My thread wasn't about the book - it was about what I felt was a common misapprehension. It is amazing and helpful that they actually put it in writing
This isn't just a semantic issue. There's not really a causal mechanism *flowing from the theory* for why changes to quantities should cause price changes (see above). I actually think that causal mechanism is fairly plausible empirically/in real life, BUT ....
For supply increases to bring down prices, you must catch up & *still* build faster than growth. But the market is beyond Econ 101 in so many ways. “Residual demand”; decompression; frictions making it much more profitable to build high-margin luxury units; probably some induced demand factors…
Clearly we don’t fix it without building a lot more housing, which necessarily means making it cheaper & easier to build, but it’s not gonna be fixed fast with One Weird Trick.
& you’re absolutely right that this market will require regulation—no markets can work without it!
NOT in the law like way that the incorrect association with the conventional theory suggests
That's really significant-- because if it's not a law like consequence, then you need to actually show the connection, either generally by empirical evidence or in particular cases with qualitative detail.
The salience of that is again made sharper by the fact that in many particular cases, the 'increased quantity' comes in the form of items priced *higher* than prevailing prices. There's really no basis in theory OR empirics to believe that will bring down prices of something.
Also of course people engaging in this argument are themselves constantly representing the contested claim as flowing from "econ 101." I don't think disproving particular people should be one's major concern, but in this case it actually matters for the substantive outcomes
Comments
This is not to say that unregulated markets will solve it—they clearly won’t. (& we must restart building publicly owned housing too.)
& you’re absolutely right that this market will require regulation—no markets can work without it!
That's really significant-- because if it's not a law like consequence, then you need to actually show the connection, either generally by empirical evidence or in particular cases with qualitative detail.