The price of food is a function of demand and supply. If there is a famine, price of food goes up.

This is a good thing because it ensures that food is used by the most productive and profitable citizens, right?

We have more empty houses than homeless people. Efficient market my ass.

Currently the most profitable use of land in London is building luxury apartments that are bough by Saudi and Russian billionaires who never live there or even let them out. They wait for their price to go up even more.

During covid 700,000 people left London, but real estate prices grew.

Hahaha.... someone that has never lived through an actual true food famine. (I have lived through two).

Price controls don't work, except for short term periods.... when you have a temporary disruption of few weeks (for an earthquake, weather, etc).

In long term famine, food that is price controlled disappears from shelves and almost never makes, and is resold in black markets at 3x the price (or whatever the market is).

He never mentioned price control.

> The price of food is a function of demand and supply. If there is a famine, price of food goes up. This is a good thing because it ensures that food is used by the most productive and profitable citizens, right?

Increasing food prices cause more food to be grown and food to be shipped over longer distances, lessening the impact of a famine. It also causes people to spend less on luxury foods that cost more per calorie.

> We have more empty houses than homeless people. Efficient market my ass.

Have you bought an unused home and given it to someone homeless lately? There are many that are quite inexpensive out there.

On the whole, I agree that our current housing and property market is not as efficient as it could be. One reason for this are our building codes; they raise the cost of housing making truly inexpensive homes illegal. There is definitely a lot of benefits to living in a properly–built house, but that is always going to be more expensive than a shack you built yourself on land you claimed from the wilderness at the edge of a growing population. When governments eliminate that possibility, they cause people to go homeless. I suspect that you will want to “fix” this by having the government step in and buy a house for everyone who wants one.

The bureaucracy expands to meet the needs of the expanding bureaucracy.

>Increasing food prices cause more food to be grown and food to be shipped over longer distances, lessening the impact of a famine. It also causes people to spend less on luxury foods that cost more per calorie.

Yes, this doesn't work with land.

It does in places with reasonable zoning laws. Taking a lot with one 1-story house on it and replacing it with two 2-story houses (or, say, a 4-story apartment building) is essentially "growing" new land. And higher housing prices cause people to reduce the square-footage they occupy as well.

> It does in places with reasonable zoning laws

I don't know why anyone would believe that. It doesn't even work in places with no zoning restrictions at all. Building up gets you more housing, sure, but it also costs way more cash per square foot, it inherently drives the price of all nearby housing higher.

> higher housing prices cause people to reduce the square-footage they occupy as well.

This is just "famine" being spun as a benefit. "Bread prices at $10,000 per loaf and rising is good, actually. It will help those silly obese Americans lose weight!"

There are places with extremely lax zoning laws and very high population densities where housing is still incredibly expensive.

Your point is apriorism and not supported by evidence.

The price of houses is determined by the ease (or difficulty) of acquiring debt. Not much more than that. If you want to know what the average price of a home will be in an area, simply find the average maximum mortgage that a financial institution will provide for the average income in the area.

Interest rates go down, housing prices go up.

What people are buying is not a house, but a loan. The cheaper the loan, the more they buy.

That is also true! However, in a hypothetical world where loans didn’t exist, then the effects of demand would still exist. There would be a lot of other problems in that hypothetical would though; loans are a very important tool for economic growth because in their purest form they allow someone with money to put it to good use while sharing the profits with the person they loaned it to. I think the real problem isn’t the loans but rather the government putting their thumb on the scales.

What you describe would be a healthy form of lending (lending out money you otherwise have sitting around, so it can be put to good use). Unfortunately, this is not actually how our global financial systems work.

I think most people would be shocked to learn that when a bank lends out money, they are actually “cloning” their money many times over: each dollar from their reserves actually gets loaned out multiple times over, to multiple people (such that e.g. 100 people all have claim to the same 1 “real” dollar that exists, although it’s not actually tracked that way). But because almost nobody uses physical cash any more in large quantities, no actual cash needs to be printed to cover this. Then, if/when the loan is later repaid (which again is not a physical transaction, but occurs as numbers being updated in balance sheets), the repaid “clones” get “erased” from circulation, and only the real original reserves remain [1]. The banks keep the (greatly multiplied) interest paid though as profit.

You (as a mere peasant) are not allowed to clone your money and lend/invest it out, but banks are (in fact, this is essentially what makes a bank a bank), and it’s called “fractional reserve banking”. Some argue that this is very unfair, and argue that this is actually the root cause of a lot of financial problems and wealth inequality in the world.

For example, this system inflates prices (usually starting with investment assets like land, stocks, etc. but can later trickle down and in very delayed way start to inflate food prices etc. too), due to this expansion of the money supply (commonly called “money printing” even though no actual printing needs to occur) being funneled through financial institutions and into various investment assets and derivatives.

[1] Note that in practice, the total amount of outstanding debt tends to increase over time, because old debt just ends up getting replaced/refinanced with newer debt of even larger size (e.g. due to decreasing interest rates). This creates a system where the global economy is essentially “addicted” to perpetually increasing amounts of debt. The official stance though is that central banks should be able to unwind this debt when we are in good economic health, but this is debated; for example, I don’t know of any case in modern history where overall money supply has actually been decreased without markets immediately panicking and starting to crash (after which the central banks always quickly give in and reverse course, usually re-inflating the money supply far more than even before).

This is not a good thing, because people need to live somewhere, and this is likely not the most profitable thing to do with a given piece of land.

On the contrary. Businesses need employees, and if there are fewer people living in an area then the cost of the employees goes up and the profitability of the businesses go down.

How does that in any way prove that housing is the most profitable thing to do with that land?

Starbucks in London is staffed with poor sods who travel for 2 hours from outside the city to take their shift for hardly above minimum wage.

As long as there are people willing to subject themselves to that, then Starbucks will continue to employ them. But each minute of commute you add removes more people from the pool of potential employees. The more skill the job requires, the smaller that pool will necessarily be. At some point a business will find itself unable to hire for any amount of money they can offer, and they will either go out of business or move out of the city. Then the companies that don’t need much skilled labor, such as Starbucks, will either close down most of their locations, or open them elsewhere. The result will be less demand in the city center, and more elsewhere.

You could accelerate this by making employers pay for time spent commuting to and from work, but that will not be a panacea; it will eliminate some jobs that people rely on. The person in your example might end up completely unemployed, and given the choice they might prefer to commute for four hours per day than to be completely unemployed.

"As long as there are people willing to subject themselves to that, then Starbucks will continue to employ them"

Historically some people sold themselves into slavery, should we bring back the good old days?

Also, how does any of this prove that having people travel 4 hours a day is economically productive?

No, it’s relatively easy to prove that all forms of slavery, even voluntary ones, are less efficient than simply paying wages. This is because it removes the capacity for future choice. An employee in a low–paying job today can leave for a new opportunity whenever one appears, a slave or an indentured servant cannot. Societies which use slaves or indentured servants will have less economic success over the long term than ones without.

> Also, how does any of this prove that having people travel 4 hours a day is economically productive?

It’s manifestly more productive than being unemployed. It might be a bad enough job that you can barely tolerate it, but that’s better than starvation. An employer whose employees are this close to the edge is taking a very large risk. If any alternative opens up, or if the job conditions get any worse, then they will suffer fatal turnover. They’ll either have to pay higher wages or improve conditions (or both) to survive, or their competitors will do it for them.

Well blame it on London for not building more housing and having ornery zoning laws not on Starbucks

Minimum wage is a distortion of the market. Without that, this Starbucks would have to pay a higher wage than a Starbucks in a cheap-housing area.

For jobs that pay above minimum wage, that's what already happens.

You're saying that minimum wage is somehow providing a ceiling? This is nonsense. It's a distortion in that if Starbucks was allowed to, Starbucks would pay less, not more. If they had to pay more to attract employees, they would pay more -- nothing's stopping them from doing that today. The fact that they're paying minimum wage means that the clearing price for Starbucks labor is at or below the floor already!

If the minimum wage were lower, then the Starbucks could open a store 2 hours away from the city. The employees there would earn less than the employees in the city, but they wouldn’t have to commute two hours each way either. As it is, the customer base in that location outside the city cannot support the minimum wage that Starbucks is required to pay. (Not to mention all of the other costs that Starbucks has; wages are not the only factor that keeps them out of small towns and villages. Starbucks is really a luxury product compared to an inexpensive coffee machine.)

Yes, but that would mean the employees that work at this out-of-the-way location would be paid less than the city centre, not that those in the centre would get paid more. The issue is that even in the city centre, the labor clearing cost isn't high enough to afford for its employees to live in the city centre. If its employees were paid less, they would have to live in even more undesirable locations -- and there is a floor on how bad living conditions can be, so a rural Starbucks' labor clearing cost would be below what would be required to live anywhere.

That’s only because of a _different_ distortion in the market . Both of them were created by the government in the name of helping people, but it should be fairly clear that all they really do is hurt the very poorest people.

I certainly agree that it would be nicer if everyone could live in as nice a house as they wanted, located in as nice a place as possible, and if they could always eat all the food they wanted without regard for prices. We should aim as much as possible to build our world along those lines. But we must also recognize that it will only happen once we’ve built a Dyson swarm so that we have enough energy that it can be given away, and we’ve developed actual Star–Trek–style replicators (using nanotechnology, most likely, rather than teleportation) that produce as much food as people want without consuming any time or effort on the logistics of growing, preparing, shipping, and preserving food. But most everyone would still want to live in the big city, so land prices would still be a factor.

On the other hand, with a growing Dyson swarm we can start making as many O’Neil cylinders as people want. Even so, there will always be some places that are popular and crowded, and others that are almost empty and peaceful.

Even in novels like the Culture series, where free energy and free living space abound, there is still scarcity and economics. You might have heard of a really great place to live on the other side of the galaxy, but do you really want to pay the price of moving there? Sure, you wouldn’t have to buy any property there, or pay someone to move your stuff (in these books anyone can just hop on the next passing space ship and make their way to wherever they want to go, because those ships can house millions or billions of people.) But you would still have to pay the cost of the travel time, potentially years of it. You would eventually lose contact with the friends you have, and the place you grew up. All of these things are scarce, and it will cost you some or all of them to move across the galaxy. It would be nice to live in a civilization where those were the only costs, but it’s important to recognize that we haven’t built it yet. We can’t just legislate that people are not allowed to be poor until after we’ve eliminated the scarcity of physical goods.

You're conflating minimum standards of living (a room to sleep in, food to eat, clothes to wear) with an end to all scarcity with maximum consumption. We actually don't need that much. The USA absolutely produces enough to feed, clothe, and house everybody -- we've simply decided that the market is more important than doing so. It's nonsense. Make sure everybody is fed, clothed and housed first to a minimum standard, then if you want to have wealth accumulation, fine, if you must.

Minimum wage provides a floor function to make sure people can at least maybe put a roof over their head and food on the table. The market fails quite often because all the true power is in the hands of the 0.1% the only counter balance is either democracy or rebellion because those actually allow regular people to have a bit of power in what goes on in a given economy.