Heads Up, California: Sydney Has Figured Out How to Get the Rents Down

From Reason.com:

Sydney, Australia, may not be New York or London or Los Angeles, but it’s a big city with a population approaching five million. It’s got more people than the San Francisco area.

But unlike San Francisco (or Los Angeles, or several other major American cities), rental prices in some parts of Sydney are seeing a massive decline—as much as 100 Australian dollars a week in some places.

It is not some magical mystery as to why Sydney’s rental prices are declining. And it’s certainly not due to rent control. It’s because Sydney’s seeing a building boom. The size of Sydney’s apartment market has doubled in two years, and landlords have had to drop rents in order to get tenants.

The Sydney Morning Herald reported over the weekend that the city has seen more than 30,800 multi-unit dwellings built last year, a record for any Australian city. And there still are nearly 200,000 additional dwellings in various stages of development. The city is seeing a glut driven by investors. And those investors are now leasing out the apartments.

This overabundance in rental properties has spread across the economic spectrum. Median rents in some more expensive parts of the city range around $1,400–$1,700 a month (in U.S. dollars). But there are parts of town where the median rental price is $850 a month, thanks in part to the oversupply. The glut ranges from simple apartments to townhouses, highlighting an outcome understood by those who are simply begging cities to allow more housing of any kind to be built: An increase in the supply of middle- and upper-class housing will give better choices to people moving up the economic ladder, freeing up older housing and making it more accessible to people with lower incomes.

Compare these numbers to San Francisco and its stagnant housing market. In June, median rental rates there for one-bedroom apartments passed $3,600 a month.

A policy expert for Tenants Guild of New South Wales makes it clear to the newspaper that he understands exactly why rents are coming down: “At a city-wide level, we’ve had rent prices set by restrictive supply for at least 14 years, probably longer. It will take more than a few quarters for prices to correct to equilibrium.”

Rent prices set by restrictive supply, you say? And yet, in California, attempts to bring down sky-high rents by allowing more housing developments keep hitting walls from entrenched interests with a financial stake in keeping things the way they are. That includes current property owners who benefit from the high rates, and it includes construction unions that want their slice of the pie and are willing to abuse the legal process in order to get it.

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Did January 6 riots threaten our democracy? (1-7-21)

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Top 10 Aussie sayings to restore homeostasis (1-6-21)

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Broken societies: Inequality, cohesion and the middle-class dream

‘There is no evidence that the ethos of a people can be changed according to plan. It is one thing to engineer consent by the techniques of mass manipulation; to change a people’s fundamental view of the world is quite a different thing, perhaps especially if the change is in the direction of a more complicated and demanding morality’. (Edward Banfield in 1958)

Christian Larsen writes in 2013: The intriguing finding is that the share of ‘trusters’ has decreased dramatically in the US and UK. In 1959, 56 per cent of British respondents said that most people can be trusted; in the latest World Value Survey, this figure was down to 30 per cent. In 1960, 55 percent of Americans said that most people can be trusted; now it is 35 per cent. In Denmark and Sweden, by contrast, the share of ‘trusters’ has increased. In Denmark, it shot up from 47 per cent in 1979 to 76 per cent in 2008 (the highest level ever measured in any country). In Sweden, the share went up from 58 per cent in 1981 to 68 per cent in the latest World Value Survey.

What explains this divergence? What socioeconomic changes have shaken these countries from stable levels of trust? Why have American and British people become less trusting and Danes and Swedes more so? My answer is that the level of economic inequality within a society profoundly shapes how we perceive the trustworthiness of fellow citizens.

* those in the middle of society are seen as having little to win and a lot to lose by cheating. Why would they risk the reputational damage of being caught cheating? Anthropological studies support this notion: ‘It is those in the middle of the social spectrum, vying with one another for slight precedence in social affairs, who are most concerned about gossip and most vulnerable to its consequences.’ Again, in contrast, those less concerned about gossip ‘tend to be persons who are insulated from the social, political, and economic consequences of gossip either by their wealth … or by their accepted marginal social status’ (Merry 1997: 48).

* US data shows that those who are optimistic about the future are much more likely to trust fellow citizens than pessimists…

* social cohesion, especially as measured as trust in unknown fellow citizens, is primarily a cognitive phenomenon. Trust and distrust are judgments depending on citizens’ perceptions of their society…

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What Is Social Cohesion?

Christian Albrecht Larsen writes:

* I suggest that we define social cohesion as the belief held by citizens of a given nation-state that they share a moral community, which enables them to trust each other… The very discussion of social cohesion often implies its absence and, even more specifically, the decline of social cohesion. I suggest that we label the decline of social cohesion “social erosion”, which we then can define as fewer citizens in a given nation-state having the belief that they share a moral community that enable them to trust each other…

* In a modern globalized and multicultural world, it is difficult and problematic to cultivate a similarity of mind.

* The shift from pre-modern to modern societies can according to Giddens (1990) be described as a shift from embeddedness to disembeddedness (Giddens 1990). In such a situation, trust becomes a fundamental precondition for the ontological safety for the individual, as when by simply taking the bus you have to trust in the abilities of the experts who invented the bus, in those of the unknown bus driver, and those of all the other unknown drivers on the road. One can argue that in a “risk society” (Beck 1992) many risks can only be overcome by placing trust in unknown fellow citizens and the roles they fulfill in the social system as policemen and women, social workers, bank advisors and countless others. Even more convincing is the argument that trust in unknown fellow citizens, besides influencing individuals ability to cope with modernity, is crucial for the functioning of modern institutions such as the market, democracy, and the state…

* If we return to the definition of social cohesion provided above – the belief held by citizens of a given nation-state that they share a moral community – the point is that we are now able to specify the most important aspect of the content of the “shared moral community”. For modern (or post-modern) societies, the most important aspect is not that citizens believe they share the same religion, family values, attitude towards homosexuality or other ideals; for the everyday operation of highly differentiated societies, the most important aspect of social cohesion is that citizens believe they share the norm of not cheating each other. And fortunately, a number of international surveys allow us to measure this pivotal aspect of social cohesion.

* The overall conclusion is that no matter what part of the world one studies, one only finds few hightrust countries. So despite the importance given to trust by sociology, political science and economics, the conclusion is that by 2008-2014 the most common situation is that citizens around the globe display very little trust in their fellow citizens.

* It is well-established in previous trust research that levels in social trust are “sticky”, i.e. there is simply no quick fix to increase the level of social trust in a country.

* trust in fellow citizens has found to be rather stable over the life course. As one grows up in a given society, one forms a basic understanding of this society and it citizens. And these basic impressions from the socialization in youth are hard to shake (Uslaner 2002). This is one of the most common ways to explain the stickiness over time within countries as well as well as the stickiness among migrants (in the US context trust levels of country of origin have been found to have effects across many generations, Uslaner 2008, however, different results have been found from the Nordic context, Dinesen 2012).

Thus, when overall trust levels in a society increases overtime it is often caused by the coming a new generation with more faith in the trustworthiness of fellow citizens and the dying of a generation with less faith in fellow citizens. And the other way around, a decline in overall trust levels over time is typically caused by the coming of a new generation with low social trust and the dying of a generation with higher social trust. The classic example is the US, the best analyzed case of a decline in social trust… the American decline in trust is primarily caused by younger generations having less trust.

* Banfield might actually be right that… “there is no evidence that the ethos of a people can be changed according to plan”.

* Policy relevant implications and questions:

• Similarity of mind is difficult and problematic to create in diverse multicultural and highly differentiated societies. However, a shared perception of unknown fellow citizens being trustworthy is highly relevant in order to make such societies work.
• A shared perception of fellow citizens being trustworthy is not easily achieved. Such “societal glue” is unlikely to be created by societies simply being wealthier. On the country, the increased economic inequality often attached to economic progress is likely to lower trust levels.
• Social trust in diverse multicultural and highly differentiated societies is dependent on collective political actions aiming at creating a coherent society; this is an ongoing nation building process. Pivotal in this nation building process are a moderation of economic inequalities and the establishment of a uncorrupt state institutions.

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