Krugman on housing

I generally don't read Paul Krugman -- bad for the blood pressure -- and I even less often respond -- don't dignify the insults or feed the trolls. But I took a long plane flight yesterday, and the Times was all I had to read, so I stumbled across his column on housing.

After getting through the customary political barbs at Republicans (Rick Perry in this case), and snarky insults ("the habit economists pushing this line have of getting their facts wrong"), I found something almost sensible.

People, especially "middle class" people,  are moving away from New York and to California, and to Texas and Georgia. Nominal wages in Texas and Georgia are not higher. So why do they move? Answer: Real wages are a lot higher, because the cost of living is so much less. It's practically like moving to a foreign country (in  many ways!). You are earning $100,000 in the un-hip part of Brooklyn, they offer you 80,000 zingbats to move to Truckgunistan. Is it a good deal? Well, you get two dollars per zingbat, so sure!

Real wages are higher in large part because housing costs are lower. And housing costs are lower because...

high housing prices in slow-growing states also owe a lot to policies that sharply limit construction. Limits on building height in the cities, zoning that blocks denser development in the suburbs and other policies constrict housing on both coasts; meanwhile, looser regulation in the South has kept the supply of housing elastic and the cost of living low.

So conservative complaints about excess regulation and intrusive government aren’t entirely wrong,

Yup. When people want to live somewhere, you can build denser and higher -- the best answer -- you can build out -- causing a lot of transportation gridlock, long commutes, and pollution as people drive by artificially low density housing on their way to work -- or you can watch prices explode.

There is plenty more wrong in the economics of the column -- for example, "workers" aren't a homogenous lot, and "productivity" is not a constant of nature, independent of numbers or of occupation. Hedge fund managers are productive (at least by usual measurement) in New York. That does not mean that auto assembly workers will be more productive if they move back to New York. So moving everyone back to New York and California is not likely to double GDP. But it's nice to see an admission of a major problem caused by regulation.

On the second-to-last sentence, he's still going strong

It would be great to see the real key — affordable housing — become a national issue. 

Indeed it would. But faced with the inevitable, unavoidable, logically unassailable conclusion -- we need a massive liberalization of zoning laws, planning restrictions, and so forth, allowing people to build up and dense, and thereby create an immense supply of slightly used housing too as people move out into the new stuff--his political blinders just won't let him do it:

But I don’t think Democrats are willing to nominate Mayor Bill de Blasio for president just yet. 

Bill de Blasio?? That champion of free markets?  From that paragon of low-cost housing,.... New York City? Touting that well-proven, time-tested solution: more regulation, set-asides, rent control, government construction, and quotas? Just like they have in Texas and Georgia?

Well, today Grumpy got two good LOLs from the news.