I also remember when the government owned its buildings-like post offices. Now the post office closest to me moves every few years since they’ve been forced to rent from private owners. All this costs a whole lot more than when the government was allowed to own its buildings, which in turn gets passed on to us.
This is broadly true and I agree we desperately need more/better housing/education/healthcare/good things, but some aspects of this scarcity are not a plot or evidence of market forces failing, but perversely result from the labor market *working* to unfortunate effect. There's a phenomenon called Baumol's Cost Disease: roughly, it explains that if some parts of the economy become more productive, it drives up costs even in unrelated sectors.
Imagine a city like San Francisco experiencing a tech boom: software is going crazy, computers are getting 100x better/faster/cheaper every few years. Anyone who is clever enough to be a high school science teacher could instead go become a web developer and triple their salary overnight. Education hasn't gotten any better or more efficient, but suddenly you have to pay more to attract and retain your teachers.
Some variation of this effect is at play in most of these sectors like healthcare or education that are not susceptible to efficiency gains and automation. The financial sector has been wildly profitable over the past four decades, and so many of the top students have flocked to finance. It costs more to hire a math teacher because so many potential math teachers are now Wall Street quants.
I don't think rising wages among teachers are driving prices higher. The finance sector is itself the problem. Why is that where the money flows? Why is the profit in automobiles in the financing and not manufacturing? Not because labor to make the car is too high. Au contraire! The money from interest and indebtedness is greater and growing. Slavery by any other means...
At least partly because it's much easier to innovate in a spreadsheet than it is to innovate in the real physical world. Making a better car is harder than tricking people into paying more for the same car by spreading out the payments.
Good point. Virtual reality of digital economy, a redefining of social relations with the stroke of a pen (or esign robosignature) is easier than building an undivided house!
I do wanna give Corbin credit for grokking that “credits” are just going to exacerbate the problem of Cost Disease Socialism.
But OTOH he perversely seems to imagine that public construction — PHIMBY — won’t get defeated by the same NIMBY machine we’re currently trying to defeat. The relevant part is the “-IMBY”, not the “PH”.
It's frustrating how many things Corbin says seem like common sense, but aren't taken as such by a lot of people. If you have lived sixty years, you've seen - or had the opportunity to see - the hope for a good future for your kids and neighbors start to disappear in real time. The extraction is obvious these days. I wish we could put advertising back to *only* telling us what is available, and where. Make coupons be coupons instead of an extractive trick. Let phones be just phones, and let people own what they buy. Regulate all things that can be harmful, especially when so many off us don't have a clue how dangerous they are.
We don’t have anything that scales anywhere near what we had during the new deal. Put people to work building public housing, fixing our rotting infrastructure, taking care of delayed or abandoned projects in National Parks due to GOP defunding, building high speed rail projects, green energy infrastructure, etc. But most importantly, keep these projects and assets publicly owned and not sold off to private interests.
Oops! Meant to say “permitting hampers the scale”.
Our current programs don’t scale BECAUSE of permitting. We’ve HAD programs in places like SF where they try to build “affordable” housing by the city, and it ends up costing $800k/unit because of all the NIMBYs and the permitting veto points. Even relatively permissive Vermont can’t get it done for less than $300k.
You can’t scale $800k/unit without breaking the public budget. Doesn’t matter if the public “owns” it once it’s built, it costs too much to build at scale, period.
RE infrastructure, go read Chuck Marohn’s Strong Towns book. The infrastructure crumbles because the suburban form is not dense enough to pay for itself and is a huge drag on everything else.
This is one of the better production arguments I've seen, and I agree with most of it: money without supply just relocates price. Two additions from a different angle, for what they're worth.
The tax-the-rich fixation you're describing has a specific political function, and it's not really about revenue. A target that both sides can rally around is politically useful because named targets are what drive movement solidarity. That's why the debate keeps returning to the wealth tax even after everyone involved knows it won't fix housing or health care on its own. The wealthy are targeted not due to their wealth alone, but due to the fact that their wealth has been used to skew the rules in their favor.
My other addition cuts against your frame a little. Some of what you're calling a production failure is real; more doctors, more housing units, and more capacity would genuinely help. But some of the goods on your list (the right school district, the top-tier college, the best hospital) are positional. Their value comes from other people wanting them too, not just from scarcity of supply. Build twice as many houses in a metro area and you haven't built twice as many houses in the neighborhood with the good schools, because the good schools are partly defined by who else lives there. That's not an argument against building. It's a reason building alone won't fully deflate every price you're pointing to. The issue is not solely supply; it's also the tangible things that go along with certain things like a house in a neighborhood with superior schools.
Your TVA line is the strongest part of your argument. A cash transfer doesn't build a durable political coalition, because nobody can point to it and say the government did that. A public utility, a public housing project, or a rural co-op all generate the kind of visible, attributable win that holds a coalition together past the next election. That's a large part of why redistribution politics keeps losing to production politics even when the numbers favor redistribution. People don't organize around a check. They organize around something they can see get built.
How do we convince people that the ultra-wealthy didn’t earn their wealth — that they benefited from structures that funnel money away from the public good and from worker wages? I find so many people snookered into defending the musks of this world as “successful” instead of as the exploiters and plunderers they are.
I’m fighting this on a smaller scale with Untrickled. I’m not convinced there is a more important issue than this, because it affects every other issue. EVERY issue. Economic inequality is tearing down families, robbing youth, starving elders and tearing down democracy.
Dean Baker used to write about how the financialization of everything is a huge part of the problem. Our financial sector used to be 3% of GDP and now it’s 20%. Banking is like trucking. You need it to have the economy functioning, but it doesn’t actually do anything. The goal should be to have it be as small as possible.
This guy, as young as he is, gets it!!! What he speaks is the truth. I don't know if we can ever get back to the place we need to be as described in his post; but I do know that if we don't find a way quickly a lot of us will not make it. I truly believe that this is in fact the plan! "Humanely" get rid of a lot of the pesky poor people while keeping just enough to continue doing the grunt work that the wealthy wouldn't be caught dead doing. Frees up more for the top 1% and gets rid of a lot of the "waste" on subsidies to the bottom 90% . Kills 2 birds with one stone; or many of the "common" people without lifting a finger. I hope I'm wrong; but I don't believe so. Our government and most of our representatives have been bought out by the extremely wealthy and they don't even pretend to see the rest of us. I hope we can turn it around, but I also know that these people with all the power and most of the money are not going to go quietly. This will take more than a movement; it will take a lot more. I hope we're up to it.
I'm 75. I have seen this country taken over by corporations. Wall Street Healthcare ? HMOs have destroyed our affordable healthcare you used to be able to buy like car insurance. An example: an xray costs $500. The HMO gets $150 off the top (30%) to pay for CEO salaries, buildings full of people trying to deny your claim and stockholder dividends. Obviously, it serves the HMO if the xray is $1000 - then they get $300. How will prices ever be controlled ?
This really resonated with me. One of the things I've come to appreciate through studying disaster recovery is that resilience isn't just about having more money. It's about whether communities still have the capacity to build, care for one another, and solve problems together.
Redistribution matters, but so does rebuilding the local institutions, relationships, and capabilities that allow communities to meet their own needs. We've become very good at extracting value and much less intentional about creating it.
That feels like one of the deeper challenges of our time.
When I read your articles, I breathe a sigh of relief. You are able to bring nuance, detail and depth to your discussions. I have consciously lived through exactly what you are delineating when affordable housing stopped being built and money was siphoned off from every large and small asset remaining in the public sphere. You are a great teacher and I hope you will be able to influence more people. I am glad to send your posts to friends.
Identifying the problem is important, and the problem is the wealth extraction (aka rentier) model. Other people's debt is money now. Our debt if we aren't on the extraction side.
First step, eliminate debt. A jubilee. But that's only a start. What comes next is important. Change the machine from extraction to creation again. Bravo! Invest to build and create again.
This would be a lot more plausible if we didn’t have public builders struggling to build units that are cost-competitive with private builders. The only reason the end rents are ever lower than private-built is because the public subsidized the building; there is ultimately no free lunch here, though, and we can’t just build over-market-cost units forever and somehow expect the price to *go down*.
Moreover, if we DID build enough units for the market prices to go down, that’s basically asking the public to spend a lot of money and then have all that value go up in smoke.
In the housing context, the relevant cartel to defeat is NOT developers. It’s NIMBYs and homevoters.
I agree with this solution.
I also remember when the government owned its buildings-like post offices. Now the post office closest to me moves every few years since they’ve been forced to rent from private owners. All this costs a whole lot more than when the government was allowed to own its buildings, which in turn gets passed on to us.
This is broadly true and I agree we desperately need more/better housing/education/healthcare/good things, but some aspects of this scarcity are not a plot or evidence of market forces failing, but perversely result from the labor market *working* to unfortunate effect. There's a phenomenon called Baumol's Cost Disease: roughly, it explains that if some parts of the economy become more productive, it drives up costs even in unrelated sectors.
Imagine a city like San Francisco experiencing a tech boom: software is going crazy, computers are getting 100x better/faster/cheaper every few years. Anyone who is clever enough to be a high school science teacher could instead go become a web developer and triple their salary overnight. Education hasn't gotten any better or more efficient, but suddenly you have to pay more to attract and retain your teachers.
Some variation of this effect is at play in most of these sectors like healthcare or education that are not susceptible to efficiency gains and automation. The financial sector has been wildly profitable over the past four decades, and so many of the top students have flocked to finance. It costs more to hire a math teacher because so many potential math teachers are now Wall Street quants.
https://en.wikipedia.org/wiki/Baumol_effect
I don't think rising wages among teachers are driving prices higher. The finance sector is itself the problem. Why is that where the money flows? Why is the profit in automobiles in the financing and not manufacturing? Not because labor to make the car is too high. Au contraire! The money from interest and indebtedness is greater and growing. Slavery by any other means...
At least partly because it's much easier to innovate in a spreadsheet than it is to innovate in the real physical world. Making a better car is harder than tricking people into paying more for the same car by spreading out the payments.
Good point. Virtual reality of digital economy, a redefining of social relations with the stroke of a pen (or esign robosignature) is easier than building an undivided house!
I do wanna give Corbin credit for grokking that “credits” are just going to exacerbate the problem of Cost Disease Socialism.
But OTOH he perversely seems to imagine that public construction — PHIMBY — won’t get defeated by the same NIMBY machine we’re currently trying to defeat. The relevant part is the “-IMBY”, not the “PH”.
It's frustrating how many things Corbin says seem like common sense, but aren't taken as such by a lot of people. If you have lived sixty years, you've seen - or had the opportunity to see - the hope for a good future for your kids and neighbors start to disappear in real time. The extraction is obvious these days. I wish we could put advertising back to *only* telling us what is available, and where. Make coupons be coupons instead of an extractive trick. Let phones be just phones, and let people own what they buy. Regulate all things that can be harmful, especially when so many off us don't have a clue how dangerous they are.
How though? The what is easy to think up: More supply. How do we create more supply? How, Sway?
Public works programs like the CCC from the 1930s is a great place to start.
We already have those.
The problem is scale and permitting, which is hampered by scale.
We don’t have anything that scales anywhere near what we had during the new deal. Put people to work building public housing, fixing our rotting infrastructure, taking care of delayed or abandoned projects in National Parks due to GOP defunding, building high speed rail projects, green energy infrastructure, etc. But most importantly, keep these projects and assets publicly owned and not sold off to private interests.
Oops! Meant to say “permitting hampers the scale”.
Our current programs don’t scale BECAUSE of permitting. We’ve HAD programs in places like SF where they try to build “affordable” housing by the city, and it ends up costing $800k/unit because of all the NIMBYs and the permitting veto points. Even relatively permissive Vermont can’t get it done for less than $300k.
You can’t scale $800k/unit without breaking the public budget. Doesn’t matter if the public “owns” it once it’s built, it costs too much to build at scale, period.
RE infrastructure, go read Chuck Marohn’s Strong Towns book. The infrastructure crumbles because the suburban form is not dense enough to pay for itself and is a huge drag on everything else.
This is one of the better production arguments I've seen, and I agree with most of it: money without supply just relocates price. Two additions from a different angle, for what they're worth.
The tax-the-rich fixation you're describing has a specific political function, and it's not really about revenue. A target that both sides can rally around is politically useful because named targets are what drive movement solidarity. That's why the debate keeps returning to the wealth tax even after everyone involved knows it won't fix housing or health care on its own. The wealthy are targeted not due to their wealth alone, but due to the fact that their wealth has been used to skew the rules in their favor.
My other addition cuts against your frame a little. Some of what you're calling a production failure is real; more doctors, more housing units, and more capacity would genuinely help. But some of the goods on your list (the right school district, the top-tier college, the best hospital) are positional. Their value comes from other people wanting them too, not just from scarcity of supply. Build twice as many houses in a metro area and you haven't built twice as many houses in the neighborhood with the good schools, because the good schools are partly defined by who else lives there. That's not an argument against building. It's a reason building alone won't fully deflate every price you're pointing to. The issue is not solely supply; it's also the tangible things that go along with certain things like a house in a neighborhood with superior schools.
Your TVA line is the strongest part of your argument. A cash transfer doesn't build a durable political coalition, because nobody can point to it and say the government did that. A public utility, a public housing project, or a rural co-op all generate the kind of visible, attributable win that holds a coalition together past the next election. That's a large part of why redistribution politics keeps losing to production politics even when the numbers favor redistribution. People don't organize around a check. They organize around something they can see get built.
How do we convince people that the ultra-wealthy didn’t earn their wealth — that they benefited from structures that funnel money away from the public good and from worker wages? I find so many people snookered into defending the musks of this world as “successful” instead of as the exploiters and plunderers they are.
I’m fighting this on a smaller scale with Untrickled. I’m not convinced there is a more important issue than this, because it affects every other issue. EVERY issue. Economic inequality is tearing down families, robbing youth, starving elders and tearing down democracy.
Thank you, Corbin, for saying it again and again. Your message and your math keep becoming clearer!
Dean Baker used to write about how the financialization of everything is a huge part of the problem. Our financial sector used to be 3% of GDP and now it’s 20%. Banking is like trucking. You need it to have the economy functioning, but it doesn’t actually do anything. The goal should be to have it be as small as possible.
This guy, as young as he is, gets it!!! What he speaks is the truth. I don't know if we can ever get back to the place we need to be as described in his post; but I do know that if we don't find a way quickly a lot of us will not make it. I truly believe that this is in fact the plan! "Humanely" get rid of a lot of the pesky poor people while keeping just enough to continue doing the grunt work that the wealthy wouldn't be caught dead doing. Frees up more for the top 1% and gets rid of a lot of the "waste" on subsidies to the bottom 90% . Kills 2 birds with one stone; or many of the "common" people without lifting a finger. I hope I'm wrong; but I don't believe so. Our government and most of our representatives have been bought out by the extremely wealthy and they don't even pretend to see the rest of us. I hope we can turn it around, but I also know that these people with all the power and most of the money are not going to go quietly. This will take more than a movement; it will take a lot more. I hope we're up to it.
I'm 75. I have seen this country taken over by corporations. Wall Street Healthcare ? HMOs have destroyed our affordable healthcare you used to be able to buy like car insurance. An example: an xray costs $500. The HMO gets $150 off the top (30%) to pay for CEO salaries, buildings full of people trying to deny your claim and stockholder dividends. Obviously, it serves the HMO if the xray is $1000 - then they get $300. How will prices ever be controlled ?
https://davcer.substack.com/p/wha-hoppen-purchasing-power
This really resonated with me. One of the things I've come to appreciate through studying disaster recovery is that resilience isn't just about having more money. It's about whether communities still have the capacity to build, care for one another, and solve problems together.
Redistribution matters, but so does rebuilding the local institutions, relationships, and capabilities that allow communities to meet their own needs. We've become very good at extracting value and much less intentional about creating it.
That feels like one of the deeper challenges of our time.
When I read your articles, I breathe a sigh of relief. You are able to bring nuance, detail and depth to your discussions. I have consciously lived through exactly what you are delineating when affordable housing stopped being built and money was siphoned off from every large and small asset remaining in the public sphere. You are a great teacher and I hope you will be able to influence more people. I am glad to send your posts to friends.
Identifying the problem is important, and the problem is the wealth extraction (aka rentier) model. Other people's debt is money now. Our debt if we aren't on the extraction side.
First step, eliminate debt. A jubilee. But that's only a start. What comes next is important. Change the machine from extraction to creation again. Bravo! Invest to build and create again.
This would be a lot more plausible if we didn’t have public builders struggling to build units that are cost-competitive with private builders. The only reason the end rents are ever lower than private-built is because the public subsidized the building; there is ultimately no free lunch here, though, and we can’t just build over-market-cost units forever and somehow expect the price to *go down*.
Moreover, if we DID build enough units for the market prices to go down, that’s basically asking the public to spend a lot of money and then have all that value go up in smoke.
In the housing context, the relevant cartel to defeat is NOT developers. It’s NIMBYs and homevoters.