8letters' Economic and Social Policy thread

[8letters]

I like to read and think about economic and social policy. I work that interest into my stories. I thought I'd create a thread about economic and social policy to see if others would like to discuss it

* * * THIS IS NOT A THREAD ABOUT POLITICS. DO NOT MENTION POLITICIANS OR POLITICAL PARTIES * * *

I found this article by the Minneapolis Fed interesting:
>>>>>>>>>>>>>>>>>>>>>
Who benefits from new market-rate apartments? While these new units are typically occupied by households on the higher end of the income spectrum, the chain of residential moves brought about by their construction benefits many more households. Today’s lower-priced rental housing was often the new, expensive rental housing of yesteryear. And it doesn’t take decades for new apartments to put downward pressure on rents elsewhere in a metropolitan area. New units help keep current prices down for everyone by opening up new opportunities for low- and moderate-income renters over a few short years through a chain of residential moves.

Creating the chain
Imagine that a renter named Jim moves into a brand-new market-rate apartment. A renter named Maria moves into Jim’s old unit, which is more affordable than Jim’s new place. Another renter is going to move into Maria’s old unit. The chain will likely continue to include several more units, each progressively older and more affordable. It will end when someone moves out on their own from a previously shared living space.

This process of new construction encouraging mobility across the income spectrum is one piece of a phenomenon known as filtering. Theories connecting filtering to housing affordability are generally accepted among economists. For example, economic theory predicts that housing units should be relatively more affordable when the housing supply increases, as it does when new apartments open.
:
[Economist Evan] Mast found that these chains of moves lead to apartment openings in other neighborhoods relatively quickly. He estimated that, within five years, the aggregated chain of residential moves ultimately results in about 70 new openings for renters in lower-income neighborhoods for every 100 new market-rate apartments.
<<<<<<<<<<<<<<<<<<<<<
I wish the article was clearer on exactly how chaining works. It sounds like when a 100 new market-rate apartments are opened for rent, people generally move into them from nice-but-not-as-nice apartments, which creates openings in those apartments. Over time, 30 people will move from living with their parents or a roommate into one of the vacancies created by chain apartment upgrades. Eventually, the chain terminates at apartments in lower-income neighborhoods. Sadly, the article doesn't say what happens there.

Is the vacancy rate for lower-income neighborhoods permanently lowered? I could see that quickly leading to urban blight. Any apartment complex has to keep up a high vacancy rate in order to afford maintenance and on-site support staff.

Or are apartments in lower-income neighborhoods the primary entry for people living with their parents or a roommate to get a place of their own? In that case, everyone wins (except for owners of apartment complexes).

I'd think there'd be only so much natural demand for apartments in lower-income neighborhoods. Do Minneapolis' state and local governments need to pair their push to build new apartments with a policy of bringing people into the now-open apartments in lower-income neighborhoods? Where are those people to come from? Exurbs? Rural areas? Other states? Other countries? Or should the state and local governments be buying up and tearing down apartments in lower-income neighborhoods to keep the vacancy rates up in those areas?

 

[onehitwanda]

Sir, this is a Hooters.

 

[Cagivagurl]

I like to read and think about economic and social policy. I work that interest into my stories. I thought I'd create a thread about economic and social policy to see if others would like to discuss it

* * * THIS IS NOT A THREAD ABOUT POLITICS. DO NOT MENTION POLITICIANS OR POLITICAL PARTIES * * *

I found this article by the Minneapolis Fed interesting:
>>>>>>>>>>>>>>>>>>>>>
Who benefits from new market-rate apartments? While these new units are typically occupied by households on the higher end of the income spectrum, the chain of residential moves brought about by their construction benefits many more households. Today’s lower-priced rental housing was often the new, expensive rental housing of yesteryear. And it doesn’t take decades for new apartments to put downward pressure on rents elsewhere in a metropolitan area. New units help keep current prices down for everyone by opening up new opportunities for low- and moderate-income renters over a few short years through a chain of residential moves.

Creating the chain
Imagine that a renter named Jim moves into a brand-new market-rate apartment. A renter named Maria moves into Jim’s old unit, which is more affordable than Jim’s new place. Another renter is going to move into Maria’s old unit. The chain will likely continue to include several more units, each progressively older and more affordable. It will end when someone moves out on their own from a previously shared living space.

This process of new construction encouraging mobility across the income spectrum is one piece of a phenomenon known as filtering. Theories connecting filtering to housing affordability are generally accepted among economists. For example, economic theory predicts that housing units should be relatively more affordable when the housing supply increases, as it does when new apartments open.
:
[Economist Evan] Mast found that these chains of moves lead to apartment openings in other neighborhoods relatively quickly. He estimated that, within five years, the aggregated chain of residential moves ultimately results in about 70 new openings for renters in lower-income neighborhoods for every 100 new market-rate apartments.
<<<<<<<<<<<<<<<<<<<<<
I wish the article was clearer on exactly how chaining works. It sounds like when a 100 new market-rate apartments are opened for rent, people generally move into them from nice-but-not-as-nice apartments, which creates openings in those apartments. Over time, 30 people will move from living with their parents or a roommate into one of the vacancies created by chain apartment upgrades. Eventually, the chain terminates at apartments in lower-income neighborhoods. Sadly, the article doesn't say what happens there.

Is the vacancy rate for lower-income neighborhoods permanently lowered? I could see that quickly leading to urban blight. Any apartment complex has to keep up a high vacancy rate in order to afford maintenance and on-site support staff.

Or are apartments in lower-income neighborhoods the primary entry for people living with their parents or a roommate to get a place of their own? In that case, everyone wins (except for owners of apartment complexes).

I'd think there'd be only so much natural demand for apartments in lower-income neighborhoods. Do Minneapolis' state and local governments need to pair their push to build new apartments with a policy of bringing people into the now-open apartments in lower-income neighborhoods? Where are those people to come from? Exurbs? Rural areas? Other states? Other countries? Or should the state and local governments be buying up and tearing down apartments in lower-income neighborhoods to keep the vacancy rates up in those areas?

Sorry, but I am not convinced the trickle down effect works with housing.
Lets assume that an investor owns the cheapest apartment blocks affected by others moving up.
Their propbable reaction is to hold the rents at current levels. They would accept the vacancy's, and use them as a tax write off.
There may be more vacant apartments, but they would still be out of reach for those that need them most.
At the end of the day. Anyone who invests in property expects a return.

Just my opinion. No facts to support my theory.

Cagivagurl

 

[joy_of_cooking]

I thought I'd create a thread about economic and social policy to see if others would like to discuss it

* * * THIS IS NOT A THREAD ABOUT POLITICS. DO NOT MENTION POLITICIANS OR POLITICAL PARTIES * * *

I think we must disagree on the definition of economic and social policy or of politics if you think it's possible to discuss the first without the second.

 

[onehitwanda]

Wanda's religious beliefs:

Things that trickle down: melt water, toxic waste, urine.
Things that do not trickle down: wealth.

 

[SimonDoom]

I find these issues interesting as well, but I don't think there's any way to separate "economic and social policy" from politics. It doesn't touch on the subject of writing fiction. I think the reason to avoid subjects like these in this forum is that they don't have anything to do with writing and almost invariably invite more rancor. Just look at the tone in the Politics forum.

 

[alohadave]

Sorry, but I am not convinced the trickle down effect works with housing.
Lets assume that an investor owns the cheapest apartment blocks affected by others moving up.
Their propbable reaction is to hold the rents at current levels. They would accept the vacancy's, and use them as a tax write off.
There may be more vacant apartments, but they would still be out of reach for those that need them most.
At the end of the day. Anyone who invests in property expects a return.

Just my opinion. No facts to support my theory.

Cagivagurl

Supply and demand work with housing, like anything else. If there is adequate housing supply, the one owner holding rents at a higher level will find that they have excessive vacancies and will lower their rents to match the supply.

Holding vacancies isn't something that landlords want to do, because they make no money on vacant units.

Many places have more demand than housing supply, so the cost of rent is high. Supply and demand in action again. What this does is makes people panic and people start demanding action. This is where you get things like rent control and income restrictions, and this exacerbates the problem because the supply becomes further constrained, driving rents higher.

The only real way to lower rents is to build out housing supply so that there is some amount of vacancies at any time. This doesn't mean that rents will necessarily go down, because places that are in demand will tend to have higher rents because more people want to live there. This is why rents in big cities is higher than out in rural areas and smaller cities.

 

[Voboy]

Wanda's religious beliefs:

Things that trickle down: melt water, toxic waste, urine.
Things that do not trickle down: wealth.

*cough*

Candle wax.

*cough*

 

[SouthernCrossfire]

I find these issues interesting as well, but I don't think there's any way to separate "economic and social policy" from politics. It doesn't touch on the subject of writing fiction. I think the reason to avoid subjects like these in this forum is that they don't have anything to do with writing and almost invariably invite more rancor. Just look at the tone in the Politics forum.

Agreed, including pointedly the part about inviting rancor. That and subject belong, if anywhere, in the Politics forum, not here.

 

[ElectricBlue]

Agreed, including pointedly the part about inviting rancor. That and subject belong, if anywhere, in the Politics forum, not here.

Agree. The topic hasn't got a lot to do with writing erotica.

 

[onehitwanda]

*cough*

Candle wax.

*cough*

well, it doesn't so much trickle as cause second degree burns to the labia minora.

 

[Voboy]

well, it doesn't so much trickle as cause second degree burns to the labia minora.

...I mean, to be fair, so does toxic waste. Probably.

 

[KeithD]

"policy" = politics

 

[Bramblethorn]

Supply and demand work with housing, like anything else.

Like with anything else, supply and demand works in housing to some extent, except when it doesn't. Real-world markets are messy, plagued by irrational agents, and have a variety of exciting failure modes.

If there is adequate housing supply, the one owner holding rents at a higher level will find that they have excessive vacancies and will lower their rents to match the supply.

Holding vacancies isn't something that landlords want to do, because they make no money on vacant units.

Not if they see themselves as "landlords", no. But if they see themselves as "property speculator with a sideline in landlord", finding tenants might not be a high priority. For those folk the dream is to buy a property or five, sit on them as prices go up, and then sell them at a big profit without having to do more than necessary between the buy and the sell. They might take tenants to cover the interest payments in between, but it's not the main game to them.

 

[Wat_Tyler]

I wish the article was clearer on exactly how chaining works. It sounds like when a 100 new market-rate apartments are opened for rent, people generally move into them from nice-but-not-as-nice apartments, which creates openings in those apartments. Over time, 30 people will move from living with their parents or a roommate into one of the vacancies created by chain apartment upgrades. Eventually, the chain terminates at apartments in lower-income neighborhoods. Sadly, the article doesn't say what happens there.


Actually, what happens there is one of the things that your HUD does. They have programs where money is lent and tax credits are issued to incentivize property owners/investors to renovate these units and make them available for section 8 renters and so on. Apartments are modernized with an emphasis on energy efficient lights and faucets and appliances, including HVAC, and often new doors and windows are installed and insulation is upgraded. The whole idea is to create a decent place for low income people to live and to make it economically attractive for investors to pursue as a remedy for sub-standard housing.


All of this is great in theory. Rents can be raised and the tax credits mean that the tax hit is deferred. Or the credits can be sold to produce cash to help fund the project. That gets them off the ground and functional for the first several years. Landlords, however, are notorious for putting no more shekels into keeping a place up than absolutely necessary. Low expectation tenants make that possible, too. Sadly, that nicely renovated apartment complex will likely need redoing in 12-15 years - completely. And the cycle begins again, usually under a new owner as the complex is sold.

 

[jaF0]

I find these issues interesting as well, but I don't think there's any way to separate "economic and social policy" from politics. It doesn't touch on the subject of writing fiction. I think the reason to avoid subjects like these in this forum is that they don't have anything to do with writing and almost invariably invite more rancor. Just look at the tone in the Politics forum.

In case innocent passers by are wondering which forum is 'this forum' and who all of these posters are, that would have been the Author's Hangout at the time the thread and first responses were posted and those posters are regulars there who rarely, if ever step out of there. It seems the as yet unidentified AH_Mod has sliced this thread from there and transplanted it here.

 

[MajorRewrite]

Of course supply and demand determine the price of apartments. But another factor has been overlooked: inflation.

The US population increased 8% from 2010 to 2022.

About 1.5 million housing units are built annually, which is roughly the same as the increase in population.

The US average rent increased 36% from 2010 to 2020.

Obviously something other than supply and demand pushed up rent. That something is inflation.

In response to the 2007-2008 financial crisis, the US government (and governments around the world) slashed interest rates to near zero and pumped money into the economy as fast as they could. It prevented an extended crash like the Great Depression, but “there is no such thing as a free lunch”.

The huge surge in the money supply resulted in huge surges in house prices, apartment rents, and the stock market.

Both parties contributed to this result. Trump’s $7 trillion in deficit spending fueled inflation as much as other administrations.

 

[adrina]

Of course supply and demand determine the price of apartments. But another factor has been overlooked: inflation.

The US population increased 8% from 2010 to 2022.

About 1.5 million housing units are built annually, which is roughly the same as the increase in population.

The US average rent increased 36% from 2010 to 2020.

Obviously something other than supply and demand pushed up rent. That something is inflation.

In response to the 2007-2008 financial crisis, the US government (and governments around the world) slashed interest rates to near zero and pumped money into the economy as fast as they could. It prevented an extended crash like the Great Depression, but “there is no such thing as a free lunch”.

The huge surge in the money supply resulted in huge surges in house prices, apartment rents, and the stock market.

Both parties contributed to this result. Trump’s $7 trillion in deficit spending fueled inflation as much as other administrations.

*greedflation

The majority of the increase in prices across the board has been and is corporate profiteering.

 

[MajorRewrite]

*greedflation

The majority of the increase in prices across the board has been and is corporate profiteering.

Well, no.

Investors and corporations are greedy. But they’ve always been greedy. Consistently greedy. That’s the nature of investing.

So, if corporations and investors are always greedy, then why don’t we always have inflation? We had a long period of very low inflation prior to the recent spike.

Inflation is caused by an increase in the money supply.

 

[adrina]

Well, no.

Investors and corporations are greedy. But they’ve always been greedy. Consistently greedy. That’s the nature of investing.

So, if corporations and investors are always greedy, then why don’t we always have inflation? We had a long period of very low inflation prior to the recent spike.

Inflation is caused by an increase in the money supply.

https://www.cnn.com/2024/03/11/economy/inflation-corporate-greed-biden/index.html

https://fortune.com/2024/01/20/infl...-index-producer-price-index-corporate-profit/

https://www.theguardian.com/business/2024/jan/19/us-inflation-caused-by-corporate-profits

We've always had inflation. That's why licorice is no longer a penny for a stick etc. But this is not normal inflation. This is a sky rocketing of costs that have brought windfall profits for every major industry across the board.

This is not normal.

I'd like you to connect the dots on your last statement and how it specifically addresses the reality of the windfall profits for corporations over the past couple of years. Increased money supply would essentially affect everyone equally, but it's not happening at the supply chain level.

 

[MajorRewrite]

https://www.cnn.com/2024/03/11/economy/inflation-corporate-greed-biden/index.html

https://fortune.com/2024/01/20/infl...-index-producer-price-index-corporate-profit/

https://www.theguardian.com/business/2024/jan/19/us-inflation-caused-by-corporate-profits

We've always had inflation. That's why licorice is no longer a penny for a stick etc. But this is not normal inflation. This is a sky rocketing of costs that have brought windfall profits for every major industry across the board.

This is not normal.

I'd like you to connect the dots on your last statement and how it specifically addresses the reality of the windfall profits for corporations over the past handful of years. Increased money supply would essentially affect everyone equally, but it's not happening at the supply chain level.

Agreed that prices are sticky (tend to stay up) and corporations take profits whenever they can.

But the mechanism that enabled them to quickly push up prices in the first place was inflation caused by expansion of the money supply.

Again, if greed were the driving factor, inflation would skyrocket every year because greed is unlimited and consistent.

 

[adrina]

Agreed that prices are sticky (tend to stay up) and corporations take profits whenever they can.

But the mechanism that enabled them to quickly push up prices in the first place was inflation caused by expansion of the money supply.

Again, if greed were the driving factor, inflation would skyrocket every year because greed is unlimited and consistent.

Any event which presents the opportunity to raise prices has been and continues to be exploited by corporations. Supply costs have gone down. My groceries in Florida continue to go up. This isn't fed policy - this is corporate policy. They will push it as far as they can.

Right now, greed IS the driving factor. Sometimes it may be more, sometimes it may be less. It's not like it's a straight line. But right now in American history, corporate greed is part of the fabric of our society. Likely, more so now than at any other time. Even including the robber barons and the bullshit gambling which caused the great depression. We are at the point now where people expect to be taken advantage of and fleeced by corporations. For their profit.

 

[ll74]

I always find it fascinating that inflation is driven by poor people having more money.

 

[RoryN]

* * * THIS IS NOT A THREAD ABOUT POLITICS. DO NOT MENTION POLITICIANS OR POLITICAL PARTIES * * *

....then, wrong forum?

 

[jaF0]

....then, wrong forum?

^^^^ ... vvvv

In case innocent passers by are wondering which forum is 'this forum' and who all of these posters are, that would have been the Author's Hangout at the time the thread and first responses were posted and those posters are regulars there who rarely, if ever step out of there. It seems the as yet unidentified AH_Mod has sliced this thread from there and transplanted it here.