Equality Requires Abundance

A blog about business and economics.
March 12 2012 4:26 PM

Equality Requires Abundance

Peter Frase seems to me to agree with The Rent Is Too Damn High but it makes him feel icky to embrace deregulation and so concludes dissatisfied:

That vision assumes that it’s desirable to subject all of life to the whims of the market, in return for a higher standard of living. But whether or not such a tradeoff is politically or economically feasible, there’s no a priori reason to say that the desire to have a stable, predictable life or job or neighborhood is less valid than the desire to maximize economic growth. It’s not that Yglesias’s line of critique is totally wrong—I agree that NIMBYism and fear of change is often an impediment to desirable policies, and I agree that people with generally Left politics often betray a confusion about these issues. But while it’s not desirable to just freeze our current cities and neighborhoods as they are, it’s unreasonable to simply dismiss the desire for stability out of hand. To take this to its reductio ad absurdam, I don’t think most people—or probably even Matt Yglesias—would want to live in a world where we all had to change jobs and move to new apartments every few weeks, even if such an arrangement would make us materially richer.
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I think this entirely misses the important questions of freedom and equality posed by scarcity of housing stock. Some places—the Bay Area, for example—are nice places to live. How will we determine how many people get to live there? One way is to hold the supply of Bay Area houses constant and ration the houses by prices. Another way would be to hold the supply of Bay Area houses constant and then ration the houses by political clout. A third way would be to hold the supply of Bay Area houses constant and then ration the houses by lottery. In practice, we employ a mix of market-based rationing and clout-based rationing.

But suppose we could increase the stock of houses, thus allowing more people to enjoy the nice weather and high wages? Wouldn't the correct egalitarian thing to do be to increase the housing stock even if doing so inconvenienced the incumbent set of landowners?

I say yes. The question is not whether some fixed pool of people should give up stability in exchange for more money. The question is whether the incumbents should be asked to give up some stability for the sake of other people who are currently excluded from the opportunities the incumbents enjoy. My answer is that yes they should. That we should work toward plentiful housing not merely for its own sake, but precisely for the sake of equality. We don't worry about maldistribution of black beans in the United States, because black beans are so cheap that we get to live in a utopian environment where everyone has access to all the beans they want (if you buy in bulk, you can even get fancy beans for less than $2 a pound). But we do worry about the maldistribution of housing in the Bay Area because the stock of houses is so small relative to the quantity of people who might enjoy living there. If this were a scarcity that we were technologically or organizationally incapable of overcoming, we might just need to think about the best possible way to manage it. But it's not. We have the tools at our disposal to drastically increase the housing stock in the priciest areas. We just need to adopt the policies that will lead to those tools being deployed.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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