Is it ironic, or just self-serving, that Richard Florida, the man who urged cities to attract the so-called creative class with policies that made housing unaffordable, now writes a Wall Street Journal article (link to full article for non-subscribers) arguing that “homeownership is overrated”? Pay no attention to the facts behind the curtain, which are that growth-management policies encouraged by Florida’s ideas created an affordability crisis, which led policymakers in Washington to pressure lenders to loosen mortgage criteria so people could buy overpriced homes, and that growth-management also made prices more volatile so that eventually a large share of American homeowners would be underwater.
Florida can get away with his brazen approach because most of his followers don’t understand economics well enough to follow the above train of logic. As George Mason University economist Dan Klein points out in the very next day’s WSJ, when asked if “restrictions on housing development make housing less affordable,” 60 to 70 percent of liberals and progressives incorrectly answer “no.” By comparison, only 16 percent of libertarians and less than 23 percent of conservatives said “no.”
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This raises some interesting questions. Does economic ignorance lead people to lean left? Or do progressives cultivate economic ignorance? Klein doesn’t speculate about the answer. However, I suspect that some people find economics to be more intuitive than others, and those who don’t easily understand it are more likely to be attracted by flim-flam artists such as Richard Florida.
The Antiplanner wrote:
> This raises some interesting questions. Does economic
> ignorance lead people to lean left? Or do progressives
> cultivate economic ignorance? Klein doesn’t speculate
> about the answer. However, I suspect that some people
> find economics to be more intuitive than others, and
> those who don’t easily understand it are more likely
> to be attracted by flim-flam artists such as
> Richard Florida.
I’ve no problem with Florida (or anyone else) encouraging classes of people (be they “creative” or otherwise) to move to cities. As long as he’s not making any mandates.
Having said that, it’s unfortunate that Florida is promoting rationing of land (which clearly are government mandates, and have an assortment of unintended consequences (including, but not limited to, housing unaffordability and “leapfrog” development past the counties and municipalities that try to impose strict growth management schemes)).
You don’t need a Ph.D. in economics to understand that making raw land (or developed land with desirable single-family housing on it) scarce is likely to increase the price of the land and the housing.
Oh, I think ideological statistical semantics are at play here. I bet if the question was phrased “Do you think restrictions on housing development increase property values?” the “progressives” would overwhelmingly say, “yup.”
The difference is “make housing less affordable” sounds bad 🙁 , and “increasing property values” sounds good :).
It’s not about who understands economics better, it’s about ideological football and trying to sway the outcomes of a study by both the participants and the administrators.
Antiplanner,
When a public figure like Richard Florida makes a statement like “home ownership is overrated”, that immediately makes that person suspect in my eyes in terms of being an economist. What Richard Florida did was make a normative statement about the subject of home ownership.
During the first lecture of my first, introductory Microeconomics course, our professor taught us the difference between what is normative economics and what is known as positive economics. The difference between the two is that normative economics involves making a value judgment or a statement of values, whereas positive economics involves describing and attempting to explain economic phenomena based on actual real world data. For example:
Normative economics: “I think everyone should have health care.”
or Mr. Florida’s statment: “Home ownership is overrated.”
In the case of normative economics, always ask yourself why? Why should everyone have health care, or why is home ownership “overrated”? What does “overrated” mean? In contrast, this is a statement of positive economics:
“The price of gasoline rose from $1 per gallon in 2000 to $3 per gallon in 2010.
Really? Can we show that this is true? We can look at real world data and see if this is the case. If so, then we can investigate and then discuss why this may have happened.
Another way of looking at the difference between normative economics and positive economics is by reinvoking the oft quoted definition that positive economics involves looking at what is, whereas normative economics involves what ought to be. As an end note, it was rare event during my economics education that any of my professors made a normative statement about any subject, whereas we had positive economics pounded into us everyday in class.
The Antiplanner wrote:
Does economic ignorance lead people to lean left?
I think this is not quite the correct question.
Besides studying engineering and economics, I also study personality and temperament. As a lay person studying temperament I have only wild speculation to stand on, but I believe that certain personality and cognitive traits are more likely to occur in “left leaning” individuals. If one were to determine temperament types, using either the Myers-Briggs Type Indicator (MBTI) or Keirsey Temperament Theory (KTT), of liberals, conservatives, socialists, libertarians, etc, I believe you would find significantly different temperament distributions in the different groups.
My guess is that individuals who share the Antiplanner’s temperament type have a much higher inclination to understand economics and to lean libertarian than the general public.
I believe that the majority of liberal thought leaders are intuitive feeling types (NF) and that the majority of economists are intitive thinking types (NT). They both share abstract reasoning capacities, but one type relies on emotions much more than the other. This is not to say one type is better than the other – our society depends on both types – it is intended to further the understanding of other’s points of view.
Going off of what Bennett said, capitalism is about making money. Why would someone, say a homeowner, want to devalue their home through more housing supply? They are going to want their home prices to increase and increase and increase because they’re going to make money off their initial investment (and have the option to move to a less expensive area if they choose to). It seems the individual pursuit of being a capitalist is conflicting with the overall point about housing prices being too high, which is perplexing when you think about it.
Beyond the economic side of things, people like lower housing prices until they realize that they have to turn undisturbed green fields into housing tracts. Economics doesn’t appear to be concerned with such issues that a liberal mindset is more concerned with.
Pay no attention to the facts behind the curtain, which are that growth-management policies encouraged by Florida’s ideas created an affordability crisis, which led policymakers in Washington to pressure lenders to loosen mortgage criteria so people could buy overpriced homes, and that growth-management also made prices more volatile so that eventually a large share of American homeowners would be underwater.
Do pay attention to the fact that, despite this GM assertion having numerous times been pointed out to Randal to be flawed, he continues to peddle the bullsh– assertion anyway.
—————-
The above flawed economic assertion dovetails nicely with this commenter’s incorrect assertion:
My guess is that individuals who share the Antiplanner’s temperament type have a much higher inclination to understand economics
The key being ‘inclination’. That doesn’t mean they _actually_ understand it in reality, despite their wish to be oh-so-rational. Behavioral economics shows the gaping hole in this flawed view.
DS
ws wrote:
> Going off of what Bennett said, capitalism is about making
> money. Why would someone, say a homeowner, want to devalue
> their home through more housing supply?
Who said they would?
The recession has done a great job of devaluing home prices here in my “Smart Growth”-oriented state of Maryland. I know. My wife and I own two of them.
In spite of extensive and long-running efforts to “control” growth and discourage the construction of new single-family homes in many (not all, but many) Maryland counties.
Who said they would?
Glaeser makes a big point about homeowners agitating the electeds to zone…well, everyone here knows what he agitates about. I bring it up every two weeks and the ideologues conveniently selectively forget.
Say, CPZ, what do folk say about the comparative home devaluation? Have homes dropped value less or more than, say, the CA Central Valley, Vegas, AZ, Florida, etc.?
DS
I’m new here but since the author is concerned about housing affordability, and the blog is the ANTI-planner, I assume he he ardently against all restrictive single-family only zoning laws that restrict property owners freedom to decide how many homes to build on their own land. Further I assume that he is ardently opposed to lot coverage, height, and most of all unfunded parking mandates being forced on property owners. Especially since all of these have been shown to be government restrictions that destroy the economic value of private land.
Is that the general consensus here? If so I have found some kindred thinkers!
Brian,
Mr. O’Toole claims to be against zoning, and would prefer that HOA’s enact the regulations. Also, there’s not a whole lot of consensus around here. Welcome.
-Bennett
Brian S,
As one commenter on this website, I think private Home Owner Associations are great in theory, because they don’t involve the coercive forces of the government. But in practice, it seems to me that Home Owner Associations are often insane dictatorships that bring out the worst in normal people. It is hard to find the proper balance of power between owners and neighbors.
Aaaaaaaaaaaaaaaaaaaaaaaaaa-men, bruddah (sez the guy who apparently got one of his applications to the HOA turned down this week).
DS