Hi friends - welcome to Issue 5. If you're new here (welcome!) you can read weeks 1-4 here.
This week I finished reading Fixer Upper: How to Repair America’s Broken Housing Systems by Jenny Schuetz, a Senior Fellow at Brookings Metro and an expert in urban economics and housing policy. There's a solid summary in Brookings by the author here and a brief Twitter thread here.
In short: we have a huge shortage of housing in America right now, primarily due to a handful of factors such as incredibly strict zoning laws and homeowners who are incentivized to oppose any new construction to keep their property values high:
In every state across the country, it is illegal for a landowner or developer to build new homes (or alter or tear down existing homes) without explicit approval from the local government. And the people who already live in those places wield a variety of legal and political tools—zoning laws, historic preservation, environmental regulations, and direct lobbying of elected officials—to block attempts to build more homes.
Financially-comfortable homeowners effectively have veto power over new construction and a financial interest in preventing new construction, and the result is a sort of housing gridlock. This has all sorts of downstream effects, such as pushing low-income families out to the suburbs, which puts more cars on the road.
Housing is interesting to me for a few reasons:
Living in a large city with access to walkable neighborhoods, great parks, public transportation, and pedestrian-friendly spaces is basically my ultimate dream
Fixing our housing situation would have a ton of positive downstream effects: less cars on the road; more economic activity (more residents + more income freed up from lower housing costs); more jobs; a stronger social safety net. Of all the policy levers we could pull, this seems like a particularly effective one.
Especially in America, much of people's wealth is tied up in housing - 30-year mortgages effectively act as a "forced savings" system - and so any proposal for increasing homeownership is fundamentally a proposal for helping more households build wealth and increasing economic and social equity.
Housing also tends to generate lots of interesting ideas and policy proposals for how to tackle the problem. Here are a few of the more interesting ideas I've come across:
A Land Value Tax would tax the value of the land rather than the value of whatever's on it, incentivizing owners to build and put the land to work. The biggest downside is that middle class wealth would take a hit, as most of it is tied up in housing. Noah Smith has a good piece here on how to untie that knot.
In Singapore, the government builds housing and sells it to first-time homebuyers cheaply, which helps stabilize housing prices and makes more people owners instead of renters.
The Social Wealth Fund is a proposal for the US government to create a shared wealth fund and issue one share of ownership to every American:
After the fund is created, the government will gradually accumulate assets for the fund to manage, such as stocks, bonds, and real estate. As the assets under management increase, the value of the shares held by the citizen-owners will increase, causing wealth inequality to fall. Although the citizen-owners will not be permitted to sell their shares, they will be paid a universal basic dividend (ubd) each year from the investment income earned by the fund.
Publicly-owned funds are a great concept - for another example, see public banks, an alternative to privately-owned, for-profit banks where money stays in the community and funds are reinvested into local infrastructure projects (like housing!).
More reading
morals in the machine, on the role of AI and why it's folly to expect that AI systems will be more fair and equitable than humans:
There’s an oft-repeated myth about artificial intelligence that says that since we all know that humans are prone to being racist and sexist, we should figure out how to create moral machines that will treat human beings more equitably than we could. [...] But if we all know that humans are racist and sexist and we need the neutrality of machines to save us—in other words, if we should delegate morality to AI—how will we ever know if the machines are doing the job we need them to do? And how will we humans ever get better?
How to Be Great? Just Be Good, Repeatably
If you don’t have the opportunity to “do great things”, focus on consistently achieving small wins. These small things in fact do not need to be done in a great way, but a good way, repeatably.
see you next week!
Dan