Tuesday, January 8, 2008

Housing Bubbles

An idea I had a while ago is a new way of defining adulthood.  I think there should be 3 phases to life, child, adult, elderly.  You are born into childhood, then at any point you wish you could take some sort of test to graduate into adulthood.  Once in adulthood you'd have to regularly retest and whenever you failed you'd pass into elderly.  The test would have to be more than just knowledge, it'd be hard to test maturity or whatever, but you probably could figure something out.  Another issue would be if you failed once in the middle of your life you couldn't become elderly just like that, you'd have to be able to retest after a month or something, and 3 failures would be elderly.  Another issue would be people who want to stay a child. Being a child you'd be supported by your parents, and they couldn't throw you out.  You couldn't vote, or drive, or buy alcohol, but if you didn't care then you could cheat the system.

I suppose it'd also be capped how many hours you could work, like not more than 20 hours, and 5 in a day.  Then you could only get crappy jobs, and while your parents would have to feed and cloth you, they wouldn't have to give you anything extra, so you'd probably grow tired of it pretty fast. The other choice would be if you weren't an adult by say 20, you'd automatically become the responsibility of the state, and they would put you in some crazy place for special ed kids.  That would likely suck, and discourage people from taking advantage.  I'd guess parents would have the option of keeping their kids with them if they wanted, but this way the kid couldn't force the parent to support them for life.

The other end of this is that it would ends elderly rights.  It's pretty crazy that my grandmom who doesn't know what day, month or (likely) year it is, and thinks she might need a phonograph to play a dvd can vote, or drive, or do basically anything else.  Many people would agree that old people shouldn't be able to drive, but that is just a minor problem that people only complain about because they drive slow.  The real issue is that they can still vote, which is insane.

I'm also intrigued by your interest in the recent housing bubble.  Bubbles happen all the time, in every market, and housing is always a high volatility market.  I don't think this bubble was that bad, prices shot up, now they have fallen and are stagnating, thus over the long term they go up in step with inflation.  It seems to be your fear that prices could go up higher than an average person could afford.  That can't happen though, as who would buy the houses?  Regardless of what price you put on a house it's value is what will be paid for it, if people can/will only pay $200,000, and you are asking$500,000, then the value is $200k. Should is meaningless, the median income will always be able to afford a home, as long as the supply of homes is enough to cover the majority of population (or at least the demand of population that wishes to own a home). Again your use of justified is strange, there is nothing justified in a free market, just what happens. If you are selling your house, which is only "worth"$200k, but you get a buyer to give you $500k, then it is worth$500k.

You seem to favor some sort of government regulation in preventing bubbles. I am strongly against that.  Any new government is inherently bad, and you must justify the cost/benefit.  Free markets tend to regulate themselves, that is a core believe of libertarianism.  However, I differ from most liberationists in that I'll agree that not everything can just be left to the free market.  There are some natural monopolies, and some areas where we benefit from the government doing things.  With housing though, I do not think the government has any place regulating prices, not unless they reach some critical level, where people are truly living in the streets.

Lastly your statement about more efficient housing is interesting.  I assume you mean with a static sq footage, and an increasing population we must fit more people per sqft (more efficient).  However, this makes a false assumption, that we have a static sqft.  First off it's not sqft, but cuft, since we build in three dimensions (I know I'm debating assumptions that I assumed you made, but these are general assumptions I could foresee someone making).  You may say we have a static cuft though, and that only delays the problem.  However, we have an effectively infinite cuft.  We can build down to the center of the Earth, and build up to the edge of the universe.  We don't know if the universe is finite, but assuming it is, this still gives us more space than we could possibly need for at least 100 years.  Not only that but we have the ability to expand land into the oceans (which we already do), or just live in the oceans.

You may think it's silly to argue we could build infinitely upwards, but I'm sure people of the Roman Empire would have thought it absurd to consider building 1000's of feet upwards.  I know that's a lame come back, but it's not the whole point.  The point is we have unlimited space to build, it's just that the cost to build there goes up as we use it.  This is the same situation as people crying about limited natural resources.  We have plenty of oil left, it just gets harder and harder to reach.  This is why there have been reports saying we have 20-50 years worth of oil left for the last 50 years.  They mean there is 20-50 years worth that is about as easy to reach as what we are using today.  As we run out of that oil though, new technological advances, and just greater needs will drive us to use the harder to reach oil.  I think I remember reading that there is enough uranium to power the world in the ocean, but extracting it is very expensive.  The point is we will never reach a point where we run out of energy (well not until we use all the entropy in the universe), it will just get harder and harder to use.

The point of that tangent was to say that we will never run out of housing space, it will just become more and more expensive to house people.  At some point the costs of housing will get high enough so that people won't have kids, either because they can't house them, or because they can't afford kids plus housing.  This applies to all growth problems, to include food. The only issue becomes if there is a sudden decrease in the supply.  With housing this doesn't really apply, but with food it could happen.

The Katrina lawsuits are absurd.  I can't imagine any circumstances that would justify an individual from being awarded a billion dollars ever.  I didn't pay hardly any attention to any of that story, but I remember that people were pissed with the federal government.  You should already know I will say the federal government has nothing to do with hurricanes, or disasters.  Actually upon confirming that I found this, which is interesting: Article I, Section 8: "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States;"

General welfare does sound like it could include disaster relief.  It also could include health care, education, or just about anything else.  This is a common problem with the constitution, much too ambiguous.  It is pretty well known what the founders wanted to express, but they couldn't get a constitution passed that was that explicit.  Even 230 years ago politics prevented the country from getting what was in it's best interest.

Anyway, when you asked about what should be done (and you seem to have much more knowledge of the situation, as I've never heard of any of the wards), it made me think.  On one hand I want to support the free market to fix itself.  If people want to build there, let them build.  On the other hand though, it is the state's responsibility to support it's people.  If a disaster hits then the state should help them out.  With that in mind is it fair for the other people of LA to subsidies the poor choices of the people of NO?  Is it fair for the state to restrict people from living in certain areas?

I think the state should emanate domain all the land, level it all (thermonuclear weapons work well for this).  But then what?  Do they just let it go back to nature?  Do they sell it to private parties with the restriction that they pay some extra tax to support future disaster relief? Do they only sell the parts that are relatively safe, and make sure the leave system is solid first (hire some Dutch engineers)?  I think it's a decision internal to the state of LA, and it's people.  Whatever happens they have to pay for it, and they have to decide what to do.

A cap on lawsuits is another interesting topic.  Almost everything I find online deals with a cap on just medical malpractice.  I think something needs to be done, but that something is a hard thing to answer.  I don't know if a straight cap on damages is good.  First off it'd need to be so high that it would be meaningless.  Even if it were $1m (and I can think of legit reasons to sue for more than that), if I sued you for$1m because you called me stupid would still be frivolous.  One thing commonly discussed on Slashdot is to prevent a corp from suing an individual.  That would help, but a lot of the problem is individuals suing corporations, and I don't think anyone would say we should stop that.  Another interesting topic is citizens suing their government.  It's interesting because when they win the money is their own tax money.  The government will only have to increase taxes to get they money they lose, so it comes down to anyone who is taxed by the government but not in the lawsuit paying them money.  On the other hand I think it is a good way of keeping government in check, still interesting to think about.

Back to our cap though.  Something I've had in mind for a while, would be some sort of penalty for filing a frivolous lawsuit.  I'm not sure how they decide civil lawsuits now, but I think it's either in favor of plaintiff or defendant, no neutral ground.  I think if you file a lawsuit the judge should be able to decide that it was frivolous, and then you would be penalized part of your claim.  So if I sued you for $1m, then the judge could decide it was silly, and award you$100k (10%).  The problem is you don't want to discourage people from filing honest suits, so it needs to be really sure that it is frivolous.  Currently when you sue they can countersue you for expenses, which is similar, but you can only sue for what you can prove you lost.

I think that would work well, although I could still see problems.  Someone suing the government for $3 quadrillion wouldn't care if it got declared frivolous. They'd have to pay the government$300 billion, they'd just laugh and file chapter 7 (actually I think court imposed fines are exempt from bankruptcy, but have fun ever getting $300 billion out of them). Another thing I've thought about is the favor money gives you in any court. I've always found it strange that you can hire a team a lawyers in a court. The only real solution I could see to this would be to make all lawyers government employees. Lawyers probably wouldn't be a fan of this, as government pay is a bit less than the$x per hour (where x is the most absurd number you can think of) they charge now.  But it does make sense. Everyone else in the court is a government employee.  The government makes the laws, they should be best able to train someone to best understand the laws.  When you are involved in a court case, civil or criminal, both lawyers should be randomly provided by the state.  You would have the option of defending yourself.  This seems like a pretty simple idea, so I would think it has already been brought up and countered.