Housing Crises: Developers Love The Problem, Not The Solution

k_adam_smith photo by Caitriana Nicholson is licensed under CC BY-SA 2.0
The housing industry creates a distorted reflection of Adam Smith's 'perfect' economic theories.

To hear the housing industry talking about it, they are the embodiment of all that is right about Adam Smith’s economic theories. They build only to satisfy a public need. They are the supply. The public is the demand.

Leave everything alone and all the housing that is needed for everyone will be provided — thanks to the miraculous laws of supply and demand.

And if the problem of overly expensive housing has not exactly been solved today, just wait a moment. Demand will fall. Presumably all those indignant souls without the cash to buy or rent will withdraw their custom and huff their way off to live in a hollow log. Or a tent. Prices will accordingly fall, buyers will emerge from their hollow logs, and some day in the very near future, everyone will be happily housed.

It’s all based on laissez faire — leave well enough alone. Except the housing industry doesn’t. And here’s why you shouldn’t, either. All is revealed in the review of a new book in The Guardian: Fatcat Developers Created Our Housing Crisis. Here’s How To Stop Them

Yes, the article relates specifically to dishonest and disingenuous dealings in the United Kingdom housing market. Be assured that similar footprints can be found all over the cleverly rigged ‘free-market’ in many nations.

Samuel Stein looks at New York City in his recent book Real Estate City, where landowners and the development industry have taken over the public discourse on land development.1

Jenny McArthur, studying the housing market in New Zealand, identifies how public programs and policies allow a small group to extract excessive profits. Similar to the Guardian story, McArthur calls for policy changes to control land prices and build much more social housing. Interestingly, she also cites Adam Smith.2

Footnotes

  1. Try: Urban Planning Trapped In The Zoning ‘Solution’
  2. Try: Reviving Adam Smith

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