Tiny House, Big Wages & Nirvana
There is a war on housing — a series of regulations meant to restrict and reduce the supply of decent housing for people. The intent is to raise the value of properties by reducing the supply, a move benefitting the well off at the expense of the poor.
Back in San Francisco one of my friends was Scott O’Hara (1961–1998). I first met him when he showed up at a talk I was giving and we became friends. He often would sit a shift at my bookstore if I needed a fill-in and as I remember it he didn’t even want to be paid.
Scott lived in the Haight-Asbury area in an apartment. I visited him now and then and he’d visit my apartment on Castro when we had functions. His apartment was in the basement of an apartment building and it was actually a nice place. What I remember was how packed with books it was, and being a book peddler myself I was happy to see it.
Scott was pleased with the place. He liked the price and loved the location. But the city decided it was an “illegal” apartment and he was pushed out by the regulatory state. He wasn’t better off because of it. He was actually worse off.
This is something regulators don’t seem to comprehend. They create a perfect choice and then make illegal any less than perfect options, they ignore the real-world alternative. Scott gave up his apartment and ended up moving to Wisconsin where he bought a property. When I was living in South Africa I would get letters from his address in Cazenovia, Wisconsin until he died in 1996.
A lot of the regulatory opposition to “tiny housing” is based on this comparison of the perfect to the less than perfect — a form of the Nirvana Fallacy. The regulators posit a choice between a large house with big picture widows letting in the sun. No doubt they imagine humming birds flitting around you as you do house work, and a garden filled with talking animals and birds serenading you.
Then they make the optimal choice the only legal choice. But the real world is not the regulatory state. You can reduce the choices in housing but you can’t regulate into existence a world where everyone has enough wealth to afford them. For many people the choices are legal housing, illegal house, or homeless. And if they can’t afford the reduced supply of legal housing they end up homeless.
I watched the South Africa government regularly tear down informal housing settlements. The problem was they only made these people homeless. It wasn’t as if tearing down a shack made the dweller buy a stellar property in the suburbs. Often these informal settlements were near urban areas where the residents could find employment and start to improve their lives — and ultimately their housing as well.
What was odd was how the apartheid regime did this and so did the government of the African National Congress. The apartheid regime tore down the settlements to keep the number of blacks in the urban areas limited. It was meant to force black workers to rural areas in order to lower farm wages for Afrikaner farmers, while simultaneously keeping the wages of unionized white workers in urban areas higher by reducing the competition for jobs.
At least the apartheid regime was open about their reasoning to keep rural blacks from moving to the settlements and working in the cities. The ANC would, at best, offer platitudes about the quality of the housing. But tearing down the shacks didn’t give these people a better alternative — it just made them homeless.
We are seeing the same sort of thinking today with the push for a $15 national minimum wage. Just as you could regulate out of existence tiny housing or informal settlements you can regulate out of existence jobs that pay $12 per hour. But you can’t make the person who lost the job employable at the higher wage. Just as the regulations made people homeless, these regulations make them unemployed.
I saw this in South Africa at the local shopping mall, were dozens of parking attendants worked. They took payment for parking and patrolled the lots to keep the cars safe. The minimum wage went up and the attendants disappeared replaced by an automated system with one attendant on call by intercom if something went wrong. One worker replaced 12 almost over night.
Businesses know the wage regulators are going after the lower paying jobs so they are abolishing them. That doesn’t turn the worker into an employee who is suddenly productive enough to justify $15 an hour. It just means the job disappears. Fast food restaurants are reducing the number of employees taking orders at the counters so you’d order at a kiosk instead.
The workers who would have filled those jobs didn’t suddenly become managers, they became unemployed. Grocery stores are setting up self-pay lines with one employee monitoring it, doing the work of a dozen employees who have lost their jobs.
The future is they won’t hire high school kids to bag groceries for you or help people carry them out if they need assistance — instead you bag things yourself and carry them out yourself. In fact, you’ll be scanning each item yourself and the total number of store employees will be vastly reduced. If you need assistance, good luck. It will be like trying to get help on Facebook — there’s no one there to help and you’re left floundering.
Imagine taking the logic of the regulators and applying it to art. I have some watercolors, some prints, photos, and some oil paintings that I’ve collected over the last few decades on the walls — about 60 or 70 in total. Some are worth a few dollars and some worth considerably more now.
Imagine a minimum art price and what it would do. Some artists get millions for a piece they produce and others earn $20. Let’s set a minimum art price of $250 and see what happens.
First, the pieces worth millions will still be worth millions. Art that was previously selling for more than $250 will still be selling for more than $250. Around the $250 price there are pieces priced just below that which may see a slightly higher price beneficial, but the farther below the minimum they get, the less likely that is.
A lot of artists will find that what they previously sold for $25 simply won’t sell for $250. Their income will dry up entirely. You can force an artist to price their work at $250 but you can’t force people to buy it at that price. Buyers simply see it as not worth the extra money so the work goes unsold and the artist suffers. Sure they’d rather earn $250 over $25, but they’d rather earn $25, than nothing.
The choices people face in real life are not between the good and the perfect. Sometimes the reality is a choice between the good, the less good, or the truly awful. Sometimes people are better off when there are tiny houses they can rent, or lower paid jobs they can find. The tiny house is better than homeless and the lower paid job is better than no job at all.
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