Regardless of what framework you think makes the most sense, tackling the housing shortage in America is an imperative to tame the cost of living, promote community development, reduce financial stress, and even reduce carbon emissions. The only people who have any problem with making housing more affordable, in fact, are homeowners. And that’s the whole problem.
An ingenious little study from researchers Eren Cifci of Austin Peay State University, Alan Tidwell of the University of Alabama, J. Sherwood Clements of Virginia Tech University, and Andres Jauregui of Fresno State starts from the fairly obvious premise of self-interest: Homeowners want home prices, and therefore their property values, to go up. It’s a simple case of the wealth effect, and people, unsurprisingly, like to be richer. William Fischel, a former economics professor at Dartmouth, coined the term “homevoter” to describe the link between property values and local voting trends. But this paper is the first to track it at the presidential level.
The authors look at voting patterns in 87 percent of all U.S. counties across the past six election cycles, looking for correlations between home prices and vote-switching. Homeowners in counties where home prices rose in the four years before the presidential election were more likely to switch their votes toward the party holding the presidency at that time, whether Republicans or Democrats. Conversely, when housing prices plummeted, homeowner voters switched their votes away from the incumbent party.
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This is a problem for enlightened policy on housing. It’s not about whether zoning deregulation by itself is popular, or rent control. The crux of the matter is this: The population that wants higher home prices is bigger and votes at higher rates than the population that wants lower home prices. In some ways, our dysfunctional housing policies are just that simple. The easiest way to keep prices up, after all, is to mobilize and prevent the construction of new housing nearby. Contrast Tokyo, which has historically permitted nearly twice as many housing units as the entire state of California despite having a third the population and one-two-hundredth the amount of land, so rent therefore remains cheap.
By David Dayen
Today, the fine-graining of data and the isolation of consumers has changed the game. The old idiom is that every man has his price. But that’s literally true now, much more than you know, and it’s certainly the plan for the future.
“The idea of being able to charge every individual person based on their individual willingness to pay has for the most part been a thought experiment,” said Lina Khan, chairwoman of the Federal Trade Commission. “And now … through the enormous amount of behavioral and individualized data that these data brokers and other firms have been collecting, we’re now in an environment that technologically it actually is much more possible to be serving every individual person an individual price based on everything they know about you.”
Economists soft-pedal this emerging trend by calling it “personalized” pricing, which reflects their view that tying price to individual characteristics adds value for consumers. But Zephyr Teachout, who helped write anti-price-gouging rules in the New York attorney general’s office, has a different name for it: surveillance pricing.
“I think public pricing is foundational to economic liberty,” said Teachout, now a law professor at Fordham University. “Now we need to lock it down with rules.”
For decades, the most ruthless form of American capitalism centered on cost-cutting. […] The results can be seen in ruined industrial ghost towns across the Midwest, and businesses strip-mined by leveraged buyouts. But there is a tipping point to all this cost-cutting. There’s only so much fat to cut before you hit bone. The strategy eventually had diminishing returns, and without a new strategy, profits would hit a plateau. That wouldn’t cut it on Wall Street.
Enter the age of recoupment. Instead of cutting costs, the new mantra is raising prices.
Price hikes are old as dirt. But today’s companies have reinvented them. They’re using a dizzying array of sophisticated and deceitful tricks to do something pretty darn simple: rip you off.
The new tricks have fancy new names. Charging you more for less is a corporate practice known as “shrinkflation.” Revealing part of the total price up front, only to tack on all manner of ridiculous-sounding fees and service charges: Industry insiders call that one “drip pricing.” Stealing your online shopping data to predict the maximum price you would be willing to pay for your next e-commerce purchase: That’s personalized pricing. Using software to coordinate pricing with other companies to make sure they don’t undercut each other: That’s algorithmic price-fixing (or plain old-fashioned collusion). And charging you more for an item when supply is limited: That’s Jay Powell’s favorite, dynamic pricing.
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With prices rising everywhere they turned, nobody could discern which were justified by companies’ own rising costs, and which were truly excessive. Highly engineered “dark patterns,” where people are tricked into signing up or paying more, were chalked up to the way things are now, rather than something more insidious. If a price surges, if a fee is tacked onto the bill, the culprit is the economy, not the company shoving their hands into your wallet.
CEOs hardly contain their delight on calls with investors. From the CFO of the international conglomerate 3M patting their team on the back for doing a “marvelous job in driving price,” to the CFO of the largest beer importer in the United States, Constellation Brands, who promised investors the company would “make sure we’re not leaving any pricing on the table” and “take as much as we can,” to the tech CEO who copped to “praying for inflation” and doing his “inflation dance,” these corporate executives were clear on one thing: Inflation was very good for business.