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Money Isn’t Wealth, You Dummies
Three hundred million NIMBYs, stomping on each other’s faces, forever
I want you to do me a favor: destroy your laptop. Smash it with a hammer, beat it against the countertop, whatever it takes to break it beyond all hope of repair.
I want you to do that because if enough of you destroy your laptops, then laptops will become more scare and therefore more valuable, and my laptop will be worth more. I want you to destroy your laptop so I can be wealthier.
Perhaps you think this makes me sound like a colossal, selfish prick. I would tend to agree.
And there lies the problem, because over the last fifty years, our economy has increasingly been driven by this same logic: make less stuff so the stuff that does get made can be worth more.
We’ve become a nation of supply restrictionists, and it is killing us.
A world Where Everything Is Restricted
My parents used to own a small farm. Like most farms, it produced food. Like all businesses, it would have benefited from an increase in the price of the goods it produced.
Imagine this: my parents walk into a grocery store and see that the price of food has gone up by 30%. They’re delayed at checkout because the woman ahead of them makes a fuss after her EBT card is declined for being overdrawn. They celebrate, because this means their farm is making more money.
You’d probably think, fuck those people. You’d be right to do so– nobody should be happy that one of life’s basic necessities is getting more expensive.
And yet they do. People are rightly upset when food and gas get more expensive. But housing? We’re rather ambivalent about that.
Noah Smith just wrote an article about how America has become the build-nothing country. We can’t build housing; neither can we build public transportation, or energy infrastructure, or factories. And by extension, we can’t build enough of the things that factories make, i.e. everything.
I’m glad to see someone expressing some small fraction of the rage that I feel. And it’s only a fraction, because Noah still understates the case. Unlike most anti-NIMBY articles, he connects the problem to all made goods, not just housing. But he neglects to mention services.
You need a professional license to do damn near anything in this country. In many cases this is unobjectionable– of course doctors and building inspectors should meet a high standard of training. People could die if they screw up
In other cases, most people would agree that there should be a standard, but there’s little reason to think the standard should be all that high. In California, barbers need 1500 hours, while nail care specialists need 350.
And then there’s my personal favorite: hair braiding, a skill famously mastered by millions of ten year old girls. About half of all states require a license for that. Depending on how you look at it, the big winner here is either South Dakota, which includes hair braiding in its cosmetology license– 2100 hours– or Louisiana, which requires 500 hours of training to get a license specifically for hair braiding.
The logic here is precisely the same as NIMBY logic: if fewer other people have what you have, then the thing you have is more valuable.
That’s better for you, but worse for society as a whole. Hair braiding licenses mean individual hair braiders make a little more money, but everyone else pays more for hair braiding. Excessive occupational licensing costs us at least $200 billion a year, and that was back in 2018. It’s probably more now.
What Happens When Value Is Divorced From Utility
My DSLR camera is currently sitting right behind me. For those who don’t know, that’s one of those digital camera where the lens is separate from the camera and can be switched for a different lens.
The camera is worth several hundred dollars. It is valuable for two very distinct reasons.
First, it’s valuable because I can do stuff with it. I can take photos. I can take different kinds of photos by adjusting the settings, switching lenses, attaching different lights or remote triggers for lights, or add diffusers and colored lenses to those lights. I can also look through my photos on the camera. And I can do all of this with video too, although I’ve never used it for video.
Second, it’s valuable because I have one and most people don’t. It would be less valuable if more people had one, and more valuable if fewer people had one.
These are two very different kinds of value with very different economic effects.
If my camera was more capable, it would be more valuable and I would be better off. Other people would be better off too– the people I take photos of or for, and also any other person who enjoys looking at those photos.
If cameras like mine were more rare though? It would also be more valuable, which would be good for me– but not anyone else. People would have to pay me more for my services, and and a lot of people simply wouldn’t be able to find a photographer who isn’t me. And of course, my own camera wouldn’t take better photos, although maybe they’d look better purely by comparison to other people’s photos.
The first kind of value is good for me, but also good for you, because you can benefit from my photography. The second is good for me, but bad for you– it’s nice if you can have a camera too, or at least find someone else who has one.
And herein lies the problem, because we should be focused on maximizing that first sort of value, but instead we’ve become fixated on the second.
Your Luxury Is Somebody Else’s Necessity, But That Means It’s Your Necessity Too
At this point maybe you’re in agreement with me that basic necessities like food and shelter should be cheaper, but you don’t see the issue with luxuries like cameras. To which I say, are you so sure that cameras are a luxury? They’re certainly a necessity for photographers.
Looking around my apartment, I’m hard-pressed to pick out anything that isn’t, in some sense, a necessity for many people.
Exercise equipment? Gyms and personal trainers need those.
Kitchenware? Cooks use those.
Vacuum cleaner and Windex? Maids need them.
Furniture and wastebaskets? Every workplace needs something of the sort.
Books? Every book I own is potentially useful to somebody’s professional education. Even the fantasy novels are a professional learning tool for aspirin writers.
Make fewer of them, and people have a harder time getting what they need to do their jobs.
And we’re back to talking about goods here, where the connection between supply restriction and productivity is perhaps less obvious. But remember services and occupational licensing: in that case, stopping people from working for a living is the whole point.
Sometimes these supply restrictions even cause direct harm to the very people they’re meant to protect. I live in an old, crappy building in a popular area of Hollywood. The hallway carpets are old and stained, the internet is slow, the appliances are outdated, the pool has no room for lounges and hardly gets any sun because it’s surrounded on three sides by the building, which is U-shaped.
Frankly, this building should have been torn down and replaced a decade ago– along with half the buildings in my neighborhood.
If there were fewer restrictions on building housing, more housing would be built. That would lower rents, including mine. That would mean less money for my landlord. And yet.
It would also mean that there would be more potential to increase the value of this property by tearing the building down and replacing it with something better. A taller building perhaps, with modern apartment designs, better wiring, and either a rooftop pool, or no pool and more units.
In other words, housing restrictions raise the rent, but they limit the sale value of this building. It’s not even clear that NIMBYism is good for my landlord.
In order to have more money, we’re restricting each our ability to create wealth.
Everyone Will Be Rich; Nobody Will Have Anything
I have a nightmare. Not the kind you have while you’re sleeping, but the more scarier kind that you have while you’re awake. The kind you turn over in your head, look at from multiple angles, and think yeah, something this could really happen.
In the future, everyone will have exclusive rights to one very specific thing.
One person would have the only bicycle helmet with a GoPro on it; nobody else would be allowed to put a GoPro on a bike helmet.
One person would have the only license to braid hair that is 16-24 inches long.
One person would have the only red Macbook Air.
Another person would have the only split-level home with an east-facing oak balcony on the second floor.
Everyone would have their one unique doodad. Because their doodad is unique, it will be essentially priceless. Nonetheless, they will get the value of their doodads professionally estimated, and those estimates will be very high, and everyone will be a millionaire.
Everyone will believe themselves rich because of their unique, priceless doodad. Everyone will be zealously prevent others from replicating their doodad, lest it lose its value.
Almost nothing new will be produced. Everyone will live in squalor.
I have seen our future, and it is three hundred million NIMBYs, stomping on each other’s faces, forever.