living in an area being priced out. Arguing that umbrellas don't cause rain is correct, but if you see everyone outside walking around with umbrellas up, then the odds are it is raining.
Much of the problem flows from central place theory. Businesses want to locate in areas with suitable resources such as a market for their product, skilled workers, raw goods suppliers and appropriate regulation. Once the nucleus forms, locating one's business elsewhere turns out to be more, not less, expensive. If the business sector is growing for any number of reasons, then rents are going to rise in certain areas for the same reason economic growth causes inflation.
In the short and medium runs, it doesn't matter how much new housing is built. New housing costs more than old housing, and no profit making enterprise is going to build new housing unless it can get suitably higher rents or prices for it. We've seen this in Seattle and Austin, both booming cities with lots of new housing. (Granted, I could only see six operating cranes from my hotel window in Seattle last week, so perhaps things are slowing a bit.)
Smith is a good writer and often insightful, but he is not a particularly good observer. There's a reason people think that luxury development causes high rents. That's what people experience. If a luxury development is going up nearby, you should be reviewing your options rather than waiting for your eviction or non-renewal notice just as surely as you should expect to get deal with rain if you see umbrellas out.
You're making the exact "umbrellas cause rain" mistake here that Noah is critiquing. Yes, you tend to see higher rents in neighborhoods where buildings are going up, but that's because developers will slog through the bureaucracy to build there, because rents are rising. Even if they hadn't built there, rents still would've risen, because once you attract a lot of well-paid people to a region, they _will_ find ways to spend their money on places to live, regardless of what you build. If you don't build, then that demand squeezes out incumbent residents with lower incomes.
There are _several_ high-quality studies that find that new construction lowers the trajectory of rents nearby. Not that it lowers rents in absolute terms, but that it leads to lower rental costs _relative_ to what the rent would've been without the construction. Obviously you can't run two alternate timelines on the same block, but you can do your best to identify comparable census tracts (i.e. chunks of a few blocks) in the same city that didn't get new buildings and look at what happened to rents there. And the answer, according to most people that have tried it, is that rent goes up MORE if you don't build. Noah linked a couple of them in his piece. The Bloomberg piece cited an outlying study that found the opposite. Smarter people than any of us (like Chris Elmendorf or Paavo Monkkonen or Evan Mast) can argue about how exactly it reached that conclusion.
There basically is no American city that has built enough to keep up with demand -- to prevent housing cost as a percent of income from creeping ever-upwards. If you want to see what that looks like, you have to look somewhere like Tokyo (or Japan more broadly, where their zoning is basically "anything not explicitly banned is permitted", rather than the American style "anything not explicitly permitted is banned -- and even if it's permitted we're going to subject you to discretionary review and let the neighbors veto").
That's roughly what I said. Glad you agree with me.
It's usually true that new housing costs more than old, and commands higher rents. (Maybe not in fancy "prewar" neighborhoods--the surviving old housing is grotesquely overbuilt, and thus nicer.) But many of the people who move into new housing are the same people who have just moved out of old housing somewhere else, lowering demand for old housing and thus its rent.
OTOH, I agree with your argument that fancy new housing typically raises rents nearby. But that's a local effect. Globally, I think it reduces rents, at least in the medium-to-long term.