Antitrust critics say that homebuilding monopolies are the real culprit of America’s housing woes. I looked into some of their claims. They don’t hold up.
What's always been strange about this line of criticism is that restrictive zoning rules affect small homebuilders the most. Big homebuilders can afford expensive lawyers to fight re-zoning battles, they have the capital to buy and hold land while they wait for permits, and they are more likely to have political connections to smooth everything over. Loosening zoning rules would make it easier for small homebuilders to compete. Even if you think the problem with housing is monopoly (which Derek shows it isn't), you should still be against zoning because it helps concentrate power in the hands of bigger homebuilders.
You couldn't write anything more true, with one caveat. Big multi-market builders have a choice on where to allocate their capital. They will be happy to buy land someplace that doesn't require that fight over having the fight, whether in the market at a housing-friendly perimeter location or someplace else entirely. Regardless, the housing units don't get built in the poorly-zoned location unless they're pot-committed and they fight the fight the small guy can't.
You just explained San Francisco in a nutshell. It’s more than just the zoning, but when a builder is looking at 10 years before they break ground? They stop pursuing projects in San Francisco. Of course, SF is also a NIMBY city. I say all that lovingly, since it’s still my favorite city on earth.
I'd say it is more like why some automakers focus on automobiles and others focus on commercial vehicles. They're two different segments of the industry, with very different expertise required - two different trade bases in many cases, different land and customer-facing strategy as well. Our parent company has an apartment segment, but it is a separate business entity. But yes, the particulars of building apartments on a piece of ground and all the factors that come with it certainly would dissuade a large homebuilder from venturing into apartments at scale. A lot of movement into the build-for-rent area with large builders, but that's frequently in partnership with VC, and frequently attached and single-family, versus multifamily. In these cases, the homebuilder acts as a GC, and it's often a diversification move to lessen market shocks and better allocate capital.
In our area the county is pushing for higher density building, particularly in transit corridors. Our Foundation has a plot that was zoned for 5 homes and they urged us to get it rezoned for density. We are going back in with a townhouse/apartment complex that can house 3 1/2 times the number the homes would.
This effects all parts of the housing market. I at one point worked for a company that among other things, provided software to property managers to help with government compliance with affordable housing programs. A premise of our sales strategy was that we would only target very large property management companies with this feature, because they were the only ones able to sustain the legal apparatus and staff necessary to provide affordable housing assistance to tenants.
I think what is happening with these Abundance critics is mostly a case of sequencing/prioritization. They don’t have true substantive issues with the Abundance movement (sometimes when you really press them they will admit that). They do understand that policy making in America is difficult, and if smart policymakers and legislators are working on Abundance-themed ideas, they won’t be working on theirs. When there is limited capacity to get any ideas pushed through, of course everyone wants THEIR idea(s) to go first. While that is all true, I think there are strong objective reasons for anyone left of center to prioritize the Abundance ideas- principally the forecasts that blue states like NY and California will lose representation in the next reappointment because their high housing costs keeps driving people out to more affordable states like Texas and Florida. If you don’t address that reality, the right will continue to gain power and no good ideas on the left of any kind will be implemented.
I'm not convinced it is just sequencing though. There's a contingent that so badly wants to believe "corporations are bad" that they apply motivated reasoning and try to make THAT the explanation for every problem.
And there's an audience for people who pander to this thinking! But it is as misguided as right-wingers blaming everything on immigration or China. However, it is a potent political and fundraising force, so some Democrats keep riding the tiger instead of redirecting supporters to the real issues to solve.
It’s obviously a somewhat extreme comparison, but after reading this piece comprehensively demolish the entire anti-monopoly argument, I was left with the vibe that they’re a bit like the early Soviets, running around looking for ‘Kulaks’ hiding all the apparently-abundant grain. My guys, the problem isn’t evil people keeping stuff from you, it’s that there’s a finite amount of the stuff. The solution is to make more of it more cheaply! Not to posit the existence of evil yet somewhat ambiguous enemies holding it from you!
And they worry that the Abundance movement will adopt a broader deregulation platform that will jeopardize the antitrust movement. But there really is no reason per se why the Abundance movement and antitrust movement need to be mutually exclusive.
Right, I think that movement is scared Abundance says "Private enterprise would get the job done if government gets out of the way. Look at housing and clean energy in Texas as an example."
And that challenges their core beliefs! I'm also suspicious many of these people feel they have more influence through the government process than they do through private investment processes...
The fear is largely based at looking at the history of the rebranded neoliberal project, in particular the 90s, where liberals largely adopted laissez faire attitudes and policies. Clinton wasn’t a socialist. In fact, except in comparison to those on the right at the time many would actually consider him on the right/conservative! The current state of progressive discourse is on the back foot after a decade of ascendancy and risks being considered a politically rejected project. Not the core, broad liberal ideal of protecting the downtrodden, but many ideologic facets that recently had mainstream political salience.
I agree, which is a shame since there is a really good critique that can be made of Abundance. It is, at its core, a trivial observation. Basically all Abundance is doing is saying “if the government does something, then the government should be good at the thing it is doing.”
Right. It hand waves a lot of trade offs. I’m Abundance-pilled but there does need to be a bit more specificity in how to thread the needle between infrastructure progress and preserving individual land and enviro rights
Yes but you also have Abundance-pilled people trying to eliminate things like voluntary conservation easements, reasoning that this will unlock more buildable land; this is where this tradeoff gets trickier.
Thanks for spelling out the priorities argument I've not seen it explained so clearly. However, your demographic argument treats political affiliation as if it is a fixed genetic trait rather than a malleable belief. The best thing about abundance is that it has strong appeal to a lot of business-oriented Republicans whose major beef with Democrats is regulatory inefficiency. Let's get back to persuading people with good policy instead of fiddling with demographics.
From inside the industry in a top-5-in-market builder who worked with a large national in multiple markets, I can tell you that we'd adore building many, many entry-level homes. But they don't pencil. The leading issues are local regulations (including, but not limited to zoning), buildable land (see the prior), NIMBYs - everywhere, ZIRP, labor costs/shortages, building codes, supply chain irregularities, and time. Maybe not in that order, but they all force us to build toward higher strata in the market, where the juice is worth the squeeze. We have to make money, so that's where we live - but we'd welcome anybody who wants to put the effort into building lower-cost homes.
I'll add one more thing little discussed. The companies in the industry are truly amongst the most inefficient businesses. Our trade base is, from my vantage point, extremely poor/out-of-date regarding business practices. It is admittedly a difficult line of work in which to get efficient, but there is room to grow there for people who figure this out. Tech plays an exceptionally limited role today versus the rest of the economy, but as/if that expands (as we've been saying it will for all my career), it will impact the cost to build. The inertia within the industry is powerful. We as an industry carry that part of the problem.
It is certainly, and I hope we see more of it, but there is extreme customer reluctance to look at anything that isn't site-built. Resale value, standards, and once again local resistance are issues. You have to get to a point where it can scale, because developing the ground still costs the same and that's a large chunk of the profit equation and gets a business upside down fast with cash and future investment. You can't have the ground sit waiting on demand.
Short answer - I think it's the future, but the public doesn't seem to agree.
I do know there are regulations (and probably business practices) that have slowed their adoption. Although I do believe there was a recent change.
I actually own a manufactured home. It's a 2,400 sq ft home, that's very nice (granite counter tops etc)
But I paid another 50 basis points for my interest, and couldn't use my normal insurance company for them.
I'm unclear how much of that is just historic prejudice against them that equates manufactured home with cheap trailer park. And how much is government regulation that justifies the extra costs.
I agree that you really need scale for it too make sense. But you could easily have whole suburbs of manufactured homes that are basically indistinguishable from stick built.
Derek, this is a great takedown. You allude to this in the piece, but the errors you point out can consistently be found in ALL the work these people produce. I am an antitrust lawyer and have worked for both defendants and plaintiffs (both in and out of the federal government). I’ve confronted the work of Stoller, Teachout, Tim Wu et al and their organizations for a long time (American Economic Liberties Project, Open Markets Institute) and it is spectacularly shoddy. They are better understood as religious fanatics rather than as policy analysts. Sometimes they make good arguments—but they are incapable of making ANY argument without distorting facts or reading source material incorrectly. This is who they are—they suck.
The problem the antitrust leftists have is the classic when the only tool you have is a hammer issue. In their eyes, every problem on earth is caused by big corporations and so that’s what they go looking for. It’s not possible for them to conceive that homeowners, unions and environmental groups can abuse their power. Acknowledging that possibility would destroy their whole reason for existing.
It’s worth noting that the leftist antitrust crowd tends to be dominated by Democrats who hate Obama. They’re a tiny number of people but were a huge influence in the Biden administration not just intellectually but in terms of staffing. Of all the things the next Democratic president should do differently, avoiding that should be high on the list.
Buildings are (1) large and (2) mostly handbuilt, limiting economies of scale and monopoly potential. Add in people's fickle preferences, variations between lots, and inconsistencies between local jurisdictions’ zoning/permitting, and we see that big homebuilders and real estate developers tend to be regional, not national. The shilobeth of concentrated corporate power is not the biggest problem always and in every context. Limited economies of scale in housing is a major factor that keeps it relatively expensive, and has presumably hobbled productivity growth in the sector.
As others have said, the main critique of abundance appears to be that it is something other than what the critics want to talk about and focus on. I would argue they feel threatened because they have a scarcity mentality about politics and in general. Their worldview relies on scapegoats and stoking anger. They struggle to articulate a positive vision. I am sick of the blame game and do not think it will solve anything.
I work in a field where we build things. While reading Abundance, I often found myself nodding in agreement — but also feeling that things are actually much worse than Derek and Ezra have laid out. Books like this often take a few cases and build a narrative around them, sometimes making a mountain out of a molehill. But here, the opposite is true. There are thousands of examples that could have been given. If anything, Abundance made a molehill out of a mountain.
I'm always mystified why this specific group of commentators seem so monomaniacal in their focus, weirdly offended if anyone suggests a monopoly isn't involved in a given problem. It would be really weird if an Abundance fan went around saying that literally everything is caused by constrained supply. I don't see how the antitrust cause is harmed at all by going "yeah sometimes other things are also problems." To the contrary, that's how you develop coalitions! There's no contradiction between "monopoly bad" and "regs constricting supply good" - they're actually pretty natural partners afaict (e.g., housing markets so constrained that one developer can dominate them...)
Derek I'd be interested in a detailed analysis of the role of private equity as part of the discussion of the antitrust argument. This seems to be a particular focus of the antitrust folks in a way that feels (to my intuition) both way out of proportion to its actual contribution and lacking a fundamental understanding of how that industry operates.
What this post helpfully demonstrates is that narratives gain power when they identify enemies that need to be fought against. Much like how people on the right insist there must be a conspiracy involving powerful people connected to Jeffery Epstein, there’s an equally powerful narrative on the left that paints corporations and monopolies as the great enemy of the people. As a result, there’s a strong contingent of people on the left who won’t accept any solution that doesn’t involve taking down the monopolies, the billionaire class, and the tech oligarchy. This is why they often accuse Abundance of being “neoliberalism in a new guise” since to them, it looks like this is just a way for their enemies to distract people from the real fight.
Since reading Abundance, I’ve had a hunch that its lack of clearly-defined enemies may be a hurdle to gaining widespread acceptance. In fact, the closest it comes to identifying enemies is when it talks about how left-wing environmental activists created a burdensome regulatory state that is now hurting the environmental cause. It might be difficult to gain traction with the left if the left itself is the only entity you portray as the source of the problem.
Even if you’re not trying to make an enemy of the left, people may often read that into your work because they’re so used to having a political bogeyman. It’s hard for people to identify with a political movement concerned with the intricacies of permitting processes, environmental inspections, land use regulations, and conditional housing grants.
Right wing populists say, "_Those people_, the immigrants and liberal elites, are the cause of all your problems. Vote for us and we'll crush them for you."
Left wing populists say, "_Those people_, the billionaires and their pet lawyers and bankers, are the cause of all your problems. Vote for us and we'll crush them for you."
Against either of those, "Things are complicated, trade-offs are real, and sometimes _our own_ refusal to make clear choices about what we want makes our own lives worse," is a tough sell. :-/
Why can’t the left broaden their boogeymen from the billionaires to the millionaires?
Seems like the common factor between the anti-monopolist and abundance diagnoses is just supply constraints caused by incumbent regulatory capture. The anti-monopolists are wrong that the incumbents in the housing case are big corporations.
Challenge is, that would alienate a big part of the democratic base — the yard sign nimby’s in the top decile by wealth/income.
So the other, under-discussed temptation here isn’t just to find an enemy — it’s desperation to make sure that enemy is not YOU.
lol, he seems to be https://www.antimonopoly.us/about-us… although his profile says he specializes in farming antitrust, which feels like more of an actual problem, but I’m going by vibes
Great post! I like that Derek is following Noah Smith's advice (inadvertently or not) for Abundance to get a little meaner lol.
With regards to the underlying claims that larger developers, asserting monopoly power in a given market, will hold back units in order to raise the prices of the units they already have for sale never made any sense to me mathematically.
I am not an economist or a housing market expert. But it seems obvious that, in order for such a scheme to work, a developer would need to be able to raise the price of a held unit by more than 100% to exceed the profits gained from just building and selling another unit (roughly).
It's taken ~20 years for US median home prices to double. Even in a hyper demand market like SF, where one might expect that doubling rate to be faster, it wasn't; ~20 years. That's just not a timescale the monopoly dynamics being claimed are operating on. Nor is it viable from the standpoint of turning a profit; where just building more houses and selling them for the win during those intervening 20 year would be FAR superior.
AND all that assumes, for the sake of argument, a perfectly monopolized market. Where one builder can control, entirely, if additional units come on the market. In reality, even if a dominant builder in a given market tried the above scheme, any other builders could undercut it by "taking the quick buck" and building more houses to sell and take the marginal unit profit themselves.
And even THAT scenario ignores that there are also existing home owners who would play spoiler to this as well (and reap any intermediate value gains the nefarious party is trying to cultivate).
All that to say, it just seems true that selling valuable things is more profitable than not selling things to raise scarcity in a market that has multiple players (even if it’s a low number).
We see in other areas that actual scarcity, caused by legitimate supply limitations, does not accrue benefit to the original selling, but to the secondary market. (Examples include, but are not limited to the Playstation 5 launch, Rolex watches during/post-pandemic, etc.)
Phenomenal piece, Derek.
I hope Matt Stoller thoroughly reads it.
Matt Stoller has never done a good faith reading of anyone else's work in his entire life, so I'm not sure it would help him any!
Stoller's reply:
> According to Derek Thompson, "oligopoly in homebuilding is destroying $100 billion in production every year".
It's unclear whether Matt Stoller actually knows how to read
What's always been strange about this line of criticism is that restrictive zoning rules affect small homebuilders the most. Big homebuilders can afford expensive lawyers to fight re-zoning battles, they have the capital to buy and hold land while they wait for permits, and they are more likely to have political connections to smooth everything over. Loosening zoning rules would make it easier for small homebuilders to compete. Even if you think the problem with housing is monopoly (which Derek shows it isn't), you should still be against zoning because it helps concentrate power in the hands of bigger homebuilders.
You couldn't write anything more true, with one caveat. Big multi-market builders have a choice on where to allocate their capital. They will be happy to buy land someplace that doesn't require that fight over having the fight, whether in the market at a housing-friendly perimeter location or someplace else entirely. Regardless, the housing units don't get built in the poorly-zoned location unless they're pot-committed and they fight the fight the small guy can't.
You just explained San Francisco in a nutshell. It’s more than just the zoning, but when a builder is looking at 10 years before they break ground? They stop pursuing projects in San Francisco. Of course, SF is also a NIMBY city. I say all that lovingly, since it’s still my favorite city on earth.
Great point. Do you think this might explain why the biggest homebuilders seem to focus most on single family construction instead of apartments?
I'd say it is more like why some automakers focus on automobiles and others focus on commercial vehicles. They're two different segments of the industry, with very different expertise required - two different trade bases in many cases, different land and customer-facing strategy as well. Our parent company has an apartment segment, but it is a separate business entity. But yes, the particulars of building apartments on a piece of ground and all the factors that come with it certainly would dissuade a large homebuilder from venturing into apartments at scale. A lot of movement into the build-for-rent area with large builders, but that's frequently in partnership with VC, and frequently attached and single-family, versus multifamily. In these cases, the homebuilder acts as a GC, and it's often a diversification move to lessen market shocks and better allocate capital.
In our area the county is pushing for higher density building, particularly in transit corridors. Our Foundation has a plot that was zoned for 5 homes and they urged us to get it rezoned for density. We are going back in with a townhouse/apartment complex that can house 3 1/2 times the number the homes would.
This effects all parts of the housing market. I at one point worked for a company that among other things, provided software to property managers to help with government compliance with affordable housing programs. A premise of our sales strategy was that we would only target very large property management companies with this feature, because they were the only ones able to sustain the legal apparatus and staff necessary to provide affordable housing assistance to tenants.
I think what is happening with these Abundance critics is mostly a case of sequencing/prioritization. They don’t have true substantive issues with the Abundance movement (sometimes when you really press them they will admit that). They do understand that policy making in America is difficult, and if smart policymakers and legislators are working on Abundance-themed ideas, they won’t be working on theirs. When there is limited capacity to get any ideas pushed through, of course everyone wants THEIR idea(s) to go first. While that is all true, I think there are strong objective reasons for anyone left of center to prioritize the Abundance ideas- principally the forecasts that blue states like NY and California will lose representation in the next reappointment because their high housing costs keeps driving people out to more affordable states like Texas and Florida. If you don’t address that reality, the right will continue to gain power and no good ideas on the left of any kind will be implemented.
I'm not convinced it is just sequencing though. There's a contingent that so badly wants to believe "corporations are bad" that they apply motivated reasoning and try to make THAT the explanation for every problem.
And there's an audience for people who pander to this thinking! But it is as misguided as right-wingers blaming everything on immigration or China. However, it is a potent political and fundraising force, so some Democrats keep riding the tiger instead of redirecting supporters to the real issues to solve.
It’s obviously a somewhat extreme comparison, but after reading this piece comprehensively demolish the entire anti-monopoly argument, I was left with the vibe that they’re a bit like the early Soviets, running around looking for ‘Kulaks’ hiding all the apparently-abundant grain. My guys, the problem isn’t evil people keeping stuff from you, it’s that there’s a finite amount of the stuff. The solution is to make more of it more cheaply! Not to posit the existence of evil yet somewhat ambiguous enemies holding it from you!
And they worry that the Abundance movement will adopt a broader deregulation platform that will jeopardize the antitrust movement. But there really is no reason per se why the Abundance movement and antitrust movement need to be mutually exclusive.
Right, I think that movement is scared Abundance says "Private enterprise would get the job done if government gets out of the way. Look at housing and clean energy in Texas as an example."
And that challenges their core beliefs! I'm also suspicious many of these people feel they have more influence through the government process than they do through private investment processes...
The fear is largely based at looking at the history of the rebranded neoliberal project, in particular the 90s, where liberals largely adopted laissez faire attitudes and policies. Clinton wasn’t a socialist. In fact, except in comparison to those on the right at the time many would actually consider him on the right/conservative! The current state of progressive discourse is on the back foot after a decade of ascendancy and risks being considered a politically rejected project. Not the core, broad liberal ideal of protecting the downtrodden, but many ideologic facets that recently had mainstream political salience.
I agree, which is a shame since there is a really good critique that can be made of Abundance. It is, at its core, a trivial observation. Basically all Abundance is doing is saying “if the government does something, then the government should be good at the thing it is doing.”
Right. It hand waves a lot of trade offs. I’m Abundance-pilled but there does need to be a bit more specificity in how to thread the needle between infrastructure progress and preserving individual land and enviro rights
I think the problem is people thinking they have the right to determine how other people use their land.
Yes but you also have Abundance-pilled people trying to eliminate things like voluntary conservation easements, reasoning that this will unlock more buildable land; this is where this tradeoff gets trickier.
I hadn't heard that.
My position is let people do what they want with their own property. That will unlock more than enough housing.
Thanks for spelling out the priorities argument I've not seen it explained so clearly. However, your demographic argument treats political affiliation as if it is a fixed genetic trait rather than a malleable belief. The best thing about abundance is that it has strong appeal to a lot of business-oriented Republicans whose major beef with Democrats is regulatory inefficiency. Let's get back to persuading people with good policy instead of fiddling with demographics.
From inside the industry in a top-5-in-market builder who worked with a large national in multiple markets, I can tell you that we'd adore building many, many entry-level homes. But they don't pencil. The leading issues are local regulations (including, but not limited to zoning), buildable land (see the prior), NIMBYs - everywhere, ZIRP, labor costs/shortages, building codes, supply chain irregularities, and time. Maybe not in that order, but they all force us to build toward higher strata in the market, where the juice is worth the squeeze. We have to make money, so that's where we live - but we'd welcome anybody who wants to put the effort into building lower-cost homes.
I'll add one more thing little discussed. The companies in the industry are truly amongst the most inefficient businesses. Our trade base is, from my vantage point, extremely poor/out-of-date regarding business practices. It is admittedly a difficult line of work in which to get efficient, but there is room to grow there for people who figure this out. Tech plays an exceptionally limited role today versus the rest of the economy, but as/if that expands (as we've been saying it will for all my career), it will impact the cost to build. The inertia within the industry is powerful. We as an industry carry that part of the problem.
Isn't this the benefit on manufactured homes and/or the partially preassembled ones.
Do most of the work in an efficient factory and then just assemble or place it on site.
Also cut down the number of floor plans
It is certainly, and I hope we see more of it, but there is extreme customer reluctance to look at anything that isn't site-built. Resale value, standards, and once again local resistance are issues. You have to get to a point where it can scale, because developing the ground still costs the same and that's a large chunk of the profit equation and gets a business upside down fast with cash and future investment. You can't have the ground sit waiting on demand.
Short answer - I think it's the future, but the public doesn't seem to agree.
I do know there are regulations (and probably business practices) that have slowed their adoption. Although I do believe there was a recent change.
I actually own a manufactured home. It's a 2,400 sq ft home, that's very nice (granite counter tops etc)
But I paid another 50 basis points for my interest, and couldn't use my normal insurance company for them.
I'm unclear how much of that is just historic prejudice against them that equates manufactured home with cheap trailer park. And how much is government regulation that justifies the extra costs.
I agree that you really need scale for it too make sense. But you could easily have whole suburbs of manufactured homes that are basically indistinguishable from stick built.
Derek, this is a great takedown. You allude to this in the piece, but the errors you point out can consistently be found in ALL the work these people produce. I am an antitrust lawyer and have worked for both defendants and plaintiffs (both in and out of the federal government). I’ve confronted the work of Stoller, Teachout, Tim Wu et al and their organizations for a long time (American Economic Liberties Project, Open Markets Institute) and it is spectacularly shoddy. They are better understood as religious fanatics rather than as policy analysts. Sometimes they make good arguments—but they are incapable of making ANY argument without distorting facts or reading source material incorrectly. This is who they are—they suck.
The problem the antitrust leftists have is the classic when the only tool you have is a hammer issue. In their eyes, every problem on earth is caused by big corporations and so that’s what they go looking for. It’s not possible for them to conceive that homeowners, unions and environmental groups can abuse their power. Acknowledging that possibility would destroy their whole reason for existing.
It’s worth noting that the leftist antitrust crowd tends to be dominated by Democrats who hate Obama. They’re a tiny number of people but were a huge influence in the Biden administration not just intellectually but in terms of staffing. Of all the things the next Democratic president should do differently, avoiding that should be high on the list.
Obama was an abject failure who directly lead to trump
Derek goes all Annie Hall, housing edition: https://www.youtube.com/watch?v=vTSmbMm7MDg
Nice clip, have to watch until the end.
Ok that was great
> To the extent that I'm good at anything, it's calling people on the phone and writing down what they say.
This really is a superpower. Every time Musharbash claimed someone said X you just gave them a call 😄.
Seems like a lot of work...
Buildings are (1) large and (2) mostly handbuilt, limiting economies of scale and monopoly potential. Add in people's fickle preferences, variations between lots, and inconsistencies between local jurisdictions’ zoning/permitting, and we see that big homebuilders and real estate developers tend to be regional, not national. The shilobeth of concentrated corporate power is not the biggest problem always and in every context. Limited economies of scale in housing is a major factor that keeps it relatively expensive, and has presumably hobbled productivity growth in the sector.
As others have said, the main critique of abundance appears to be that it is something other than what the critics want to talk about and focus on. I would argue they feel threatened because they have a scarcity mentality about politics and in general. Their worldview relies on scapegoats and stoking anger. They struggle to articulate a positive vision. I am sick of the blame game and do not think it will solve anything.
I work in a field where we build things. While reading Abundance, I often found myself nodding in agreement — but also feeling that things are actually much worse than Derek and Ezra have laid out. Books like this often take a few cases and build a narrative around them, sometimes making a mountain out of a molehill. But here, the opposite is true. There are thousands of examples that could have been given. If anything, Abundance made a molehill out of a mountain.
Important piece. This might have cinched the subscription question for me
I'm always mystified why this specific group of commentators seem so monomaniacal in their focus, weirdly offended if anyone suggests a monopoly isn't involved in a given problem. It would be really weird if an Abundance fan went around saying that literally everything is caused by constrained supply. I don't see how the antitrust cause is harmed at all by going "yeah sometimes other things are also problems." To the contrary, that's how you develop coalitions! There's no contradiction between "monopoly bad" and "regs constricting supply good" - they're actually pretty natural partners afaict (e.g., housing markets so constrained that one developer can dominate them...)
Derek I'd be interested in a detailed analysis of the role of private equity as part of the discussion of the antitrust argument. This seems to be a particular focus of the antitrust folks in a way that feels (to my intuition) both way out of proportion to its actual contribution and lacking a fundamental understanding of how that industry operates.
What this post helpfully demonstrates is that narratives gain power when they identify enemies that need to be fought against. Much like how people on the right insist there must be a conspiracy involving powerful people connected to Jeffery Epstein, there’s an equally powerful narrative on the left that paints corporations and monopolies as the great enemy of the people. As a result, there’s a strong contingent of people on the left who won’t accept any solution that doesn’t involve taking down the monopolies, the billionaire class, and the tech oligarchy. This is why they often accuse Abundance of being “neoliberalism in a new guise” since to them, it looks like this is just a way for their enemies to distract people from the real fight.
Since reading Abundance, I’ve had a hunch that its lack of clearly-defined enemies may be a hurdle to gaining widespread acceptance. In fact, the closest it comes to identifying enemies is when it talks about how left-wing environmental activists created a burdensome regulatory state that is now hurting the environmental cause. It might be difficult to gain traction with the left if the left itself is the only entity you portray as the source of the problem.
Even if you’re not trying to make an enemy of the left, people may often read that into your work because they’re so used to having a political bogeyman. It’s hard for people to identify with a political movement concerned with the intricacies of permitting processes, environmental inspections, land use regulations, and conditional housing grants.
Right wing populists say, "_Those people_, the immigrants and liberal elites, are the cause of all your problems. Vote for us and we'll crush them for you."
Left wing populists say, "_Those people_, the billionaires and their pet lawyers and bankers, are the cause of all your problems. Vote for us and we'll crush them for you."
Against either of those, "Things are complicated, trade-offs are real, and sometimes _our own_ refusal to make clear choices about what we want makes our own lives worse," is a tough sell. :-/
Why can’t the left broaden their boogeymen from the billionaires to the millionaires?
Seems like the common factor between the anti-monopolist and abundance diagnoses is just supply constraints caused by incumbent regulatory capture. The anti-monopolists are wrong that the incumbents in the housing case are big corporations.
Challenge is, that would alienate a big part of the democratic base — the yard sign nimby’s in the top decile by wealth/income.
So the other, under-discussed temptation here isn’t just to find an enemy — it’s desperation to make sure that enemy is not YOU.
"We have met the enemy, and he is us."
Wait a minute… is Musharbash an antitrust lawyer? Is he a lawyer who sues real estate companies?
lol, he seems to be https://www.antimonopoly.us/about-us… although his profile says he specializes in farming antitrust, which feels like more of an actual problem, but I’m going by vibes
Great post! I like that Derek is following Noah Smith's advice (inadvertently or not) for Abundance to get a little meaner lol.
With regards to the underlying claims that larger developers, asserting monopoly power in a given market, will hold back units in order to raise the prices of the units they already have for sale never made any sense to me mathematically.
I am not an economist or a housing market expert. But it seems obvious that, in order for such a scheme to work, a developer would need to be able to raise the price of a held unit by more than 100% to exceed the profits gained from just building and selling another unit (roughly).
It's taken ~20 years for US median home prices to double. Even in a hyper demand market like SF, where one might expect that doubling rate to be faster, it wasn't; ~20 years. That's just not a timescale the monopoly dynamics being claimed are operating on. Nor is it viable from the standpoint of turning a profit; where just building more houses and selling them for the win during those intervening 20 year would be FAR superior.
AND all that assumes, for the sake of argument, a perfectly monopolized market. Where one builder can control, entirely, if additional units come on the market. In reality, even if a dominant builder in a given market tried the above scheme, any other builders could undercut it by "taking the quick buck" and building more houses to sell and take the marginal unit profit themselves.
And even THAT scenario ignores that there are also existing home owners who would play spoiler to this as well (and reap any intermediate value gains the nefarious party is trying to cultivate).
All that to say, it just seems true that selling valuable things is more profitable than not selling things to raise scarcity in a market that has multiple players (even if it’s a low number).
We see in other areas that actual scarcity, caused by legitimate supply limitations, does not accrue benefit to the original selling, but to the secondary market. (Examples include, but are not limited to the Playstation 5 launch, Rolex watches during/post-pandemic, etc.)