Gongol.com Archives: January 2025

January 19, 2025

Almost 9,000 single-family homes destroyed in California

Almost 9,000 homes were destroyed by the fires around Los Angeles -- that's the early estimate being used by reinsurance brokerage Gallagher Re. For perspective, the US builds about 1.4 to 1.5 million new homes a year. But that's a national figure. In California alone, new single-family housing starts run about 8,000 to 9,000 per month. ■ In other words, the Los Angeles-area fires aren't just substantial in their scale and impact, replacing them is going to materially affect the construction rate for the largest state in the union. It's extremely unfortunate, but the event is going to present a dramatic set of natural experiments for economists. ■ For one, the differences between the post-disaster rules imposed on rental versus owner-occupied housing will have significant consequences. Price limits in the name of "gouging prohibitions" will only affect rental housing: Nobody can tell you not to price your house for sale for an exorbitant amount. Indeed, nobody can force you to sell your home at all (aside from exceptional circumstances involving public domain). ■ For another, the process of local regulatory approval is going to discourage innovations. Local authorities have already said they want to see like-for-like replacements, via statements like, "if you got a mid-century modern, we want to see that mid-century modern come back". The mayor's executive order includes "Clear the way to rebuild homes as they were" as an express bullet point. ■ It's understandable why regulators would prefer like-for-like replacements; the less change, the easier to review. But the mayor's executive order says that for expedited review policies to apply, "The structure or facility to be repaired, restored, demolished, or replaced does not exceed 110% of the floor area, height, and bulk of the structures or facility existing immediately prior to the Wildfires" and says, "the project cannot result in a change of use from [...] a less intensive use to a more intensive use, or an increase in density or units (including accessory dwelling units)". ■ The problem for residents is that they need as much square footage to be built as quickly as possible: It's not hard to imagine neighbors helping neighbors by offering them temporary space in a freshly-built accessory dwelling unit (ADU), like a granny flat or a prefabricated tiny home, while more neighborhood homes are reconstructed. Most people probably want to get back into their original neighborhoods as quickly as possible, and living temporarily in a neighbor's back yard studio probably beats having to live for a longer time in an RV. ■ Likewise, manufactured and modular housing doesn't fit neatly within a regulatory model that favors like-for-like reconstruction, but it could provide a significant way to expedite the reconstruction process and get people home faster than waiting for site-built assembly. Manufactured housing is wildly under-appreciated in America today, and that under-appreciation has stifled much-needed innovations. Helpfully, California's recent statewide liberalization of ADU rules has done much to boost the market. ■ Regulators and city officials too often assume that what matters most in a community is the superficial stuff: Architectural styles, paint colors, and the like. That's a mistake. The lesson of New Orleans after Hurricane Katrina is that people want to get home, but if there are too many obstacles, they'll be forced to make their homes elsewhere. Neighborhoods are made of people, not just the buildings where they live. If the fire-devastated communities around Los Angeles are to recover, what matters most is getting the people back as soon as possible. How the homes look should be a far-distant lesser consideration.

Users surge to all the wrong services

American users of TikTok, facing the app's shutdown over national security, have joined another China-based social media platform in such numbers that it is scrambling to find English-speaking content moderators.

Enough with the "red state/blue state" stuff

According to Pew survey data, there are five states where a majority of voters are registered Republicans and eight states where a majority of voters are registered Democrats. The largest majorities are just 57% each (Republicans in Wyoming and Democrats in Vermont). No party has an impenetrable majority anywhere, and every state has a substantial number of minority-party voters. Things are not as binary as they seem.

FTC goes after Pepsi for giving pricing favors to Walmart

Is this really what the government needs to be using its law-enforcement powers to manage?

Self-interested Crankery Rules Everything Around Me

People whose bread is buttered by the exchange of cryptocurrency have come out in favor of a "strategic Bitcoin reserve", which might be the most transparently self-interested proposal imaginable. ■ Even in the most favorable of interpretations, cryptocurrency is an extremely speculative asset: Something that Party A purchases strictly in the hope that Party B will purchase it later for a higher price. The greater the speculative excitement, the better for Party A -- because there is no true underlying value to the asset. ■ It's not an enterprise that produces an ongoing stream of valuable output, like farmland or a share in a productive business. It's not an investment in future returns, like a college education. It's not even like a pile of gold bars, which, even if they had no exchange value, could at least be melted down to make dental fillings. ■ Cryptocurrency, at least as an "investment", is entirely a gamble that a greater fool can be found. Anyone proposing that the government should purchase lots of cryptocurrency isn't seriously arguing that there is a "strategic" reason for so doing. They're doing it to get the government to take a pile of their asset class out of the marketplace in order to artificially drive up the market price that the next fool might be willing to pay. ■ It's not one iota different from collectors of any other "asset" -- like Beanie Babies, Hummel figurines, or baseball cards -- proposing that the government needs a strategic reserve of their plush toys, porcelain statuettes, or cardboard-backed photos. And in the case of those other assets, the producers at least knew enough to limit total production. Whole new cryptocurrencies are still being invented, and even the biggest names (like Bitcoin) aren't promising to stop producing new "assets" until 115 years from now. ■ Can cryptocurrencies be used to store value? Potentially -- just as value can be stored in the form of fur coats or antique paperback books. But the government doesn't need any such store of value when it's got the U.S. Treasury Department. A "strategic Bitcoin reserve" is nothing more than a proposal to enrich a handful of speculators at the expense of every taxpayer. Its proponents should be laughed out of the public square.