We are entering a Post Scarcity Economy. A lot of fiction books write about how this plays out. Regardless of what happens a lot of economic theory becomes less relevant.
It’s just the opposite. The essential goods needed for survival: shelter is becoming more and more Scarce. 34% of millennials can’t even afford their own shelter anymore and are forced to live with parents. Those who can live by themselves are paying over 40% of their income on shelter. There’s been a pretty dramatic drop in living standards here in the US over the last several decades
The fact that we can now afford ever more borderline useless apps, clothes and electronic gadgets doesn’t help much
Housing prices are not driven by scarcity, they are driven by financialization of our economy.
There are multiple cities in England where population has decreased but house prices increased. During lockdown 700k people left London, but house prices kept going up.
The Midwest US can assure you that they've definitely already tried this. We're literally mowing down every cornfield for housing here (I'm typing this from a neighborhood with thousands of units, 90% of all buildings here were built after 2012). It never works, prices are still at an all-time high, even for units on the market 6+ months or longer.
"Just building more" alone isn't ever going to lower prices enough to make housing affordable for most, no matter how many more units you build.
You have to decommoditize housing, or stop force-preventing natural depreciation, or at least put ownership caps on it, or some other thing in addition to the construction.
You can't say it never works because your definition of "works" is completely off base.
The population is continuously growing. We must build housing as fast as it grows to just maintain parity, and even faster to reduce prices.
Saying building new houses doesn't work to lower prices is like being in a boat taking on water and after throwing a couple buckets of water overboard saying "bailing out water doesn't work" because there's still water in the boat.
Unless you ban immigration and babies, you have to build strictly faster than new people arrive. Wealthily people with multiple houses are not the driving problem behind housing shortages.
People can afford a higher price at a lower interest rate, but in aggregate they're getting just as much house for their money. Why is that bad? Perhaps because prices will collapse later when interest rates rise? It doesn't seem like an affordability problem exactly.
- A bunch are staying un-bought and remain empty. (The bottom of the market is closing in hours, the top of the market is sitting for months)
- A bunch are technically getting occupied, but buyers are having to go way beyond their means to get them. (2008-style, except it's not their fault, you have to live somewhere or die, and you can't manufacture used housing, so it's hard to fault them for taking on risky mortgages. There simply isn't cheaper options)
- A bunch are getting bought and turned into luxury rentals, and those rentals are getting occupied. (This might seem like a win, since the end result is people-in-housing, which should be a good thing. But forcing people into unaffordable rental rates permanently hollows out those people's finances, it's super unhealthy unsustainable housing strategy)
- A handful are getting bought and getting turned into illegal unlicensed hotels. (Permanent "Air-BnB-s").
- A bunch are getting bought and stay empty. (According to local realtors, "second-home" purchases are up 300% since 2019. Generally, this is wealthy or upper-middle-class coastal urbanites realizing the currency conversion between the coasts and the midwest, and using that to their advantage)
Individually none of these are the worst thing or the primary culprit. But added all together, it means that "real people buying houses to sustainably live in", is the least likely scenario for any given home on the market right now here. "Demand" is super high, but most of the "Demand" is kind of fake-demand (demand from finance, demand from investment, demand for vacation -- but not demand for housing to house people).
> Where are all the people coming from?
They aren't coming. House prices are up 250% this decade, but we've only got a ~1.5% YoY population growth rate (for our city) and a 1% population loss YoY (for our state). We aren't a major city, and we've built more new housing units than had actual new population for 5 years straight now.
But isn't this creating a house of cards? Or are we heading towards China, where there are in many cases more apartments than people and yet prices have never fallen in the last three decades.
If a large fraction of the dwellings are truly unoccupied then it is a bubble plain and simple.
If it's just a matter of out-of-state money willing to pay a high price to own houses that they can then rent out for a high price after cornering the market, then it's less clear.
Housing supply hasn’t decreased in london, but demand has.
Housing costs are driven by what people will pay, which is driven by salary, there’s always an option to not pay for housing in london - housing in Stoke is cheap, and not much further commute from Bloomsbury than say surbiton. Places like Luton are cheap and are a very respectable commuting distance, but people will pay far more for a house in Hackney
What people will pay is not driven by salaries, it is driven by how much bank will lend.
If tomorrow the banks offer a 1000-year loan you can pass on to your children, people will take it and single-bedroom apartments will cost 50 million plus.
California has a lot of cities with 70%+ single family zoning and housing prices are exploding there in terms of monthly payments for mortgages or renting.
I'm not convinced that there's been a dramatic drop in living standards in the US over the last several decades (or that, where there has been, it's not mainly a matter of individual choice).
Think about life in the USA 70 years ago:
Do we think that much fewer than 34% of 20-to-30-year-olds lived in multigenerational households? The average square-footage of new homes more than doubled between 1970 and 2015.
Certainly people spend far more on healthcare, education, and transportation now than then. But aren't those goods and services that were simply not available at all to a large fraction of the populace? 10% rather than 30% of people went to college. Most conditions for which people seek medical treatment now probably went untreated.
So many people in 1950 eked out their existences living in a multigenerational house with a single bathroom and no car. Never traveling out of state or experiencing middle-class city culture. Walking a mile to work or performing farm labor more than 8 hours a day. The world is very different today, but it's not at all clear to me that living a comparable lifestyle is not an option for most people today.
If you believe that post scarcity is possible at all, you might consider that space colonization is also possible, but that brings about new significant requirements and needs that our economy will have to meet. Personally I think our civilization's ambition needs to expand so that happens. If we are still putting the "American Dream" as a goal when that can be built and satisfied cheaply by automation, then our goals need to change. A post scarcity economy would be able to meet today's American Dream easily and with little trouble, and yet we can't shake the mindset that you have to earn it because that makes it mean more or something.
Oh I'm not saying we force people to do space jobs or livings, only that it should wayyyyy more accessible and common than it currently is and certain sectors of the economy will need to support that. It gives us more of what we can't realistically create on Earth, which is more land.
The American dream is a challenge for people now. If we advance to where it's no longer a challenge because the pieces of that are plentiful and cheap and is given to everyone by virtue of existing, then we need a higher challenge because we've essentially "solved survival on Earth" and must now expand. IMO it's way better than just becoming an economy that focuses on producing luxuries or inventing new financial gadgets.
>Post-scarcity does not mean that scarcity has been eliminated for all goods and services, but that all people can easily have their basic survival needs met along with some significant proportion of their desires for goods and services
The premise for the linked paper, "The Post-Scarcity World of 2050-2075", that "This convergence of peaking production is likely to lead to an age of scarcity. And yet that age of scarcity is unlikely to herald the end of the world. So what lies beyond scarcity?" makes no sense to me, although I have yet to read the whole paper.
Like, yes, we are depleting the Earth of its resources, leading to scarcity, but then that will end because the Earth will be out of resources, therefore we are post-scarcity and everything is free or nearly so? No sense whatsoever.
I think I can guess what the paper is about, that technology is going to develop that will save us from exhausting resources, but we're already inching pretty damn close to various tipping points that will lead to some really terrible things happening with various ecosystems and things are going to have to get a whole lot worse (and a lot of people are going to die) before we even can attempt to go back to some sort of eventual equilibrium. And tech is nowhere close enough to saving us from a good chunk of it.
So yeah, I guess there could be a 'Post-Scarcity World', but only for the fraction of life that will survive to see it (maybe none of that life being human at the rate things are going).
What I will write probably wont be a popular opinion, but I completly disagree that we enter post scarcity.
Post scarcity perhaps exists in some richest parts of selected countries (California? Hamburg?), but even in those places it is often just an illusion. Roads still have potholes and there are homeless on streets. Schools still struggle with supplies. There are also people who work, but whose work does not allow them to get a real place to live, or health services. Then there are other things that are difficult to measure: for example overworking, or drug addiction, which perhaps dont mean scarcity of goods, but seem to be connected with scarcity of services or scarcity of quality of life.
People from the rich countries consume more natural resources than the few billion in developing, or third world countries. What happens now is already completely unsustainable and causes multiple problems: global warming, loss of natural habitats, dying species...
There are billions of people in Africa or India, who dont consume even 10% of the resources that an average American consumes - but they sure as hell would prefer to get to that level.
I imagine that it is easy to make comments about post scarcity when you live in some mega-rich bubble in California, but this is not true even for USA, not to mention the rest of the world.
People in poor countries dont have cars YET and they sure want to drive those big trucks that drink a lot of fuel per mile. But where will this fuel come from? And where does the CO2 go?
And in my opinion inflation is a result of incompetence, of planned policy by central banks to make the rich richer, while the rest to gets poorer. As much as I dont like bitcoin (multiple reasons, economical, unsustainable in real use..), it is right with one thing: the supply is known in advance and finite. We currently live in a time where money is printed out of thin air to save the too-big-to-fail banks and to pump the stockmarket prices, so rich dont lose anything. All of this at the expense of the middle class. The poor already dont have anything. And the middle class is shrinking: from one side those are the only ones who pay taxes, from other, those are the only ones who dont have real tools to defend against inflation.
I mean, of course you will write that one can gamble on the stockmarket, but weren't saving accounts supposed to be the thing for those who are risk averse? I mean, if someone from middle class gambles and loses you will write that it is their own fault. If they dont gamble - and put money on a savings account (so lose money) - also their own fault.
Currently the central banks create inflation higher than interest on saving accounts, what in my opinion is a very big problem. Since the central banks entered the cycle of bailing out bubbles, more and more money will be created: new and new bubbles will have to be bailed out.. and as I said, at expense of the middle class. Who just get screwed by inflation.
>And in my opinion inflation is a result of incompetence, of planned policy by central banks to make the rich richer, while the rest to gets poorer.
You got this backwards. The central bank is planning to make the poor richer, but as a result of incompetence inflation never hit the 2% target. If the central bank did nothing things could be even worse than they already are.
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