Phil makes a pretty basic mistake of reasoning in his post, namely, that the high income residents of the proposed new housing move to SF if and only if the new housing is built.
The reality is that 84% of the residents of new buildings already live in SF (so they’re already spending money in SF etc.) That’s from the SF Controller’s office. Not to mention, no one moves only because they see that a new building is finished. They move for work, or family.
I’m one of the founders of the YIMBY movement in the Bay, so it’s my job to write refutations of essays like Phil’s.
Here’s the response from Trauss:
Last week Phil wrote a post [http://statmodeling.stat.columbia.edu/2017/05/14/whats-deal-yimbys/] and a follow up [http://statmodeling.stat.columbia.edu/2017/05/17/nimbys-economic-theories-sorry-not-sorry/]. He says he’ll “post again when I can figure out whether or not I really am completely wrong.”
The question is, wrong about what?
A few years ago I had a roommate who brought home a giant rabbit to live with us and the cat, Marmalade. We put the two creatures together wondering what would happen. The rabbit was as big as the cat, would the cat nonetheless chase the rabbit? Answer: No. Marmalade was disgusted by the rabbit. The cat crept around the rabbit at a safe distance, horrified but unable to look away from what was apparently the ugliest cat Marmalade had ever seen. The rabbit, on the other hand, did not recognize Marmalade as a living creature at all. The rabbit made no distinction between Marmalade, a throw pillow, or a balled up sweatshirt, which alarmed Marmalade highly as long as they lived together.
Marmalade was missing critical information that he would have needed to understand what he was seeing. There was nothing wrong with the rabbit at all, it was a normal giant rabbit. Marmalade thought there was something inexplicable about the situation because he started with the wrong assumption.
Likewise, Phil’s question about YIMBYs was sincere. After meandering through a mental model of how population & rents interact, he got to his point,
“Given all of the above, … Why are these people promoting policies that are so bad for them?”
The answer to “why are people promoting policies that are bad for them?” Is always the same thing – the asker has wrong or missing information about the constituency’s (1) material conditions, or (2) values or goals, or else he doesn’t understand the policy proposal or how it works.
Another clue that a question is ill-formed is if it leads an otherwise intelligent person to a self-contradictory or incoherent answer:
…So this is my new theory: the YIMBY and BARF people know that building more market-rate housing in San Francisco will make median rents go up, and that this will be bad for them, but they want to do it anyway because it’s a thumb in the eye of the “already-haves”, those smug people who already have a place they like and are trying to slam the door behind them.”
So the answer to Phil’s question lies with him, not with us – Which of the assumptions Phil made were wrong?
Basically all of them.
The first bad assumption was about the goal of the YIMBY policy program. Phil got the idea somewhere that our policy goal has a singular focus on median rents, in San Francisco. It’s never been true that our focus was only on San Francisco. One of the interesting things about our movement is that we encourage people to be politically active across city and county boundaries. When I started SFBARF in 2014, I lived in West Oakland. My activities were targeted at San Francisco, and I started the club specifically to protect low rents in Oakland.
It’s also not true that that we would measure our success by only or primarily looking at the median rent. Ours is an anti-displacement, pro-short commute & pro-integration effort, which means the kinds of metrics we are interested in are commute times, population within X commute distance of job centers, rate of evictions, vacancy rate, measures of economic & racial integration in Bay Area cities, number of people leaving the Bay Area per year, in addition to public opinion data like do people feel like housing is hard to find? Do people like their current housing situation? If we do look at statistics about rent, median is a lot less interesting than standard distribution.
Prices are a side-effect, a symptom, a signal of an underlying situation. In California generally and the Bay in particular the underlying housing situation is one of real shortage. What is the unmet demand for housing in the Bay? Do 10 million people want to live here? 20 million? Who knows, we can only be sure at this point that it’s more than the 7 million that do live here.
Because the way we distribute housing currently is (mostly) via the price mechanism, the way most people experience their displacement is by being priced out. But distributing housing stock by some other method wouldn’t solve the displacement problem.
Suppose the total demand for housing in the Bay is 20 million people. Currently we have housing for about 7 million people. If we distributed the limited housing we have by lottery, 13 million people would experience displacement as losing the lottery. If we distributed it via political favoritism, people’s experience of displacement would be finding out their application for housing wasn’t granted. Either way it doesn’t matter. If 20 million people want housing, and you only have housing for 7 million of them, then 13 million people are out of luck, no matter how you distribute it.
[If you want to get a really intense feeling for why prices are a distraction, I recommend learning to prove both of the welfare theorems. [http://www.u.arizona.edu/~mwalker/05_Pareto%20Efficiency/WelfareTheorems.pdf] Spend some hours imagining the tangent lines or planes attaching themselves to the convex set, then imagine the convex set ballooning out to meet the prices. Then read Red Plenty.]
Phil believes in induced demand, that feeding the need for housing will only create more need for housing. I don’t think this is true but I also don’t think it matters. The reason I don’t think it’s true is that if regional economies worked like that, Detroit, St. Louis, Baltimore, Philadelphia would not exist in their current state. How can induced demand folks explain either temporary regional slowdowns, like the dot com busts, or the permanent obsolescence of the rust belt? The reason I don’t think it matters is that continuous growth in the Bay Area doesn’t sound like a bad thing to me. The Bay would be better, more livable, a better value with 20 million or more people in it.
The reason the YIMBY movement exists, in part, is that the previous generation of rent advocates were singularly obsessed with prices, like Phil is. They thought, ‘if only we could fix prices, our problem would go away,’ so they focused on price fixing policies like rent control & were indifferent or actively hostile to shortage ending practices like building housing. In fact, hostility to building new housing, and insistence that prices alone should be the focus of activism are philosophies that fit nicely together. The result, after almost 40 years, is that prices are worse than ever, but population level hasn’t changed very much.
So the first answer to “What’s wrong with Phil?” is that Phil thinks prices are the primary focus of our activism, when in fact allocations are what we are interested in.
The second and third problems with Phil are assumptions he made in thinking through his toy model of the SF housing market. This chain of reasoning purports to show that building more housing in SF increases median rent in SF (but decreases it in other parts of the Bay). This is the reasoning that led Phil to think YIMBYs are pursuing policies with outcomes that are counter to our own interests. Of course, as explained above, Phil fully identified “our interests” with “SF median rent” which was already wrong.
The biggest problem with Phil’s model is “…for better or worse I am assuming, essentially axiomatically, that building expensive units draws in additional high-income renters and buyers [to San Francisco] …” who would not have lived there otherwise. The second problem is he imagines that all of their disposable income would be new to the City. Whether these assumptions are actually true or not has a huge impact on the conclusion Phil reaches.
It happens all the time that people make axiomatic assumptions about things they think they can’t know, in order to eventually reason to the outcome that they want. This is a perfectly fine activity, but reasoning from a guess about a state of the word, to the outcome one already believes isn’t social science. It’s rationalization.
Whether N new housing units actually results in N new high income people spending new disposable income in San Francisco is an interesting research question. I would love for Phil to pursue it. I would recommend talking to demographers, economic planners and econometricians.
If pursuing the data seems too labor intensive, then Phil can try to assume the opposite of his axiom about the necessary demographics of population growth, and see if he can still reason to his desired conclusion. If he can, that result should be published at Berkeley Daily Planet, which is a blog for anti-housing ideology.
Alternately, Phil could abandon this particular line of investigation altogether because it’s not relevant to the initial question. We’ve already established that prices aren’t the fundamental focus of YIMBY activism, and Marmalade wasn’t looking at a grotesque cat, but an ordinary rabbit.
I hope you feel your mystery is solved Phil. Next time you have a question you should ask your local YIMBYs at http://eastbayforward.org/.
In my own neighborhood in NY, I’m a yimby: a few months ago someone put up a flyer in my building warning us that some developer was planning to build a high-rise nearby, and we should all go to some community board meeting and protest. My reaction was annoyance—I almost wanted to go to the community board meeting just to say that I have no problems with someone building another high-rise in my neighborhood. That said, much depends on the details: new housing is good, but I do sometimes read about sweetheart tax deals where the developer builds and then the taxpayer is stuck with huge bills for infrastructure. In any particular example, the details have to matter, and this isn’t a debate I’m planning to jump into.
P.S. The cat picture at the top of this post comes from Steven Johnson. It is not the cat discussed by Trauss. But I’m guessing it’s the same color!