1. My vision of the future is indeed that the political parties will divide up the middle class into two groups of ‘beggars’ fighting each other for a bigger slice of the pie. And I agree that government interventions in the big three sectors have made things worse than they would otherwise be, but that the trend of prices increasing faster than wages would still be happening had those policies remained static, or even without them. And it’s the policy-indifferent trend, and the forces behind it, that matters.
Remember, prices of real estate are reaching for the sky in the central economic or political hubs of almost every country in the world, regardless of the huge variety of local zoning and development rules. . .
2. I think that those ‘cultural reasons’ will fade in importance, and, if anything, become mere badges and ways to signal tribal membership but without any genuine political significance. The culture war is over and the progressives won a decisive victory against traditionalist social conservatives, and we are presently observing the mopping-up operations. You may be pleased or saddened by that result depending on your perspective – and might does not make right – but it’s a fact. A lot of people are in denial about this. The once mighty force of religion in American politics was reduced to impotence and must now try to survive an era of increasingly overt persecution.
…progressivism is unique and has a special competitive advantage because of its emphasis on equality of results and willingness to use the government to intervene to achieve it.
It can claim to be a transcendent ideology and at the same time tell its ethnic and identity-group clients that disparities in life outcomes are caused by oppression and that correcting these unfair evils requires leveling which just so happens to take the form of government payments and preferences that disproportionately benefit these groups. That is, it can rationalize treating citizens differently in order to achieve social justice. The other ideologies can’t do that, they claim neutrality and prize uniform treatment and non-intervention.
Unfortunately that probably means a much more racially-conscious politics in our future on all sides.
It would be interesting to see a dialogue between these views and those of Yuval Levin in his forthcoming The Fractured Republic.
“Remember, prices of real estate are reaching for the sky in the central economic or political hubs of almost every country in the world, regardless of the huge variety of local zoning and development rules. . .”
That’s interesting – what cities have very development-friendly policies and sky-high prices?
I’m familiar with the evidence but not an expert. I tend to look at NYC/SF vs. Texas cities. Note that Dallas and Houston have added a tremendous amount of new downtown construction in the last ten years, not just in exurbs. Growing up in a suburb of Dallas, I was shocked when I returned 15 years later – it looked like downtown was twice the size! And the ads on the sides of the buildings showed mostly condos priced “from the 200s”, when condos start at over a million in SF.
The Dallas home price index is up 57% from Jan. 2000, but Chicago is only up 31%. But no one would say there are less restrictions or that it’s easier to build anywhere in the Chicago metro.
My view is that the purported correlation between local zoning rules and recent real estate appreciation trends (i.e ‘the narrative’) is greatly exaggerated. ‘Average is Over’ and network-effect phenomena apply to cities too, and that’s what’s driving the prices.
Because of this, international comparisons are more illuminating than domestic ones because people – especially in the upper half of the talent distribution – are centralizing into cities that have sector-related super-hubs which are the ‘primary producer’ anchors of the whole local / regional economic ecosystems.
It is easy to come to immediate associations for most of the skyrocketing cities in terms of the fields in which most local income is concentrated. Think of finance, government, tech, tourism, entertainment, etc.
A local university (education) with a teaching hospital (health care) can serve as the regional anchor for middle-sized cities – practically ‘company towns’ – that would otherwise quickly evaporate and become, well, what some formerly prosperous bombed-out rust-belt towns look like today.
Some cities carry on only because they are relatively geographically isolated with a relative large ‘catchment basin’ of diffusely-populated countryside they can drain of young inhabitants to work in the regional hubs of all those sectors. But still, these are only regional hubs and not the big national (or international) centers of sector activity that will eventually do the same thing to the lower-tier cities.
Handle,
Very nice post and comment.
I agree that the average is over phenomenon is real, very real. But I think it is also a creature of the current tax and regulation structure.
If governments get short changed too much on taxes, then a populist uprising might arise against tax havens and the double irish sandwich or whatever the structure, could become a thing of the past.
Consider a land value tax. The land value tax has decentralization effects beyond a certain size. Companies with an established brand value could move to smaller cities and still retain a decent talent pool. Those smaller towns would tend to become company towns, but there as well, there could be ex-employees who could start out new ventures. The bigger cities would take on the role of incubators where cutting edge work would be done and anyone who couldn’t afford the land rent would move out.
In the current structure, a talented person has very little incentive to move anywhere except the biggest city, the most central city he can afford. I believe that in a regulatory setup where the main tax is LVT and not income tax/ VAT will look different from the current scenario.
It is interesting how the housing issue is different in Washington DC than in the other problem cities. In San Francisco, New York City, Boston, etc., rent as a proportion of incomes has been rising even as incomes have risen above the national average. This is because in those cities, housing is the binding constraint, and captures the economic rents of the industries that gain value from those locations.
Washington DC has also had very high rent inflation, but there, rent has not risen as a proportion of incomes. In other words, the economic rents come from outside housing, and the incomes from those rents are used to bid up the existing housing stock. But, since housing isn’t the source of the economic rents in Washington, households simply adjust their real housing expenditures and bid up rents until they remain in the comfortable range.
Put another way, the median household in San Francisco is moving into the smallest housing unit they can stand to get access to a $80,000 labor market, and the rent of that unit gets bid up to 40%+ of their income until it is equivalent to the $50,000 job in Phoenix. In Washington, that household has an $80,000 job due to economic rents flowing through Washington, and they find the best housing unit they can that takes 25-30% of their income.
Oh, and this was a great post.
Why Handle’s notion of progressivism may fail in large heterogenous places (the EU as a whole, the USA.)
I think there’s a human behavoir dynamic about what I’ll call “we-ism” which might also be called tribalism or close identity group relations.
The most successful social democracies are noteworthy for their declared and apparently pretty real social unity. Finland, Sweden, Norway, Denmark all seem to have a lot of that. I would guess that Germany does too. France has been on a what, 200 year campaign to get all of their citizens to identify as French rather than this-that-or-the-other-thing.
And note that even Sweden has had to retrench somewhat, and all of the nordic countries are reported to be quite dynamic outside of their government sectors.
Which suggests that they are an example of the upper limit of what progressivism/socialism/oppressorism can achieve *with a very homogenous* society.
This also suggests (to me) for good or ill, that even those levels of effective social democracy cannot be reached in the US, because we’re not all “swedes” nor all “black” nor all “white” – the entire population of the US is NOT all “our people.” So just as Germans are losing patience with paying for Greek blunders, and Swedes and Germans are losing patience with mass imigration of low-value-add folks, the ability to get folks in say WA to pay much more than they do now to raise the standard of living of folks in Alabama is probably rather limited.
(Maybe Yuval/Handle debate can explain this….)
“It would be interesting to see a dialogue between these views and those of Yuval Levin in his forthcoming The Fractured Republic.”
Well, I don’t have a copy of the book, and I doubt Levin would agree to it. But let me know if this becomes a realistic possibility.
(1) I think the comment about rising real estate isn’t aimed at Dallas or Boston or Chicago, so much as Peking and Seoul and Paris and London and the like. Places where major political and economic power reside.
(2) I recall an era in which black-skinned people with college degrees routinely failed “simple” literacy tests in southern states and were ineligible to vote until the federal government intervened on a MASSIVE scale. Not that long ago, really. I am …. fascinated … by a mind set that views Jim Crow as uniform treatment and non-intervention.
But Jim Crow was government intervention in the first place (at the state and local level). I am fascinated by a mindset that can’t seem to remember that Jim Crow laws were exactly that — namely laws enacted and enforced by government.
And don’t make the mistake of assuming that a white knight federal government intervening against oppressive state and local governments is the universal or even typical pattern. The ‘Defense of Marriage Act’ was the opposite — a restrictive federal government stepping in to stamp out state-level permissiveness. And the DEA has been trying to do the same will raids on dispensaries and federal convictions in states with permissive marijuana laws.
“a mind set that views Jim Crow as uniform treatment and non-intervention.”
Whom do you believe had this mindset, that Jim Crow was uniform treatment and non-intervention? Certainly not the Democrats who supported Jim Crow in the South. To them, the Blacks were not permitted uniform treatment and neither were they left to their own devices.
2) Yeah, he is obviously talking about now. One could make the case that redistribution is exactly and only remediation.
They don’t.
“That is, it can rationalize treating citizens differently in order to achieve social justice. ”
But also, a party that can rationalize treating citizens differently in order to achieve social justice can, when one factions gains power, rationalize treating citizens differently in order to achieve ethnic/religious/racial superiority. This is especially true when those that “claim neutrality and prize uniform treatment and non-intervention” are beaten back and their values devalued by the compulsory public education, which is always a political prize.
To put it in Millennial parlance: Adulting in a democracy is hard.
I view this as less progressivism than democracy which needs not only citizens be treated equal but become equal to some extent, some more so than others, and it was never really a war, just time moving on.
“Remember, prices of real estate are reaching for the sky in the central economic or political hubs of almost every country in the world, regardless of the huge variety of local zoning and development rules.”
This is a bizarre conclusion to draw a conclusion from.
Lets say that Michigan was the only state that allowed automobile factories, what happens to the price of land in Michigan? It gets bid up quite heavily by everyone that wants to build a car in the US. An economist that argued the restrictions in the other 49 states didn’t have an impact on Michigan’s land prices would be laughed out of the room.
“The once mighty force of religion in American politics was reduced to impotence and must now try to survive an era of increasingly overt persecution.”
Seriously, won’t the whining ever stop?
Huh?
Who are the two groups of beggars?
What are those ‘cultural reasons’ that will fade in importance?
Assuming you mean progressives vs conservatives, how can you argue that this is some new effort to divide the middle class by the political parties? Or that these points of view have no genuine political significance?
You can see this dynamic in the Oscars. Even if blacks didn’t make any good movies this year, the problem isn’t the same old problems the academy has always had (they just get it wrong for all kinds of biases, mostly related to filmmaking), it is racism, or that blacks aren’t endowed with the good roles. Or, we just need more diversity just because we need mire diversity, even if the quality isn’t there and there is no identifiable cause. The problem certainly isn’t that Asians or Latinos are unrepresented.