A wonderful explanation by Bryan Caplan on how building more new homes will help young Manx families:
One of the main problems with selling housing deregulation is the perception that new construction “only benefits the rich.” Rich developers of course, but also rich home-buyers. It’s easy to see where casual observers get this idea. New housing is usually nice housing, because over time technology improves and capital depreciates. Since richer people are more willing to pay the upcharge for nicer housing, the future residents of new construction are usually well-to-do.
So what do casual observers miss? They miss the big picture: People who move into new construction are moving away from older construction. When they move, those older units become available for others. While those others probably won’t be drastically poorer than those they replace, they tend to be slightly poorer. Think: “one rung down.” When these slightly poorer people move, their prior dwellings will tend to be taken over by those who are a further rung down. And so on, in a great chain reaction. Allowing new construction really does help the whole income distribution.
Since this is hard to visualize, picture a game of musical chairs. With one key difference. A normal game of musical chairs starts out with one chair per person, then subtracts a chair every turn. The result: Faster, aggressive kids push out everyone else, until the fastest, most aggressive kid wins. In my variant game, we start out with fewer chairs than people, then add a chair every turn. The result: Slower and more pacific kids start getting places to sit, until there are enough chairs for everyone.
Housing Deregulation: Reverse Musical Chairs
We see this very obviously in the case of cars. A person buys a new car, and then sells the used car to someone else (for cheaper!). These used cars circulate through the community, allowing people to get a car even if they can’t afford a fancy new car.
This is the problem with the current restrictive systems we endure here in the Isle of Man: “Faster, aggressive kids push out everyone else, until the fastest, most aggressive kid wins.” We need enough chairs for everyone, not just the most aggressive children.
