Pricing Follows Power

In San Francisco, most people spend much more on housing than food. Does this mean that housing brings much greater value to people’s lives? No. If I were forced to choose between housing without food and adequate food without housing, I’d rather have enough food and take my chances as an unsheltered homeless person. In reality, I might decide that temporarily lacking food but keeping my housing would be better for my social status and prospects of improving my situation (the stigma of being homeless makes it harder to improve one’s socio-economic standing). But if I believed the situation would last over three months, I would choose food.

Why is housing drastically more expensive than food? Simple – people who control housing have more power to increase prices than people who control food.

Housing is much more than physical shelter. Climate-appropriate tents are cheap and provide sufficient shelter for survival. If physical shelter is all that is needed, that’s the solution. Sometimes, that IS the solution; many people in San Francisco lived in tents after the 1906 earthquake and fire.

Another part of ‘housing’ is the social consensus that someone may reside in a particular spot. Away from others, social consensus does not matter; wherever there are others, social consensus is necessary. Otherwise, it’s dangerous to live there. Immediately after the 1906 earthquake and fire, the social consensus was that (some) people may live in tents. Now, there is a general social consensus that someone can pitch a tent on private property with the owner’s permission (but what is private property?) or in the safe sleeping villages (though some neighbors object). Otherwise, someone living in a tent pitched in San Francisco, lacking the protection of social consensus, is at much higher risk of being assaulted, robbed, or being forced to move.

Though social consensus overlaps a lot with what is legal, it’s not the same. Someone can illegally squat somewhere in relative safety if the neighbors (including local law enforcement) approve. Even someone with a legal right to residence is in danger if the neighbors, disregarding that right, are willing to use violence to drive them out.

In some places, food is more expensive than housing. Do people in those places value food more highly than housing? Not necessarily. Food is more expensive because the people who control food have more pricing power than people who control housing.

For example, when I visited Alaska, I spent more money on food than lodging. Though housing in specific parts of Alaska is pricey, land is plentify and construction regulations are relaxed; many Alaskans can (and do) get cheap land and build their own house. That limits how much people can charge for housing. Also, Alaskans are chill about tents; I could always get permission to pitch my tent somewhere.

By contrast, distributing food in Alaska is difficult. Sometimes supply boats screw up their schedules (I experienced this in Alaska; it meant that certain foods were not available at any price in that town that week). Because it’s difficult, few people do it; because few people distribute food, they can charge high prices or get away with sloppy scheduling. It’s easy to distribute food in San Francisco, so if someone charges too much money for food or screws up a shipment, I can go to a competitor with better prices or a more reliable shipment schedule.

There are other material needs, such as clothing. Cheap clothing is a recent phenomenon. Even in the 1950s, many households in the United States spent 10% of their income on clothing. Before the industrial revolution, clothing was even more expensive. Did clothing become cheap because it lost worth? Nope. For physical survival, clothing (including blankets) is more important than shelter. If I had no clothing or bedding (and ignored the central heating and functional fireplace), I’m certain I would get hypothermia. Clothing is cheap because nobody has the economic power to make basic clothing as expensive as basic housing.

So far, I’ve only talked about material needs. What about… stories? All storytelling industries combined (movies, book publishing, electronic games, TV, radio, etc.) form a tiny slice of the economy in terms of gross domestic product. But people’s time? People’s headspace? Though people spend a lot of time thinking about food, clothes, and shelter, I bet people spend even more time thinking about stories. The storytelling industries are so monetarily small not because people aren’t obesessed with stories, but because storytellers lack pricing power. Practically everyone can make stories. When the professional storytellers set their prices too high, people ignore them.

Some people claim prices always exactly match value. That is false. For example, a few weeks ago, I read an article which said, because ‘people are always paid what they are worth in capitalism’, the labor of minimum-wage workers can’t be worth more than minimum wage; therefore raising minimum wage is bad. Bullshit. There are minimum wage workers who save lives, while there are CEOs who are paid over 10 million dollars a year to wreck their corporation’s economic engine (a philosopher may argue that this is sometimes a positive outcome, but that is not what CEOs are supposed to do). People are paid minimum wage because they lack the bargaining power to get higher wages. Lacking ability in certain job tasks may have something to do with that lack of power, but that is merely one factor among many.

Beware the people who claim that prices are based on intrinsic value, not socio-economic-political leverage. They may deflect attention away from people with power because they fear that power may be lost.

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