Fixing NYC’s housing crisis (and some other cities, too.)

January 16, 2015 · Posted in Economics, Government, Policy · Comment 

The housing crisis in NYC and several other cities continues unabated. We have a strange and unsettling mix of things happening that are causing and perpetuating it:

- Misguided community boards and housing preservation committees (and some NIMBYs - we have so many neighborhoods with lots of one and two story housing. Many of those should be replaced with tall apartment buildings.)

- Outdated zoning regulations

- An unwillingness to consider radical steps to fix these problems

 There are a couple of ways to alleviate this:

  1. Build higher. A lot higher.
  2. Massively increase supply.

Put in place a regulation that says all new buildings must be X stories high (20,40,60, whatever.) Along with that, include a regulation that force said buildings to fit in with the neighborhood look. UWS and the West Village here in NYC have great examples of extremely tall buildings that are not Jetson's-style eyesores.

Also put in place a regulation that says existing building that can be built higher (while keeping the existing external facade) should be. Where this isn't possible, knock it down and replace it with a building that keeps the old facade.

Change the zoning restrictions and regulations to allow the above, and supply will go up, prices will (eventually) come down, and the neighborhood looks will remain similar. Everyone gets some of what they want, and the place stays diverse, vibrant, and does not force local workers to deal with punishing commutes just so they can do their jobs.

The above applies just as much to NYC or any other large city that is holding back housing development. As per the UN:

"In 1950, one-third of the world’s people lived in cities. Just 50 years later, this proportion has risen to one-half and will continue to grow to two-thirds, or 6 billion people, by 2050. Cities are now home to half of humankind."

Some other issues:

  • many luxury apartments are built, rented/sold, and left empty. We should consider a special tax on these to help fund development.  
  • property tax reassessments can lead to higher rents. We should consider simply suspending these altogether until housing supply catches up to demand; people getting chased out of their apartment for no other reason than "the land got more valuable" should be considered completely unacceptable.
  • there still may be an unwillingness to explore ways of building housing more cheaply in the first place so that running a building on lower rents becomes economical.
  • we're still too slow to develop the subway system. It is the best in the world, yes, but it still needs serious expansion. Issues of MTA mismanagement and complaints about disruptiveness will need to be dealt with. 

Rent stabilization and control are not the answers; they are bandaids on an extremity that has been blown off. If 5-10% of apartments were empty, we wouldn't need them, anyway. Here's a policy idea: a vacancy target. "5% of apartments empty with no involuntary doubling up" sounds like a great start.  

How would a guaranteed income change the job market?

January 9, 2015 · Posted in Business, Economics, Government, Policy · Comment 

 A few things seem likely:

  • remuneration would likely improve
  • only motivated people would be left, so "pretending" to enjoy a job and all other kinds of fakery diminishes
  • artificial competition for jobs would decrease drastically
  • the ability to change jobs becomes extremely fluid on both sides of the table (with liberalized hire/fire policies [employer-side] plus a lack of worry about winding up in the street [worker-side])

This is a very large net benefit to the motivated. The sooner those who don't want to be there get to stop working, the better for the rest.

So why would remuneration likely improve? It would improve because of the reduction in the number of people in the reserved labor pool, which means lower competition for each position (currently, there are 3 people for each available job opening, as an example), which raises wages. Additionally, the existence of an alternative income stream means that you cannot use the threat of "no income" to hold wages down. Finally, these same forces will mean that "dirty" jobs will no longer be able to bank on the marginal status of potential employees to keep their wages lower - the example of the toilet scrubber (before we get toilet cleaning Roombas, of course) is a useful one. If a potential toilet scrubber can think "do I do this dirty job for only slightly more than the BI, or do I find another one?", then the wage is forced to rise if you want someone scrubbing your toilet.

Artificial competition going away is important, because it reduces the "fake" demand for positions; those that would rather not be there won't, which takes the pressure off that position (reducing its perceived scarcity/value.) This has both the above-described wage effects, and a cultural effect: you no longer have people pretending that they want a job, lying to get jobs, inflating their resumes, gladhanding, etc.People who are very competitive and people who care a great deal about quality should be completely behind these policies; it's only upside for them.

We would get to experience a truly voluntary job market; you're only there if you want to be. 

The sharing economy, and policy non-response

January 5, 2015 · Posted in Business, Economics, Government, Policy · Comment 

The Economist recently published two articles on the rise of (related, and often overlapping) trends in the world of work in the modern world. "Freelance economy", "free agent nation", the "sharing economy", and the "temp work economy" (along with a few others) are part of this basket. The advantages and disadvantages have been written about at length, so I won't go into them in depth. I think, however, that we should address what policymakers could do to accommodate these new trends.

Think of how radically different this new model would be if countries (particularly the US, obviously) had the following:

  • a guaranteed basic income
  • universal health care
  • no minimum wage (with a GBI, you do not need one)
  • hire/fire policies made completely at-will, with pretty much no exceptions, including so for workers who attempt to strike for higher wages (you do not get to demand higher wages with a GBI present.)
  • no corporate income tax; higher individual taxes / "unproductive wealth" taxes in their stead. Loopholes closed for real, instead of just with lip service.
  • untaxed, offshore accounts made illegal. Perhaps jail time for their use.
  • increased funding for tax enforcement
  • excellent worker safety and environmental protections backed by muscular enforcement.
  • low cost (and preferably remote) higher education (read more about my ideas for improving higher education)

With these policies in place, the often unstable, benefit-free jobs go from looking exploitative to perfectly acceptable. The dreams that many economists have about "perfect labor fluidity" and mobility would be possible. Job sucks? Quit. Go elsewhere. Uber not working out? Go to Lyft. Spoonrocket not doing it for you? Off to Blue Apron. Can't find another? Sit around and study new things, then go get a new job. Or don't. No more worrying about losing health care (Obamacare still does not help everyone - there's still a hole which some in the middle are slipping through, and Supreme Court decisions may significantly weaken the whole thing anyway - it's not a real UHC), winding up on the street, or any of the other traditional repercussions of job loss. "Job lock" becomes a thing of the past. In the US, we make a big deal out of being flexible and about professional reinvention. These policies make that truly possible. On the employer side, far fewer worries: no corporate taxes to think about, health care already provided, hiring/firing get even easier. 

The reality of this new world (and the policies that allow us to adapt to it) could, and perhaps should, be explicitly stated by politicians on the left, but they don't even appear to be on the radar. Something like "we realize that because of automation / better technology and new modes of business, that more and more people are going to be freelancers and sharing economy workers. With that realization, it's time to fully embrace it and give everyone a real, stable baseline via a truly universal health care system and guaranteed basic income. We have come to understand that outdated notions like 'bring back unions' or 'outlaw Uber' are not going to get us anywhere. 'Jobs for life' are dead and gone and aren't coming back, and we now accept that. Society and work will be different: looser, faster, more fluid. Rather than denying it, we're going to adapt policy to it, and America will be better for it."

Instead we're still fighting old, long dead battles and ignoring the enormous elephant in the room; the golden age is long past. Society and policy need to adapt.

Workers on tap

The future of work: there's an app for that

Reflecting on ‘Solving America’s Innovation Crisis’

January 4, 2015 · Posted in Business, Economics, Government, Policy, Politics · Comment 

This article by Alexis Ohanian supplied a prescription for some of the ills that have beset our economy, particularly with regards to 'innovation.' It also put forth some suggestions as to what workers should do with themselves in this new world in order to compete. The suggestions, in my opinion, flew far from the mark. Reflecting on it over a year later, it does not look any better. My response:

First, it's a bit confused, so let's unpack the issues within. There are really two crises, and they have some overlapping solutions, but are definitely not the same thing.

First, there are innovation issues. As Tyler Cowen goes over in his books, we've already picked much or all of the low-hanging innovation fruit, and will have to work much harder (collectively and individually) to innovate. Ohanian's statements and implications about education (which I would argue is more about knowledge, practice, and spending time actually thinking about problems and solutions, rather than formal credentials) are correct. Autodidacts are likely to be at the forefront of innovation for the foreseeable future. Those willing to focus on learning and building things for themselves will reap the gains compared to those who want to just live their lives (spend time with others for fun, party, have hobbies, and all those other things people in earlier generations were promised once they "put in their dues") will struggle. While this was probably always true, we're entering a new era of hypercompetition where (in the US at least) it'll be what divides those in poverty from those with plenty (see Autor's work for more on this.) Which brings us to the second crisis:

Jobs. In the coming decades, as we continue to automate people out of jobs permanently (turning them into Zero Marginal Product workers) those left /solidly in/ the job market will be eventually able to command much higher salaries and benefits, while the ZMPs scrape by with either a) welfare if we leave things as they are, b) live a decent life off a guaranteed basic income if we're wise enough to do that, or c) starve, if we continue to do what we've been doing for 30 years. Those on the margins will be the ones dealing with the hypercompetition and will have to work harder and harder to stay above the line. So he's right again about "they instantly show who is resourceful and who isn't—who will go the extra mile and who will coast to the finish", but not for the reasons he thinks. The way we got here wasn't some grand choice by the people, it's the result of political choices: radical deregulation (mostly a bad story), the destruction of labor unions (had to happen), automation (technological unemployment as the result, unstoppable), and as a result, a changed culture of doing more with less. He uses the term "welcomes", but aside from those who enjoy meritocracy and all its upsides AND downsides, I would guess that most do NOT welcome it. If given the choice, most would choose to bring back some semblance the Golden Age (which I believe is impossible and should not even be considered, as the landscape has changed far too much to make that a possibility.)

So there is overlap in the two stories: hypercompetition leading to people having to work harder and harder to stay alive at the margins, and low-hanging fruit being picked requiring us to work harder to innovate. The unspoken idea that if everyone works harder we will all be able to succeed and innovate is naive; working harder to _innovate_ will be necessary but not sufficient. Working harder to _succeed financially_ will only work for /some/, and as time goes by, a smaller and smaller slice of the population.

Mr. Ohanian has romanticized a (for most) tough new reality. I believe this is unwise. We should look at it clearly and with eyes wide open so we can improve the future by putting in policies that support the innovators while keeping all the jobless and medium-term future jobless people from starving; telling people that they can succeed if they only work harder and obtain more education should be considered dangerously misguided.

I received some questions about this post, which I will answer below. They are paraphrased, since I don't know if the inquirers want their words used (if you're reading this and would like attribution, please let me know.)

Are "marginal" innovators really the only safe ones? Many jobs which rely on interpersonal interaction / soft skills will probably survive, right?

Well, there are couple things here. In the medium-term, which I'm most concerned with now, I think the percentage of people with "soft skills that are still useful / necessary to employ" will shrink. It will not go to zero like cashiers or fast food cooks, but as a percentage will go down. We are seeing the very beginnings of this in certain automated fast-food experiments (the equivalent of fast-food Matire'D people) and big-box store greeters (perhaps at some time in the past they would have been stocking shelves.) So rather than having ten human shelf stockers or cooks for each greeter, it might be ten automated shelf stockers/cooks for each greeter. Here in NYC, there are supermarkets with self-checkout aisles, and only 1 human left at a register, along with 1 human left to watch all the machines. Previously it was six or seven (up until a few years ago.) I think that will be the story for more types of jobs which require those soft skills in the future. Certain types, however, will do even better than now. I outlined a few in another comment:

Marketers will become especially important, especially as the prices of many things are driven ever lower due to automation. Perhaps we'll have 2x-4x more than we do now, and even more importantly, we will start to integrate the idea of marketing into more jobs. We already see this with musicians, visual artists, etc. Everyone needing to sell themselves even today gives a glimpse into this, I think. Other soft skill jobs that will be around in the medium term: nannies, a new breed of personal assistants, personal shoppers/designers/makeup artists, and politicians (who have long ago learned the importance of forever being in "marketing mode.")

So there is absolutely room for some soft skill jobs, but not nearly the number we're used to - and these fields will also get highly competitive, which is where the marginal innovation comes in. If I'm a marketer, even a very good one, I will potentially be competing with a large number of others who have the same training as I do, are unemployed, hungry, spending their time all day working on their pitches, etc. So in this way, I am still having to innovate at the margins. I don't think that part goes away for jobs that have lowish-barriers to entry, but are still in demand.

Telling people to get an education is good, as long as we understand that it really means 'get useful skills.' A problem is that many students go to college to learn things that don't add value and are funded by student debt that may well never be paid back. Past returns from education will likely not be repeated in the future - we're already seeing this in the west, but people should at least get educated/trained in 'good' areas.

I agree with that in the abstract, but I don't think it has a long shelf life. Here's another comment where I deal with that issue:

The short answer there is that supply and demand work against that being a viable strategy. Imagine the scenarios:

  1. Everyone (for example) becomes a software developer. Number of jobs as a percentage doesn't move that much. We fill all the existing positions, and are left with a glut. Software developer salaries plummet due to the "reserve army of labor" effect. We actually already have natural experiments for this one in certain fields (all the 'janitors with PHDs', STEM grads in India (, various others, etc.) Highly unlikely in any case.
  2. Everyone TRIES to become a software developer, and many or most fail. Software developer salaries stay where they are or increase. Those people are still jobless, but now have a pile of debt from 2-3 years of schooling. Not /incredibly/ far from where we are now, but still different.
  3. The status quo continues exactly as it is, and more people wind up with useless degrees. They remain jobless and in debt.

The highly implausible way this works out positively, is that everyone somehow succeeds against all odds and actually does 1), and the number of jobs also somehow keeps pace with the graduation numbers. I think you can probably see how unlikely this scenario is.

What path would you recommend for someone who isn't technical?

For jobs of the short-to-medium term for people who want to stay away from software/hard science/robotics, I would put:

  • Nurses, Physician assistants, and medical professionals in general in remote-ish areas (rural and ex-urban US areas still have a high demand for obvious reasons, smaller cities too. Big-city medicine is tough unless you are at the top)
  • Excellent marketers / creative professionals (art directors, for example, and anyone else who is "consistently creative" / constantly reinventing - if you're the cream of the crop here, you can do well)
  • Nannies (top ones can make 150K US)
  • Physical therapists (will eventually get automated, but likely 20-30 years out)
  • Pilots and air traffic controllers (hard to get into, start with decent pay, get very good later. Will likely be automated sooner or later, though.)

Some of us were born too early

Over the past century or so, we've been separating many of the artifacts of our history that were affronts to personal liberty and autonomy: we've separated sex and reproduction (birth control); reproduction and marriage (wide acceptance of unmarried reproduction); marriage and religion (civil unions and their equivalent); sex and marriage (sexual revolution, pro-sexual freedom laws and mores); and family and personal safety and security (welfare states.) Though we do have these things, it's still very rare to find people who embrace the 'core four' types of separation in their personal lives, rather than simply being accepting of the idea that others do these things. Tolerance, not embrace.  For myself, I long ago rejected reproduction (which I consider immoral due to violation of consent theory; a logistical, financial, and time drain; stressful; and ultimately, boring); marriage (completely outmoded); family (that is, treating people specially because of their genetic distance, rather than shared beliefs, pursuits, etc. ) and religion (unnecessary at best, dangerous at worst.) 

Recently, I attempted to think of the number of people who I've known in my life who share these ideas. Who not only accept them, but live them - and are ironclad in their rejection of these things. The number is very small. Single digits. While that's my personal sample, it probably wouldn't be too large a leap to assume that the number of people out there with the same outlook is small. So why is this? Two major things come to mind, one economic, and the other social.

Reason 1: fear of the loss of non-government safety nets. Is the marginal person who would reject these things afraid of being ostracized by those that provide tacit financial and logistical support if they were to openly reject them? How many people are out there having children, getting married, pretending to like their relatives, and faking devotion to maintain a financial lifeline from their parents, siblings, or 'friends'? If society gave people real autonomy - via a guaranteed income, a real universal health care system, cheap higher education, low housing costs - how many people would choose to reject these things and pursue their own desires, devoid of any of the 'traditional' constraints? Just as the birth control pill helped launch the behaviors and culture associated with modern sexual freedom and liberalized divorce laws gave women the ability to escape suffocating marriages and pursue their own desires more easily, so too might pro-autonomy economic policies allow others held back by the need to please the holders of their implicit personal safety net to truly go out own their own.

Reason 2: fear of social ostracism. A society of autonomous, self-actualized, knowledge and pleasure pursuing individualists that are freed from the economic constraints associated with day-to-day survival sounds like a wonderful thing to me. Even after the first constraint is fixed, we'd still have another problem - the lag time between it being possible, and wide-enough acceptance that people would actually do it. Why? The marginal person might also be afraid of social rejection and loneliness - especially in places that hold very tightly to these outmoded ideas. It would likely take decades for this one to sort itself out - but just as ideas and behaviors birthed by the sexual revolution took until the 1990s / 2000s to truly become a widespread (rather than countercultural) reality, it likely would too.

Eventually, I do think we'll get there, and we'll continue to develop technologies to unshackle ourselves from other constraints (anti-aging and mind uploading would completely remove the perceived need for reproduction, for instance), but until then, we have societies still look terribly primitive in some of our eyes. Some of us were born too early.

State of things to come, medium-term-ish edition mini-roundup

Two must reads:

"Trotskyite singularitarians for Monarchism! A political speculation" by Charlie Stross

"Automation, inequality and geopolitics" by Tyler Cowen


The world is polarized, drone edition

November 18, 2013 · Posted in Government, Politics, Science and technology · Comment 

 Now that we have insect-sized assassination drones and assassination marketplaces may exist for real, we're entering a world of incredible polarization (interesting that we're seeing the same thing happen with wealth.) We're hitting double edged swords on everything in the area of drones/weapons/security. Make snooping easy, you get surveillance states / make snooping hard, dangerous groups are able to coordinate easily. Give resistance movements access to social networks, easy to coordinate resistance to despots / give despots access to social networks, easy to get propaganda out and use surveillance to monitor movements. Individuals can now have outsize power if they have the right tools (Anonymous, network security savvy individuals, attacking infrastructure, small terrorist groups) while governments have massive datasets, great surveillance tools, many people focused on this area, and lots of guns. Everyone in the middle is potentially caught in this.

We're approaching a world where a lone individual can build a drone to kill a world leader, and a world leader can kill a lone individual with a drone. Just like it's hard to put checks and balances on a nuclear state, so too is it hard to put checks and balances on a determined person with poison needle drone fleet.

Finally, Schneier's latest Crypto-gram is a must-read:

We're all going to need personal protection bubbles.

What would you pay for?

October 23, 2013 · Posted in Economics, Government, Science and technology · Comment 

 Though I write quite a lot about how jobs are disappearing, that doesn't mean there's nothing left to do. In fact, there are a large number of things that "need" doing, but where we have barely scratched the collective surface:

  • Youth preservation
  • Life extension
  • Safe, rejection-drug free artificial organs
  • "Perfect" prosthetics / regeneration technology
  • Fast/instant growing food
  • Delicious, calorie and nutrient-free food
  • Faster intra and inter-continental transport
  • Underwater breathing gel that works without side effects

What do these things have in common besides formerly being only in the realm of science fiction? They require large investments of time and cash, with little hope of immediate return. If they existed, however, plenty of people would pay for them. We've eaten the low-hanging fruit already, but as societies, still aren't prepared for the work to get the higher hanging stuff.

The failure of political gridlock

September 18, 2013 · Posted in Government, Policy, Politics · Comment 

 Our system of divided government in the US is designed as a double-edged sword: things that are useful happen slowly, but things that are dangerous are slowed (or stopped.) That's the price we're supposed to pay. When dangerous things like the PATRIOT act can pass, but useful policies like working out the debt ceiling, or updating redistribution policies to reflect modern realities have no chance, it becomes clear that our system has failed. The doubled-sword is now a "Bident", with both prongs facing us.

Guaranteed basic income and automation super link roundup

July 11, 2013 · Posted in Economics, Government, Politics · Comment 

It's finally entered the mainstream. The guaranteed basic income will have to be our transitional policy until we reach post-scarcity (and that's a long way off), and there's just no way around it anymore:

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