I'm not the first to point out that many people can earn a graduate degree in economics without actually absorbing or understanding the ideas of economics. As is often the case, Twitter (I still refuse to call the platform X) has seized on the opportunity to set an example. The subject in this case is the Irish economist Philip Pilkington, who kindly provides an example of what happens when you confuse an increase in supply with an increase in supply.
On this occasion, Pilkington tweeted Outside:
Charts you don't want your YIMBY kids to see:
There is a positive correlation between home prices and new construction. In other words, when supply increases, price increases, and when supply decreases, price decreases. OPPOSITE with YIMBY argument.
Actually, I wrote it all. post A year ago, I specifically addressed this elementary mistake, and I'll briefly summarize the points I made then.
supply, roughly speaking, refers to how much ability you have to create something. Supply refers to how much quantity sellers offer at a particular price. New construction is not an increase in supply, but an increase in supply. YIMBY does not claim that we need to increase. Quantity of housing suppliedthe argument is that we need to increase . housing supply. That means we need to increase our ability to produce more housing. In part, this could be achieved through new construction methods and technologies, such as the modular housing method described below. this post. But there is now a huge amount of low-hanging fruit to increase housing supply in the form of deregulation. That means eliminating minimum lot sizes, eliminating bans on multifamily housing, and reforming zoning laws. These changes increase the ability to build housing, meaning an increase in supply.
Absent a policy change that allows housing supply to increase, the supply curve will remain fixed. And if the supply curve is fixed but demand is increasing, the equilibrium price of housing will rise along the upward-sloping supply curve as the demand curve shifts to the right. In other words, the supply of housing increases, but in the same process housing prices also increase.
YIMBY doesn't have an argument for it. move up the fixed supply curve – YIMBY advocates the following policies: shift the supply curve. The solution proposed by YIMBY is not simply to increase the supply of housing by building more homes, but to increase the supply of housing through deregulation of the housing market. The YIMBY argument emphasizes that if the supply curve cannot shift to the right, new housing will only be built in response to increasing demand, and prices will rise increasingly. This is what we are actually witnessing.
Mr. Pilkington said that rising house prices are positively correlated with increased construction of new homes, as if he thought he was referring to something that refuted YIMBY's claims, when in fact he I don't realize what it's pointing to. This is exactly what you would expect to see if the YIMBY argument is correct. This is not just about running own goals. It's about performing a bicycle flip kick that gives the opposing team a winning point in a championship match, then breaking into a celebratory song and dance routine to perform an own goal. gangnam style Meanwhile, fireworks go off in the background.
like I did recently Said In another context, this type of mistake is easily avoidable by anyone who has taken an Econ 101 course at least once and actually retains what they learned. Unfortunately, some people go far beyond Econ 101 and still don't retain the basic concepts.