[eatsyourtacos]

>When supply is less than demand, prices go up

Question though... why, exactly does that have to be the case? Especially with something like housing where say there is mostly a fixed supply at any point and you can't just turn a machine on/off to produce more.

The only reason the prices go up is because of greed basically- because people say "hey I can just charge more and people will pay more!". And there in lies the bullshit of the free market once again. It always benefits the people with money, who can afford to pay that amount more "just to get what they want".

The last few years in particular have made me so tired of hearing about people talk about supply & demand like it is some unarguable hard scientific fact. It's not even close to that. It just represents how much people like to price gouge because "they can"

>Those price increases incentivize builders to increase the housing stock (which subsequently lowers prices). Capping prices prevents the price mechanism from working, leaving a shortage of housing.

And the following part of this is also just more bullshit. I'm not saying you are "wrong", but you say it as if that is how things have to work and there is no other alternative.

Every word of what you said is based on greed and squeezing the most you possibly can from people. Please realize that.

[ElevenLathe]

I largely agree, but if there is a scarce good (where there is less of it available than people want -- i.e. supply is less than demand) then we have to ration it /somehow/. The American way is by bidding up the price, so whoever is willing to pay the most money gets it. The Soviet way was by queuing, so whoever gets in line first gets it. We could also do it by lottery. We can come up with any number of schemes and most of them are "fairer" than market pricing, but they do all involve the "price" going up in some sense. Either you pay more in money, or in time, or in luck, but the price has increased because there are more people chasing the stuff than there is stuff to chase.

[ponow]

Very nice description. No free lunch.

[nickles]

> Question though... why, exactly does that have to be the case? Especially with something like housing where say there is mostly a fixed supply at any point and you can't just turn a machine on/off to produce more.

Supply/demand is a basic tenet of economics. You can visualize the model with supply/demand graphs [0], which help make the model more intuitive.

The issue of the fixed supply is known as 'stickiness'. Most things in the economy lag policy, and data that we use to observe the economy also tends to lag. This is why it's really bad to have poorly designed policy; course correction is difficult, and people are hurt in the meantime.

> Every word of what you said is based on greed and squeezing the most you possibly can from people. Please realize that.

It could be fun to channel Gordon Gecko, but I disagree that this is about greed. I care about well designed economic policy because I care about people's well-being.

[0] https://www.edrawmax.com/article/supply-and-demand-graph.htm...

[charliea0]

Well demand rising is an abstraction for relative balance between buyers and sellers of a good.

Say there’s one free apartment in NYC and two marginal buyers submit bids: Alice and Bob. If Alice offers $1000/month and Bob offers $1200/month, then Bob gets the lease. The marginal rent is $1200.

If another apartment is built then Alice leases it and the marginal rent is $1000. Similarly, if a new buyer Charlie enters the market and bids $1500 then $1500 is the marginal rent.

The number of people with apartments depends only on the number of apartments built. Which buyers get apartments depends on their relative ability to pay. The price depends on what the marginal apartment-buyer will pay. That is the lowest amount offered that still gets an apartment.

[closeparen]

Scarcity really exists. Markets are one way of contending with scarcity; you could also use a lottery or a queue. But people who lose the lottery or get stuck in the queue are just as deprived as people who can't pay the market price. And there are exactly as many of them. Probably more, since there is no mechanism to bring more supply online when the queue is deep, while the market mechanism works to some extent, choked off as it is by government limits.

Fundamentally, the only way that more people can be satisfied with the housing they have access to is to produce more of the housing people want.

[nhooyr]

There is a machine... Of thousands of workers. If those people can't make more money, they have less incentive to recruit more and build more housing stock faster...

Such price signals are a basic element of the efficiency of the free market.

[ponow]

Activity guided by rational self-interest causes rapid improvement to the things that people value (_exchange_ value, not some other value for which people don't trade scarce things).