Affordability is Bullshit

A financial fakeness fractal

On the way to a family vacation, I saw a billboard of some guy standing next to Trump, promising to make the Florida Panhandle affordable again. Back home, I got junk mail from a career Democrat who promised an affordable city.

Either America is healing, and we’re all learning to agree on the important stuff, or “affordability” is bullshit.

See title.

What Even Is Affordability?

In practice, an unholy amalgamation that emerged from the primordial soup of polling data, an accursed lamp that grubby voters simply cannot resist.

In theory, being able to buy stuff. A person can afford something if they have the money to pay for it, so the “affordability” of some item - say, a yacht - is a function of how much money the buyer has and how much money the seller is charging. You may notice that this question hinges very much on who the buyer is, and how their budget works, and you would be correct. That is the first problem with affordability.

My jobless friends have some difficulty buying fast food, not because it’s expensive, but because they don’t have income, and so their means are inadequate to any financial purchase. But my rich aunt also has affordability problems: she’s constantly consolidating businesses and buying patents and pitching products to conglomerates, which means sometimes she’s illiquid and has trouble fronting the cash for fancy schmoozing dinners. And I’m a poor fragile delicate relatable middle class waif who gets the vapors when he (?) walks into the kitchen, so I struggle at times to afford my ceaseless torrent of restaurant meals.

All three of us have our own affordability problems, but they’re much more different than similar. And all this has been in the narrow (well, pretty thick for me) sliver of budget that goes to restaurants! It’s perfectly possible for fast food and caviar prices to go up a lot, midrange sensible burger prices to go up a little, and jumbo bags of rice that would make a 15th century peasant weep in ecstasy to hold fast at $3.99.

In other words, how “affordable” food is depends on class, income, desire for convenience, sectoral inflation, the Gini coefficient, and a million other things. In some sense food got less “affordable” for me when I realized I could just order Uber Eats when I didn’t feel like driving for 10 minutes in the rain, but this was a function of a new, well, affordance. I’m glad to have the option!

And don’t even get me started on housing, transportation, medical care… “affordability” lumps the entire economy onto one big slider, doing violence to the beautiful glittery multifaceted jewel of modern capitalism. Cash stimulus helps the poorest quintile with affordability, which raises prices throughout the economy as businesses charge more to capture the surplus, which makes middle class expenditures less affordable. Banning AirBnb makes housing slightly more affordable by weakening the value of homes as investment vehicles, but makes vacationing less affordable as hotels have less vigorous competition, and as tourism decreases various tourism professionals will find themselves with less affordable lives.

This is all extremely basic stuff. Who can afford what and when is a major theater of human conflict, and has been for thousands of years. There’s not a big knob you can turn to make it better or worse across the board!

Okay, But Are You Sure There’s No Big Knob?

Yes!

To be more precise, to make things “affordable” in general, you’d have to do one of two things: raise incomes, or lower prices. All of this adjusted for inflation, of course, since we’re not barbarians.

Raising incomes gradually happens as self-interested individuals figure out new and clever ways to sell each other things; for example, Roombas now exist, and so we can buy and sell Roombas in mutually beneficial trades, and everybody’s better off. Sometimes this is called R&D, and it’s certainly possible to fund it better or regulate it more sensibly; if the FDA was more chill we’d invent more and better drugs and all be richer and happier that way. But random city politicians probably can’t fix the FDA, and anyway R&D investments pay off over decades, not the short time horizons that politicians implicitly promise.

Raising incomes can also happen through a bunch of other complicated macroeconomic levers I don’t understand well, each with various pros and cons, which in recent history (but less so in very recent history) have been kept to careful and thoughtful professional appointees, and are certainly not in the direct hands of local politicians. And anyway, if you want to raise incomes, just say that! I have no issue with someone promising “Better jobs for the Panhandle” or whatever; I doubt they can deliver but I can imagine various policies they might try. Not so for “affordability” because “affordability” is not mostly, in the popular imagination, about income. It’s about prices. Which are, you see, too high.

That brings us to the worst thing about affordability: lowered prices. People see the price of eggs and freak out and feel ripped off, but modern capitalism is too big and weird and intricate for that to actually be true. Markets are a system far beyond human comprehension, but one thing we have learned is that trying to control prices is a disaster. Rent control turns desirable apartments into dynastic boons, leaving the people who have rent controlled apartments unable to ever move and the rest of the market spiraling deeper and deeper toward infinity dollars per single bedroom. Anti-price gouging laws during natural disasters disincentivize suppliers from rushing more sorely needed supplies to affected areas, because it is literally not profitable to do so at ordinary prices. And these are maximally sympathetic cases, where specific vulnerable people are being protected from the recognized evils of gentrification, and, like, hurricanes. If forcibly lowering prices backfires when it seems most obviously good, how do you think it’d go if it were done across the whole economy?

It would go bad, but rather than litigate against naively centrally planned economies, I will simply point out that random low level politicians have functionally no chance of becoming Chairman Mao or Comrade Lenin, no matter what Texan radio advertisements say. There’s a Mercatus-y version of this post with lots of graphs and pictures of Bryan Caplan dabbing and a sort of well-pressed shirt sensibility, and that post has been written a billion times. I’m not trying to educate you here. I’m not trying to convince you of the merits or demerits of any specific policy and/or fundamental restructuring of social reality. I’m just saying that “affordability” is, in the current paradigm, a deity constructed of a trillion spectral shards, and challenging it atop its mountain is akin to apocalypse. Your newest city commissioner is not the chosen one. It ain’t happening.¹

You can have this loose approximation of Bryan Caplan dabbing, I guess. As a treat.

Politicians Are Just Like That, Right?

Ha. Muahaha. You thought I was trying to convince the politicians? I know they’re like that. They have their own spectral monstrous deity built of focus groups and ranked lists of priorities, and that deity has told them that “affordability” is a free bingo space. A thing they can say they’re in favor of, and it can only help.

This blog post is what we in the business call a speech act. We’re doing politics right now, baby, me and you, the girl reading this. Now you know affordability is cringe, and you know I know it, and if enough of us realize that then we can become a movement. A movement of people who stand with one voice, and demand that local politicians make promises that they probably won’t keep, rather than ones that they can’t keep, even in theory, in a million years.

Take my hand, dear reader. And come with me to a world where nothing is affordable, and everything hurts.

Wait—

1. But wait, you say, coastal eliteishly, what about YIMBY? We absolutely can make housing more affordable with Georgism or whatever, or even just legalizing building way more and denser units, and since housing is generally people’s biggest expense, bada bing bada boom, baby. Of course as a fellow person of culture and taste I wholeheartedly agree, but this is really just another thing I hate about “affordability.” It’s so general and slippery! “Affordable housing” is fine. “Rezoning for multifamily homes” is even better. But “affordability” in general? You are better than this, brightest and most endearingly foppish of my readers. Join my crusade.