Demand Better Journalism

So something has been annoying me for a while. News articles will bemoan the shortage of affordable this or that. "There is a huge demand for cheap housing that simply isn't being met," the reports will go. Now, there is some sliver of merit to this concept (see below), but for the most part it's bullshit.

The main reason it's bullshit is that "demand" isn't meant as a synonym of "desire." Sure, we all want the things we buy to be cheaper. That's not news. Demand isn't what we want, though, it's a function of our willingness to pay. At any given price, a certain number of people will be willing to buy a certain amount of the product. Generally, the lower the price, the more will be demanded.

Now, a lot more people want most products than are willing to pay for them. On what grounds do we say that it's a good thing these people don't get the goods? The answer is that it's not worth it for society to produce the extra goods. Say someone is willing to pay $10,000 for a Civic, and it costs $12,000 to build one (just making up these numbers). We could spend $12,000 worth of resources and then turn over a car that is valued at $10,000. The net loss to society is $2,000. That's why we only want to give goods to people when they value them at least as much as the cost of producing them.

And that brings us to the one glimmer of truth in the idea of demand for affordable housing. In some parts of the country, the supply has been artificially restricted for various reasons. In some NYC suburbs, there's a minimum lot size because the residents don't want to live near poor people. As a result, I read in the NY Times, it's very difficult to hire firefighters for these suburbs (they have to be close to their jobs, I guess). Technically demand isn't going unmet, but
that's because prices have been inflated to the point that many working-class people aren't willing or able to pay. Fucking suburbs.