Dave's Daily Dose 10/19/2021
Dad Joke Of The Week
Q: How did the loafer get smoother?
A: He was thoroughly per-sueded.
Noah Smith had a good piece on the (slightly) denser future of the suburbs. And he actually built this article off a somewhat mushier but still insightful NYT piece by Conor Dougherty.
This would all seem to be of a piece with Chuck Marohn’s vision of a “Bottom-Up Revolution”. But I think the sad practical factor here is that this revolution won’t be as seamless and inflation-less as it may otherwise seem. Because, as Dougherty’s piece unwittingly illustrates, there’s a lot of inflation that’ll be baked-in to the sort of subdividing and densifying work that he profiles, and which Smith prophesies will be involved in remaking the suburbs.
To wit, the contractor Dougherty focuses on was taking single-family houses worth, say, a $1M or so (in the Bay Area), splitting them into 2-4 units each worth somewhat less (around $700k), and then selling the whole thing at a huge profit (~140%!). Great for him! And while that certainly increases overall supply in the region (4x the units at 70% the original cost), $700k is still far above any reasonable price point both nationally and regionally.
Moreover, the 140% rise in value puts ownership even further out of the reach of the middle class. Despite being described as having $700k sticker prices, those units aren’t going to be sold individually; someone will come along and buy the whole $2.4M complex, then rent out 3-4 of the units, depending on if they save one for theirself. And again, those 3-4 new tenants are all paying well above the national average, and aren’t doing anything to reduce the regional average. If anything, they’ll make that regional average stickier, fueling the perception that nothing’s actually changing.
If you really want to impact affordability, you’re going to have to flood the market with these rehabs so much that you can’t sell those 4 subunits for 70% of the price, but something closer to 30-35% — high enough for the redeveloper to profit, but low enough to bring the regional average back in line with the national average.
Now, none of that is to say these are all portents of doom. I could easily make a convincing-looking case that this is some scary road to serfdom under a future landlord class. And that’s a genuine danger. But if you’ve ever been in Queens, or in what Chicagoans call “The Neighborhoods” (IE its inner ring), you’ll see that this is a perfectly workable arrangement. I’m really just trying to call out that our goal should be to not inadvertently create inflation, and that we shouldn’t mistake “stopping the bleeding” for “curing the patient”.
On the other hand… the whole post-Great-Recession trend of foreclosures turning into rentals really does worry me.
It’s not that I have anything against renters or “being a society of renters”. I’m a renter. And most of the last several generations’ worth of NIMBY concern about renters was racial dog-whistling.
What worries me is who has been turning all those foreclosures into rentals: big banks.
It’d be one thing if we had, as a society, consciously opted to move towards something more like the Netherlands’ model1: most housing owned by a handful of government-sponsored enterprises (“GSEs”), whose sole purpose — and possibly even regulatory mandate, like the Fed’s — was to provide stability and affordability in the national market. We could easily see Fanny and Freddie, already GSEs, being converted into that role. They’d buy up much of the nation’s housing stock, allowing for more comprehensive redevelopment strategies (like the one we just discussed with Dougherty), and we’d all just rent our houses and apartments either directly from them or from a network of all the former private local and regional real-estate firms converted into management arms for Fanny and Freddie.
Now. Does any of what’s going on resemble that to you? Has there been any national debate about this besides the murmurs of a handful of financial analysts and even fewer political pundits? No. Of course not. We’re muddling in this direction the same way we muddle through practically every challenge in this era of broken government.
That’s what scares me.
People often say, “Twitter is not the real world”. And they’re right. But Facebook… is.
I’ve been mostly off Facebook for the past several years, and coming back to it now, the thing that strikes me is just how pervasive it is. Twitter’s critics rightly do complain that it’s only a fraction of the public, and mostly populated by extremists on both sides. But those same critics rarely contemplate in the same breath that the exact same potential threat they dismiss Twitter as not posing, is indeed posed by Facebook.
It’s not that they don’t criticize Facebook. They do! But to ignore that these two narratives need to be joined, is a mistake. If Twitter truly “isn’t the real world”, that directly implies that we should be paying attention to whatever “the real world” is. Which is Facebook. Facebook has a much larger swath of American society on it. And in fact, Facebook has the exact swath of American society about whom liberal pundits have been complaining for years that they don’t participate in the surveys those pundits rely upon to form their political strategy!
Again, it’s not that no one’s thinking about each individual part of the problem. We’ve all heard the complaints about Facebook propaganda, about polls’ sampling biases among “low-social-trust voters” causing them to miss the Trump surge, about algorithmic brainwashing, about trolls, and more. The problem is that no one’s putting all the pieces of the puzzle together.
Here’s a bold prediction: The next nationally successful Democratic campaign will involve repudiating the Twitterati in favor of Facebook as a strategic means of reversing the last decade’s losses among low-social-trust voters.
This, Not That: My local PD don’t go around committing much police brutality… at least, they aren’t getting huge headlines for it. What they are getting headlines for are some minor corruption cases — for instance, a couple cops got caught drinking on the job and are in the process of being prosecuted and drummed out. The annual public payroll disclosure also always sets off a mini-firestorm about cops taking ridiculous amounts of overtime, under a system by which local businesses can contract them directly thru the PD to handle things like traffic duty on roadwork sites. Bog-standard stuff!
The point of bringing this up is, considering all the alternatives on display out there, rather than blinding ourselves in the light of utopian visions, I guess I’d rather have my local cops charging sketchy overtime on public balance sheets, than being unaccountable moonlighting as security guards. And I’d rather they be keeping their ambitions small-bore and lazy, than getting themselves all amped up and shooting people of color.2
I’m not holding this up as a paragon of sanity; the Dutch are not very happy with the arrangement, and it hasn’t managed their own housing crisis very well. Rather, it’s just a putative example of an intentional reform to contrast to what’s actually happening.
Just watch. These lazy idiots are going to prove me wrong like, next week, by shooting some innocent kid. This is why we can’t have nice things.