Gongol.com Archives: June 2021

Brian Gongol

June 7, 2021

Business and Finance Can we start talking about housing affordability yet?

It's hard to escape the news that housing prices have jumped by quite a lot, across many markets, in a very short period of time. Low interest rates, changing work patterns (especially the growing option to work from home), and other factors all play into what's going on. And it certainly doesn't help that lumber prices have risen 300% since last April. If new construction becomes more expensive, that adds fuel to the prices of existing homes. ■ Amid the momentary boom cycle, we ought to make ourselves think seriously about what housing is for. As Le Corbusier said, "A house is a machine for living in". While that was a statement of architectural principle, it has merit as a statement on finances and policymaking, too. ■ Housing is a universal need. Some would call it a human right, but that language isn't helpful -- human rights are the things you possess by virtue of birth, like your right to free expression, and they can only be taken away by the deliberate actions of others. Universal needs, by contrast, are things we have to pay for, using the world's finite resources. This may seem like a trivial difference in language, but it's rather significant. Unless scarcity is a part of our context for thinking about how we supply universal needs, we can't come to reasonable conclusions about how to deliver them. ■ The way we've responded to that scarcity in the United States reflects the demands of some strongly vested interests. The real-estate industry, for instance, benefits from lots of churn and rising prices. The construction sector broadly benefits from lots of site-built, single-family projects that keep lots of people at work. The financial sector benefits from people borrowing the largest amounts they can possibly afford and from taking out further loans for renovations and expansions over time. These vested interests tend to encourage a perspective that rewards American households for sinking as much money into housing as possible, which is broadly encouraged by our habit of referring to housing as a family's "biggest financial asset". ■ It isn't hard to find critics of more-permissive zoning regulations who equate enthusiasm for expanding the supply of housing with pimping for private developers. But just because it's easy to create a meme doesn't mean the logic behind it is sound. There's no inherent hypocrisy in choosing to live in a single-family home while cheering on the development of new housing at higher densities. ■ The root cause of the problem is that, in treating housing as a financial instrument, we create a whole lot of private incentives for people to oppose the creation of new, attractive supplies of housing stock at affordable prices. Manufactured and modular housing, for example, can be delivered at much lower costs per square foot than comparable site-built single-family housing. Backyard housing (in the form of auxiliary dwelling units, or ADUs) can be produced in 30 days -- where the laws will allow. Innovations from other countries (like Japan's mass-customized housing industry) could have much to teach us. ■ With prices rising and supplies unusually tight, there is no better time than now to look at the root causes and to ask whether our incentive structures and rules are set up in ways that have too many people committing too much of their hard-earned money to shelter (in the name of "investment") when there could be far better returns available from putting their money to work elsewhere -- whether in financial investments, educational opportunities, or even goods like vacations. Housing is a universal need -- and that means our minds should turn to how best to supply the maximum amount of it so that people can satisfy their needs while having resources left over to put elsewhere.

Computers and the Internet One part of government that should be expanded: Cyber Force

One of the reasons the United States needs a Cyber Force (and needed one before we needed a Space Force) is because we need a recognizable service academy for that part of defense. It's no different, really, from branching the Air Force away from the Army -- new technology has opened a new domain of warfare. With that new domain come new challenges, new areas needing devoted study, new legal requirements, and a new need to be taken seriously. ■ One way to lend credibility to a sector is to devote research and academic discipline to it. Thomas Jefferson signed the legislation establishing West Point in 1802; the Naval Academy didn't come to fruition until the mid-1800s. In between, James Madison asked Congress in 1810 for "the establishment of an additional [military] academy at the seat of Government or elsewhere", justifying his request thus: "Even among nations whose large standing armies and frequent wars afford every other opportunity of instruction[,] these establishments are found to be indispensable for the due attainment of the branches of military science which require a regular course of study and experiment." ■ The four legacy armed services each have a specific domain of fighting: Land (Army), sea (Navy), air (Air Force), and amphibious zones (Marines). A project to re-focus the Marine Corps on that amphibious mission has stirred some controversy, but they're ditching the tanks and spending more time in the water. The new Space Force narrows the focus of the Air Force to the airspace closer to the ground. Taken altogether, the defense posture of the Pentagon is taking an increasingly precise look at where each fighting force conducts its operations. ■ None of these places -- space, air, land, sea, or beaches -- fits neatly with the digital world. And yet cyberspace is exactly where an increasing amount of conflict is taking place. Some of the bad things that are happening are criminal (like the ransomware attack on the meatpacker JBS). Some of them are military-driven (like Russia's attack on Ukraine's power grid). Some affect highly sensitive areas that have clear-cut national security implications (like the Colonial Pipeline cyber attack). Still others are self-evidently motivated by the strategic interests of state-level adversaries (like China's repeated assaults on databases containing data on Federal employees). ■ It is exactly because the cyber domain is complicated -- not only from a technological standpoint, but from legal and strategic viewpoints as well -- that the United States really ought to have a distinct defense branch commissioned explicitly to protect the country's security interests in that realm. To borrow from Madison's words, we need to regularize both "study and experiment". If foreign governments were facilitating, say, bands of airborne pirates parachuting into the country to rob American companies at gunpoint, one might reasonably expect us to treat it like a national-security risk. What's happening is, functionally, little different. ■ It has long been noted that one of the issues that hamstrings our cyber defense is that it's really hard for the Pentagon to compete with the private sector for computing talent. A different kind of workforce approach is needed -- so different from the incumbent service branches that it has to stand on its own. ■ A stand-alone Cyber Force would encourage the cultivation of a more comprehensive way of looking at cyber defense -- complete with theories of conflict, rules of engagement, approaches to recruitment, skill development, and even a distinct "look and feel". And perhaps even more than in the other branches, the need for a respected, research-focused, state-of-the-art training academy would be a distinctive tool for a Cyber Force to advance the national defense. ■ Any sound analysis of the future would have to conclude that the high-technology domains are going to play a more significant role in the conflicts to come than they have in the past. And just as code-breaking was a profoundly powerful weapon in WWII, so will the technological advantages we can accrue in cyber warfare. We shouldn't be afraid to put a name and a mission statement on what we know is inevitably going to be needed next.