K but also he’s an idiot because treating housing like supply and demand applies to it is how we got to a place where nobody can fucking afford them because, clearly, supply and demand does not apply to things people need
It does, but it’s a reason to regulate the market. Otherwise there is minimal incentive to build affordable housing. The margins on luxury housing are just too fat. A developer is better letting half of a luxury setting sit empty than selling out affordable space. Same reason there is so little competition for affordable cars.
It’s called inelastic demand when price changes have very small changes to demand. Supply and demand are very relevant to this situation.
With inelastic demand a small reduction in supply can cause a large increase in price. When paired with something like housing where new production takes a long time to become available you end up in a rapid inflationary period with the price.
It’s a situation where owning the asset and being able to rent it greatly favors current owners who have more then their personal demand. This leads to them being able to buy more and more of the asset and continue to increase price.
The current housing situation in the US is exactly what is predicted. It’s why we used to have programs like low cost housing and first time home buyer loans and grants.
Fannie Mae becoming a publicly traded company in 1968 was the beginning of the end of an easy path to home ownership.
Yes, I am aware of how the capitalist system works. And I am aware that it is working as intended. My statement is a statement of values.
Supply and demand are relevant, but the market still doesn’t allocate resources effectively and requires regulation to prevent predatory housing prices because of said inelastic demand.
So sure, if you want to make a semantic argument, supply and demand “applies”.
Does it efficiently and effectively get housing to those who need it? Absolutely not.
My statement is a criticism of capitalism and the way it works.
In my comment what I mean by the word “apply” is that resources are allocated effectively, which they are not without heavy regulation, and at that point it is no longer the free market that is allocating the resources.
If we’re talking about efficient price discovery, it doesn’t apply to necessities. Supply and demand doesn’t just mean “Some people sell things, other people buy them”, it refers to specific emergent dynamics in markets. One of the essential parts of supply and demand is the ability of the consumer to abstain from a purchase which is more expensive than they’re willing to pay.
iPhones don’t cost $10,000 because if they did, most people wouldn’t buy them. This doesn’t work for things you need, like housing or medicine, because you can’t just choose not to buy them, no matter the cost. That removes the downward pressure that validates supply and demand curves.
In America, the housing problem is significantly contributed by over-regulations. In most areas, it is only legal to build single family homes. It shouldn’t be a surprise that we can’t build enough homes for everyone with only houses.
When i say supply and demand does not apply, I mean the basic rules of supply and demand do not apply. In most cases where the free market is effective at allocating resources, it’s because when demand increases, price increases, and when demand decreases, price tends to decrease.
The problem with things like Healthcare, housing, food, etc. Is that that demand line is a straight line. People cannot choose to not eat, or have shelter (at least most people don’t want to be homeless), or have Healthcare, so they are left with a single option: to go into debt.
Because people cannot choose not to purchase necessities, according to the supply and demand rules, and the basics of capitalist economics (charge as much as people are willing to pay), with no change in demand based on price and with no legitimate regulations, this kind of thing always results in exorbitant prices that most people cannot afford.
What I mean in one sentence: the free market is incapable of allocating resources effectively for necessities because people can’t just choose not to buy.
The whole idea behind “Supply and demand” require that “demand” can fluctuate as readily as “supply”.
Shelter does not fit the narrow confines of the econ101 S&D concept; as shelter from the elements is a necessity, and so demand does not fluctuate.
But you are correct about S&D existing in the market as it currently stands. Problem is, “the housing market” has moved fully away from a “market of shelter”. It is driven by speculators who hold vast swaths of property and treat these items as a commodity, not shelter. “Shelter seekers” compete with each other and with speculators in this “commodities market” but “Shelter Seekers” are not the driving force of demand, their demand is static.
So you’re right in the sense that supply and demand exists for the current “housing market”, but the S&D are held and driven by and for speculators, it is not a shelter seekers market.
K but also he’s an idiot because treating housing like supply and demand applies to it is how we got to a place where nobody can fucking afford them because, clearly, supply and demand does not apply to things people need
It does, but it’s a reason to regulate the market. Otherwise there is minimal incentive to build affordable housing. The margins on luxury housing are just too fat. A developer is better letting half of a luxury setting sit empty than selling out affordable space. Same reason there is so little competition for affordable cars.
Regulating the market is taking it out of the free market though, and i am a very strong supporter of that.
https://mises.org/mises-daily/children-and-rights
It’s called inelastic demand when price changes have very small changes to demand. Supply and demand are very relevant to this situation.
With inelastic demand a small reduction in supply can cause a large increase in price. When paired with something like housing where new production takes a long time to become available you end up in a rapid inflationary period with the price.
It’s a situation where owning the asset and being able to rent it greatly favors current owners who have more then their personal demand. This leads to them being able to buy more and more of the asset and continue to increase price.
The current housing situation in the US is exactly what is predicted. It’s why we used to have programs like low cost housing and first time home buyer loans and grants.
Fannie Mae becoming a publicly traded company in 1968 was the beginning of the end of an easy path to home ownership.
Yes, I am aware of how the capitalist system works. And I am aware that it is working as intended. My statement is a statement of values.
Supply and demand are relevant, but the market still doesn’t allocate resources effectively and requires regulation to prevent predatory housing prices because of said inelastic demand.
So sure, if you want to make a semantic argument, supply and demand “applies”.
Does it efficiently and effectively get housing to those who need it? Absolutely not.
My statement is a criticism of capitalism and the way it works.
I mean… It does apply though?.. It shouldn’t, but it does.
In my comment what I mean by the word “apply” is that resources are allocated effectively, which they are not without heavy regulation, and at that point it is no longer the free market that is allocating the resources.
If we’re talking about efficient price discovery, it doesn’t apply to necessities. Supply and demand doesn’t just mean “Some people sell things, other people buy them”, it refers to specific emergent dynamics in markets. One of the essential parts of supply and demand is the ability of the consumer to abstain from a purchase which is more expensive than they’re willing to pay.
iPhones don’t cost $10,000 because if they did, most people wouldn’t buy them. This doesn’t work for things you need, like housing or medicine, because you can’t just choose not to buy them, no matter the cost. That removes the downward pressure that validates supply and demand curves.
Is this not simply covered by elasticity? E.g. if housing was $50,000 a month, most people would be homeless, even if it is a “need”.
At a certain level of inelasticity, the self regulating aspect of supply and demand becomes basically irrelevant.
that is called price elasticity, google PED
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In America, the housing problem is significantly contributed by over-regulations. In most areas, it is only legal to build single family homes. It shouldn’t be a surprise that we can’t build enough homes for everyone with only houses.
That’s not the only issue either.
Yes urban sprawl is a problem and apartments would be a better use of space.
Don’t forget to reserve a few square kilometres for parking. Can’t have enough of that.
Didn’t you know? Building cities so people can get around in them easily without a vehicle is oppression
What?
You could argue it shouldn’t and myself and 99% of Lemmy will agree.
But it’s sure as shit not the current situation.
Like, people needing something is literally the whole “demand” part of “supply and demand”.
Let me explain what I mean:
When i say supply and demand does not apply, I mean the basic rules of supply and demand do not apply. In most cases where the free market is effective at allocating resources, it’s because when demand increases, price increases, and when demand decreases, price tends to decrease.
The problem with things like Healthcare, housing, food, etc. Is that that demand line is a straight line. People cannot choose to not eat, or have shelter (at least most people don’t want to be homeless), or have Healthcare, so they are left with a single option: to go into debt.
Because people cannot choose not to purchase necessities, according to the supply and demand rules, and the basics of capitalist economics (charge as much as people are willing to pay), with no change in demand based on price and with no legitimate regulations, this kind of thing always results in exorbitant prices that most people cannot afford.
What I mean in one sentence: the free market is incapable of allocating resources effectively for necessities because people can’t just choose not to buy.
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I don’t understand what you’re angry about.
The whole idea behind “Supply and demand” require that “demand” can fluctuate as readily as “supply”.
Shelter does not fit the narrow confines of the econ101 S&D concept; as shelter from the elements is a necessity, and so demand does not fluctuate.
But you are correct about S&D existing in the market as it currently stands. Problem is, “the housing market” has moved fully away from a “market of shelter”. It is driven by speculators who hold vast swaths of property and treat these items as a commodity, not shelter. “Shelter seekers” compete with each other and with speculators in this “commodities market” but “Shelter Seekers” are not the driving force of demand, their demand is static.
So you’re right in the sense that supply and demand exists for the current “housing market”, but the S&D are held and driven by and for speculators, it is not a shelter seekers market.
Removed by mod
I guess your name means nothing. Having concepts explained shouldn’t make you this hostile hahaha! What a fuggen debatelord omg 😂