Oh come on. You didn't buy the CDs as an investment, planning to sell. You got what you paid for. You can still listen to the CDs. You have lost nothing. A price drop matters only if you were planning to sell (as with a house).
In the day and age of fintech brokerages, ETFs and bonds, policy should be set up in way where people are incentivized to use more appropriate investing instruments that do not price the young people out of economically productive regions. A good example would be Tokyo, which historically treats the housing more as a depreciating consumption good, no different from a CD.
Bingo, people downsize in retirement, they don't upsize and it's because (made up percentage) they planned to use 50% of that sale to fund their retirement activities. 50% of zero doesn't buy you dinner regardless of where you can live now, nor get you there, pay the utilities, etc.
I'm a bit puzzled by this claim: "If I were totally set in my ways, I really would be $40,000 poorer with no offsetting gain." Even if you were not to use new streaming services, you have had the wonderful experience of having listened to all that awesome music during the previous decades. Only you know whether that was worth the $40,000 you dropped on it. As for me, knowing what I know about the music I've adored, what that has meant to me as the soundtrack of my life, and how that has enriched my life for decades (on vinyl, casettes, and CDs), *that* is precisely a tremendous value for me that I will never regret spending all that money on.
I want to note, for the record, that I totally agree with you about housing deregulation. Even if that were to drive housing values way down, I never thought I was entitled to have that be any particular valuation.
1) The price of real estate is the price to exclude poor people, because the presence of poor people has negative externalities.
2) If you build cheap housing next to me poor people move in and the value of my house goes down. If I want to not live around poor people I have to sell my house and buy a new one in a neighborhood without poor people, but my house went down in price 50% while a house in a good neighborhood stayed the same.
3) Before the civil rights era there were ways have neighborhoods with cheap housing units that kept the underclass out/in-line, but those days are gone. Price is the only effective way left to segregate.
4) Many boomers either don't have kids or don't give a fuck about them. They want to either sell their house for a gajillion dollars and buy a cheaper one in Florida and go on cruises (young people will be force to buy it for a gajillion dollars because the jobs are in SF/NY not Florida). Or get a reverse mortgage based on the inflated assessment, spend down their equity on cruises, and then die penniless leaving their kids with nothing.
The presence of poor people having negative externalities is a highly contestable assumption. It may have consequences you don't like, but that does not equal negative externalities.
As is often the case, you mix several good - and provocative - ideas with at least one false one.
In this case, it is your #2.
Because if people are allowed to build more housing in an area, then even if the value of your *house* may fall, the value of you *land* likely rises - especially in CA “where the jobs are”, as it can be sold to a developer who tears down the house and puts up a multifamiliy unit.
Or you can put an ADU in the yard and increase the value that way.
Adu’s only work if individual homeowners can skirt under the enforcement of the civil rights regime in a way apartment buildings and trailer parks can’t.
“If I were totally set in my ways, I really would be $40,000 poorer with no offsetting gain.”
Your children inheritance example immediately following the quoted line is not bad, and of course your description re housing costs going down and the rationale why people should be for it - so long as it is relatively uniform, and not primarily impacting them - makes a lot of sense.
But the claim that you would be $40K poorer because of streaming is just false.
First because you enjoyed some no doubt POSITIVE consumer surplus from having owned those CDs all those years that exceeded the $40K you spent. And this positive consumer surplus is true for essentially each of the ones you bought save perhaps the ones purchased in the immediate few months before you switched to streaming.
Second, because “Set in your ways” you wanted to keep listening to that music, so selling it for dollars wasn’t in the cards.
Third, even if you are claiming that the CD collection was a sellable asset, it was not worth the full $40K even before streaming showed up. Maybe $10K or $15K at most, given transaction costs.
Which means even if you ignore the consumer surplus - which is why any consumer buys almost anything ever to begin with, to be better off than they are by just holding the money spent instead of - $40K poorer is way overstated.
He did not ignore consumer surplus. The homeowner also had surplus for living in their house for decades. He, and they, lose money because a new technology/development reduced the value of their assets, and that's independent of how much they enjoyed the assets before.
Your point on past consumer surplus is fair enough.
But the “new technology/development” did not reduce the value of his CDs by $40,000, because they were not immediately pre-event worth close to what he paid for them.
Where the house if held all those years is likely worth way more than what he originally paid.
Stuffing an apartment building next to a nice suburban home doesn’t mean the owner can now afford another nice suburban home without an adjacent apartment building.
Is it a net gain for society through the new apartment dwellers? Probably. But stop pretending the homeowner doesn’t lose. They’re not stupid.
I mean it’s right there in the name NIMBY. Nobody is opposed to deregulation somewhere else. They don’t want their existing backyard densified. Any political solution to housing needs to understand that. ADU’s manage to be reasonably successful because the existing homeowners have a combination of gains and losses that balance out. Building apartments in existing neighborhood hurts all existing homeowners.
In Australia, people invest in rental properties which produce negative net income (after financing costs) on the basis that they expect real capital gains. So any fall in value is bad for them!
If it’s a change to regulation in the neighborhood, as opposed to merely a single incremental development, then the regulation change that allows new housing development likely makes the value of the NIMBY’s land greater, since developers now have a lot more incentive to purchase that land,
"new housing development likely makes the value of the NIMBY’s land greater" I don't know much (I wish I did) how zoning works but I'm kind of skeptical of this claim. Because if changes in regulation/zoning just made NIMBY's land appreciate in value, then we'd have more home owners advocating for changes to the regulation (upzoning is the term?) to allow for more development in the neighborhood. Are they just patently against their economic interest? Maybe? I just don't know.
But at least in places like CA where the housing shortages are worst, yes I do believe that some meaningful number of NIMBYs are ignorant of their own economic interest at least some of the time.
This is good, but I think undersells the value of owning CDs (and a local-only music streaming server.)
I pay for Apple Music to: a) spare myself the expense of running such a server, and b) to find new music and playlists.
But I thoroughly enjoy the insurance value of knowing I own (significantly fewer) CDs in case streaming music services become too expensive or stop being a source of valuable new music.
Also, did you really pay full price for every CD? Did you never sign up for Columbia’s CD subscriptions with 12 CDs for $1??
(I know it’s just to make your overall point. But I think you also ignore how having more neighbors makes my home more valuable by giving me more possible friends and collaborators and giving local businesses more incentive to locate close to us.)
The real value of owning the physical music (even if a mp3 you bought) is it doesn't get cancelled or demonetized. A lot of movies never made it off VHS to DVD and it's impossible to find them streaming today. A lot of music likewise, especially when it ran afoul of modern "taste" or wokeness. I have dozens of CDs and music tapes where you can't find the music digitally anymore anywhere. Could once in many cases but then it was deemed offensive. Movies are in that boat too, especially if you have a passion for old turn of your century French New Wave Cinema, many of which are now illegal to even own or sell anymore in 21st Century NeoPuritan America which definitely means they aren't getting streamed.
But the value of your asset has gone down. Your net worth has gone down. What is the buying-power value of a worthless “mansion”?
I mean, with this logic, shouldn’t you want deflation too? “What used to cost $2 now only costs $1. Think of how much more stuff you could buy. And your kids could buy.”
That’s true, although with the sticky wage mechanism it might cause more unemployment instead of lowering average wages.
But still, I agree that the housing aspect differs from deflation as it has less direct impact on income; it merely erodes wealth, since the biggest asset for most people is their home value.
I suspect many of your music CD's are worth more than $1. You'd be surprised. Especially take note of your imported CDs which had lower distribution. Here's an idea - buy a CD player! You can also buy boxes of CD jewel cases to replace any of your old ones that have snapped, cracked.
One idea you omitted was you are now decades older and simply do not wish to put in the time to either listening or selling your collected music.
Great point, this analogy does a good job of illuminating the flaws with NIMBYism that are often overlooked. I'd also note that specifically in the case of "forever homes", no value is lost to the owner even if the price of the house falls. This is because the owners are planning to live in it "forever" anyways. They're not planning on selling it, so really it wouldn't matter to them even if the price dropped to $0 (and hey, maybe they'd even have lower property taxes!).
Of course, they may be concerned that their children would inherit a house that's now worth less money. But here, this loss really is basically offset by every other house costing less too. It would be basically the same as if your inheritance was cut in half, but all prices were cut in half too. In purchasing power terms, nothing changed. But what did change is that everyone who DIDN'T have inheritance now became richer. So again, a win-win (or at least, a "not-lose"-win).
Libraries no longer loan out CDs. (That is, in Fullerton CA). So they don't accept CD donations anymore either.
Instead use "playlists" on youTube. Takes up no space at all in your house.
Here's mine. I'm very proud of it. Put this in the search window "BEST OF THE LEAST known composers" And on the right click on "filters" and choose "playlists."
Just wondering, how do you think a musician should feel about this essay? It appears that a substantial source of their livelihood (CD sales) has recently been gutted of its economic value.
As much as I love my spotify subscription, I also feel guilty on behalf of the musicians whose CDs I used to buy, who no longer get that income (my understanding is that the formula for payment ends up paying the vast majority of musicians far less money than they would have made by selling their CDs, unless they are among the few with massive listening audiences).
I do still by CDs or digital downloads from bandcamp, etc, but not nearly as many as I used to (I believe my collection is a bit smaller than yours, but still in the thousands, and a fair number of those are duplicate CD versions of albums I had previously bought on vinyl).
I know a couple musicians and it's basically returned to it's roots in living history, I.e. you make your money actually performing, not passively off canned performances. Recordings now are simply adverts for shows. The middling musician has been gutted but the high and low ends are doing fine, in some cases better. BTS isn't hurting, nor is the local string band nor the 4track touring punk band getting paid on bar door sales and beer.
3. Pleasure. joy in the object, status of ownership, identity, signalling
let's assume owning a CD collection is more likely to be for reasons of pleasure - you gain status from having every Beatles record, there is joy in the hunting and fulfilling a collection, the object is a work of art and so on
Owning a house is more likely to be for security and financial reasons - the potential home owner makes a bet on whether to buy or rent based on the likely future value before committing to a long-term mortgage. If the home owner experiences the pleasure of the home (e.g. it is a work of art) then it matters less
a better comparison is education. is it worth spending $100,000 on education and a certificate if the value of the education is diminished by a free alternative?
Oh come on. You didn't buy the CDs as an investment, planning to sell. You got what you paid for. You can still listen to the CDs. You have lost nothing. A price drop matters only if you were planning to sell (as with a house).
In the day and age of fintech brokerages, ETFs and bonds, policy should be set up in way where people are incentivized to use more appropriate investing instruments that do not price the young people out of economically productive regions. A good example would be Tokyo, which historically treats the housing more as a depreciating consumption good, no different from a CD.
“You have lost nothing.”
Well… you are mostly correct. See my answer elsewhere.
But the CDs did have some option sale value, although I agree it’s nowhere near the entire $40K.
Bingo, people downsize in retirement, they don't upsize and it's because (made up percentage) they planned to use 50% of that sale to fund their retirement activities. 50% of zero doesn't buy you dinner regardless of where you can live now, nor get you there, pay the utilities, etc.
I'm a bit puzzled by this claim: "If I were totally set in my ways, I really would be $40,000 poorer with no offsetting gain." Even if you were not to use new streaming services, you have had the wonderful experience of having listened to all that awesome music during the previous decades. Only you know whether that was worth the $40,000 you dropped on it. As for me, knowing what I know about the music I've adored, what that has meant to me as the soundtrack of my life, and how that has enriched my life for decades (on vinyl, casettes, and CDs), *that* is precisely a tremendous value for me that I will never regret spending all that money on.
I want to note, for the record, that I totally agree with you about housing deregulation. Even if that were to drive housing values way down, I never thought I was entitled to have that be any particular valuation.
1) The price of real estate is the price to exclude poor people, because the presence of poor people has negative externalities.
2) If you build cheap housing next to me poor people move in and the value of my house goes down. If I want to not live around poor people I have to sell my house and buy a new one in a neighborhood without poor people, but my house went down in price 50% while a house in a good neighborhood stayed the same.
3) Before the civil rights era there were ways have neighborhoods with cheap housing units that kept the underclass out/in-line, but those days are gone. Price is the only effective way left to segregate.
4) Many boomers either don't have kids or don't give a fuck about them. They want to either sell their house for a gajillion dollars and buy a cheaper one in Florida and go on cruises (young people will be force to buy it for a gajillion dollars because the jobs are in SF/NY not Florida). Or get a reverse mortgage based on the inflated assessment, spend down their equity on cruises, and then die penniless leaving their kids with nothing.
High house prices = more cruises.
The presence of poor people having negative externalities is a highly contestable assumption. It may have consequences you don't like, but that does not equal negative externalities.
When people sell houses at significant discounts whenever poor people are nearby its not a contestable assumption, its a market verified fact.
As is often the case, you mix several good - and provocative - ideas with at least one false one.
In this case, it is your #2.
Because if people are allowed to build more housing in an area, then even if the value of your *house* may fall, the value of you *land* likely rises - especially in CA “where the jobs are”, as it can be sold to a developer who tears down the house and puts up a multifamiliy unit.
Or you can put an ADU in the yard and increase the value that way.
Adu’s only work if individual homeowners can skirt under the enforcement of the civil rights regime in a way apartment buildings and trailer parks can’t.
“If I were totally set in my ways, I really would be $40,000 poorer with no offsetting gain.”
Your children inheritance example immediately following the quoted line is not bad, and of course your description re housing costs going down and the rationale why people should be for it - so long as it is relatively uniform, and not primarily impacting them - makes a lot of sense.
But the claim that you would be $40K poorer because of streaming is just false.
First because you enjoyed some no doubt POSITIVE consumer surplus from having owned those CDs all those years that exceeded the $40K you spent. And this positive consumer surplus is true for essentially each of the ones you bought save perhaps the ones purchased in the immediate few months before you switched to streaming.
Second, because “Set in your ways” you wanted to keep listening to that music, so selling it for dollars wasn’t in the cards.
Third, even if you are claiming that the CD collection was a sellable asset, it was not worth the full $40K even before streaming showed up. Maybe $10K or $15K at most, given transaction costs.
Which means even if you ignore the consumer surplus - which is why any consumer buys almost anything ever to begin with, to be better off than they are by just holding the money spent instead of - $40K poorer is way overstated.
He did not ignore consumer surplus. The homeowner also had surplus for living in their house for decades. He, and they, lose money because a new technology/development reduced the value of their assets, and that's independent of how much they enjoyed the assets before.
Your point on past consumer surplus is fair enough.
But the “new technology/development” did not reduce the value of his CDs by $40,000, because they were not immediately pre-event worth close to what he paid for them.
Where the house if held all those years is likely worth way more than what he originally paid.
Listening to a CD is a completely different experience from listening to a streaming service. It's almost like listening to a different song.
Stuffing an apartment building next to a nice suburban home doesn’t mean the owner can now afford another nice suburban home without an adjacent apartment building.
Is it a net gain for society through the new apartment dwellers? Probably. But stop pretending the homeowner doesn’t lose. They’re not stupid.
I mean it’s right there in the name NIMBY. Nobody is opposed to deregulation somewhere else. They don’t want their existing backyard densified. Any political solution to housing needs to understand that. ADU’s manage to be reasonably successful because the existing homeowners have a combination of gains and losses that balance out. Building apartments in existing neighborhood hurts all existing homeowners.
In Australia, people invest in rental properties which produce negative net income (after financing costs) on the basis that they expect real capital gains. So any fall in value is bad for them!
Note that regulation made your house expensive to begin with.
There is a collective action problem here.
NIMBY loses housing value for sure (let’s assume) when new housing comes to his neighborhood.
But housing prices don’t drop until there is new housing everywhere else.
So for the NIMBY, losses look certain but gains a lot less so.
Agreed for certain NIMBY cases, but not all.
If it’s a change to regulation in the neighborhood, as opposed to merely a single incremental development, then the regulation change that allows new housing development likely makes the value of the NIMBY’s land greater, since developers now have a lot more incentive to purchase that land,
"new housing development likely makes the value of the NIMBY’s land greater" I don't know much (I wish I did) how zoning works but I'm kind of skeptical of this claim. Because if changes in regulation/zoning just made NIMBY's land appreciate in value, then we'd have more home owners advocating for changes to the regulation (upzoning is the term?) to allow for more development in the neighborhood. Are they just patently against their economic interest? Maybe? I just don't know.
Of course, the changes are uncertain and unkown.
But at least in places like CA where the housing shortages are worst, yes I do believe that some meaningful number of NIMBYs are ignorant of their own economic interest at least some of the time.
This is good, but I think undersells the value of owning CDs (and a local-only music streaming server.)
I pay for Apple Music to: a) spare myself the expense of running such a server, and b) to find new music and playlists.
But I thoroughly enjoy the insurance value of knowing I own (significantly fewer) CDs in case streaming music services become too expensive or stop being a source of valuable new music.
Also, did you really pay full price for every CD? Did you never sign up for Columbia’s CD subscriptions with 12 CDs for $1??
(I know it’s just to make your overall point. But I think you also ignore how having more neighbors makes my home more valuable by giving me more possible friends and collaborators and giving local businesses more incentive to locate close to us.)
The real value of owning the physical music (even if a mp3 you bought) is it doesn't get cancelled or demonetized. A lot of movies never made it off VHS to DVD and it's impossible to find them streaming today. A lot of music likewise, especially when it ran afoul of modern "taste" or wokeness. I have dozens of CDs and music tapes where you can't find the music digitally anymore anywhere. Could once in many cases but then it was deemed offensive. Movies are in that boat too, especially if you have a passion for old turn of your century French New Wave Cinema, many of which are now illegal to even own or sell anymore in 21st Century NeoPuritan America which definitely means they aren't getting streamed.
But the value of your asset has gone down. Your net worth has gone down. What is the buying-power value of a worthless “mansion”?
I mean, with this logic, shouldn’t you want deflation too? “What used to cost $2 now only costs $1. Think of how much more stuff you could buy. And your kids could buy.”
With deflation your wages will fall as well.
That’s true, although with the sticky wage mechanism it might cause more unemployment instead of lowering average wages.
But still, I agree that the housing aspect differs from deflation as it has less direct impact on income; it merely erodes wealth, since the biggest asset for most people is their home value.
I suspect many of your music CD's are worth more than $1. You'd be surprised. Especially take note of your imported CDs which had lower distribution. Here's an idea - buy a CD player! You can also buy boxes of CD jewel cases to replace any of your old ones that have snapped, cracked.
One idea you omitted was you are now decades older and simply do not wish to put in the time to either listening or selling your collected music.
Great point, this analogy does a good job of illuminating the flaws with NIMBYism that are often overlooked. I'd also note that specifically in the case of "forever homes", no value is lost to the owner even if the price of the house falls. This is because the owners are planning to live in it "forever" anyways. They're not planning on selling it, so really it wouldn't matter to them even if the price dropped to $0 (and hey, maybe they'd even have lower property taxes!).
Of course, they may be concerned that their children would inherit a house that's now worth less money. But here, this loss really is basically offset by every other house costing less too. It would be basically the same as if your inheritance was cut in half, but all prices were cut in half too. In purchasing power terms, nothing changed. But what did change is that everyone who DIDN'T have inheritance now became richer. So again, a win-win (or at least, a "not-lose"-win).
Libraries no longer loan out CDs. (That is, in Fullerton CA). So they don't accept CD donations anymore either.
Instead use "playlists" on youTube. Takes up no space at all in your house.
Here's mine. I'm very proud of it. Put this in the search window "BEST OF THE LEAST known composers" And on the right click on "filters" and choose "playlists."
Just wondering, how do you think a musician should feel about this essay? It appears that a substantial source of their livelihood (CD sales) has recently been gutted of its economic value.
As much as I love my spotify subscription, I also feel guilty on behalf of the musicians whose CDs I used to buy, who no longer get that income (my understanding is that the formula for payment ends up paying the vast majority of musicians far less money than they would have made by selling their CDs, unless they are among the few with massive listening audiences).
I do still by CDs or digital downloads from bandcamp, etc, but not nearly as many as I used to (I believe my collection is a bit smaller than yours, but still in the thousands, and a fair number of those are duplicate CD versions of albums I had previously bought on vinyl).
I know a couple musicians and it's basically returned to it's roots in living history, I.e. you make your money actually performing, not passively off canned performances. Recordings now are simply adverts for shows. The middling musician has been gutted but the high and low ends are doing fine, in some cases better. BTS isn't hurting, nor is the local string band nor the 4track touring punk band getting paid on bar door sales and beer.
I don't think you are comparing apples with apples
a better comparison is between education and housing, not CDs and housing
Three reasons for ownership:
1. Security. Ownership ensures continued, uninterrupted access
2. Financial. Bet on the increase in value
3. Pleasure. joy in the object, status of ownership, identity, signalling
let's assume owning a CD collection is more likely to be for reasons of pleasure - you gain status from having every Beatles record, there is joy in the hunting and fulfilling a collection, the object is a work of art and so on
Owning a house is more likely to be for security and financial reasons - the potential home owner makes a bet on whether to buy or rent based on the likely future value before committing to a long-term mortgage. If the home owner experiences the pleasure of the home (e.g. it is a work of art) then it matters less
a better comparison is education. is it worth spending $100,000 on education and a certificate if the value of the education is diminished by a free alternative?