Re: [Pen-l] another one for David S.

["Gar Lipow" <gar.lipow@xxxxxxxxx>]

On Fri, Apr 18, 2008 at 10:20 AM, raghu <mraghu01@xxxxxxxxx> wrote:
>  No doubt subsidies and zoning laws are part of the answer. But is that
>  the whole story?
>  -raghu.

Well,a flip answer is that houses require land and they aren't making
any more of it. But like most flip answers, that is at best a half
truth. All sorts of public infrastructure investment does in fact
"create" new land - that is convert areas that no one wants to live
into areas that are desirable to live in via providing water, sewers,
fire and public service.

So I think subsidies and zoning laws and so on are more part of the
story than is even superficially apparent. Don't have time to dig it
up now, but encouraging home ownership is deeply woven into public
policy. Home ownership makes people feel richer, gives them something
to lose. I'm pretty sure that some of the data I'm not digging up
documents that people on average become much more conservative once
they own their own homes, both politically (more anti-tax, more
worried about crime hurting property values and so on) and personally
- less willing to take risks. My memory is really awful, so when I
cite without the data in front of me you have to really discount. But
I'm pretty sure I'm remembering correctly in this case.

Not saying other things don't play a part. Even if in a sense new
desirably land can be "created" by use of subsidies to turn
undesirable land into desirable land, the actual physical acreage that
can be done to is finite.
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