Month: July 2025

Perhaps 7% of homes turnover in a year

Is Rural Housing Really Unaffordable? The Numbers Tell a Different Story

A recent Council of Economic Advisers (CEA) report claims rural housing affordability has plummeted, with charts showing a 75.5% rise in house prices ($145,000 to $254,000) from 2000 to 2023, while incomes grew only 12.3% ($65,000 to $73,000). This suggests a price-to-income ratio jumping from 2.2 to 3.5, implying homes are much harder to afford. But the charts mislead by lumping everyone together, hiding who’s really affected.

The CEA’s charts (Figures 5 and 6) plot real income and house prices for all rural homeowners, suggesting everyone faces a $254,000 price tag. Here’s the catch: only about 7% of rural homes (~1.6 million households) are sold each year. Most homeowners have fixed costs from years ago, like a $145,000 mortgage from 2000, and aren’t hit by today’s prices. Even worse, only a third of those sales—about 2% of all homes—are to first-time buyers, who truly face the 3.5 ratio. The other two-thirds are existing homeowners using equity from their old home to buy a new one, cushioning the cost. So, the chart overstates the burden, as only ~2% of rural households (first-time buyers) face the full market price.

Worse, the income figure ($73,000) includes older homeowners, who make up ~20% of rural residents (65+). Many own their homes outright, with low costs (e.g., $2,540/year in taxes on a $254,000 home) and low incomes (e.g., $30,000 from pensions). This drags down the median income, inflating the 3.5 ratio. Young buyers (25–45), earning ~$85,000, face a better ratio (~3.0), showing the problem isn’t as dire for them.

Picture a bar chart: in 2000, the price-to-income ratio was 2.2 for all. In 2023, it’s 3.5 for everyone (per the CEA), but only 3.0 for young buyers. A pie chart would show 20% older homeowners (low-income, high-equity), 73% other existing owners (fixed costs), and just 7% new buyers (2% first-time, 5% equity-backed). By mixing everyone into one pool, the details are drowned out.

Prices have gone up. They are set by the purchasing abilities of those entering the market. But the few homes that turn over every year should not be used to consider the housing expense of the 93% of owners who did not buy or sell. That obligation was set years prior in a different market.

Single Issue Groups vs Pluralistic Partnerships

Two recent articles by prominent housing policy voices reveal a shared concern about the structural limitations of the YIMBY movement’s traditional approach. Both Chris Elmendorf’s “YIMBYism started as a single-issue movement. It’s time to think bigger” and Matthew Yglesias’s “The power of a single-issue group” examine how YIMBY organizations have operated as focused advocates for increased housing density, but each author suggests that this narrow framework may need evolution to achieve lasting success.

The Competitive Model of Single-Issue Advocacy

Both authors describe YIMBY groups through a similar structural lens: as collections of people united around the singular goal of increasing housing density through land use reform and community lobbying. This approach has positioned YIMBY organizations as competitors in the arena of local politics, where they must vie against other community interests—from neighborhood character preservation to parking concerns—to secure favorable outcomes.

This competitive dynamic has been YIMBY’s strength. As Elmendorf notes, “The signal advantage of one-issue groups is that they can work with almost any legislator. By not taking stances on peripheral issues, they avoid making enemies.” Similarly, Yglesias emphasizes that “the strength of YIMBYism over the past 10-15 years has largely derived from its single-issue orientation during a time of relentless political polarization.” The movement has achieved bipartisan success across diverse political landscapes precisely because it hasn’t alienated potential allies by taking controversial positions on unrelated issues.

However, both authors identify a fundamental limitation in this competitive approach. When YIMBY groups operate as single-issue advocates, they inherently position themselves in opposition to other legitimate community concerns rather than as partners in comprehensive neighborhood improvement.

The Case for Pluralistic Collaboration

The articles converge on a crucial insight: sustainable support for housing density may require YIMBY groups to embrace a more pluralistic approach that considers multiple public goods simultaneously. Rather than competing against other neighborhood priorities, they could collaborate to address the full spectrum of urban challenges.

Elmendorf argues that this shift is not just strategically wise but empirically necessary. His research reveals that “people who feel good about big cities want existing cities to become more canonically city-like.” This finding suggests that support for density depends heavily on broader urban quality of life—including schools, transportation, public safety, and cultural amenities.

Yglesias acknowledges the value of this broader approach while defending the continued importance of single-issue organizing. He recognizes that multi-issue coalitions can offer something valuable to skeptical neighbors: addressing their concerns about construction impacts by simultaneously improving schools, transit, and safety.

Beyond Zero-Sum Thinking

The structural shift both authors envision moves beyond zero-sum competition toward collaborative problem-solving. Instead of viewing neighborhood concerns as obstacles to overcome, a more pluralistic YIMBY approach would treat them as legitimate issues requiring integrated solutions.

This doesn’t mean abandoning the core mission of increasing housing supply, but rather embedding that mission within a broader framework of neighborhood improvement. As Elmendorf suggests, such an approach could offer community members a compelling trade-off: “You may not like all the buildings, but you’ll love the great schools, safe streets, fast transit, and thriving business that we’ll deliver.”

The Challenge of Multiple Public Goods

Both authors acknowledge the complexity of this transition. Weighing multiple public goods requires sophisticated political judgment and potentially controversial prioritization decisions. A group focused solely on housing can avoid taking positions on education funding or transit investment; a multi-issue coalition cannot.

Yet this complexity may be precisely what sustainable urban policy requires. Rather than treating housing, transportation, education, and public safety as separate domains competing for attention and resources, effective urban governance demands understanding their interconnections and potential synergies.

Conclusion

While Elmendorf and Yglesias differ on whether YIMBY organizations should fully embrace multi-issue coalition building or maintain some single-issue focus, they share a recognition that the movement’s competitive, narrow approach has structural limitations. The path forward likely involves both preserving the strategic advantages of focused advocacy while developing new organizational forms capable of the pluralistic collaboration that sustainable urban development requires.

The evolution from single-issue competition to multi-issue partnership represents more than a tactical shift—it reflects a deeper understanding that creating livable, dense communities requires addressing the full spectrum of residents’ concerns rather than simply winning narrow victories on housing policy alone.

Old Friends

I can’t thank fortune enough for that sweet twist of fate,


Our worlds collided, bound, some forty years to date.


Yet here we sit, on lawn chairs side by side,


On a grassy knoll where lake and sky abide.

The birds weave songs through whispers of the breeze,


Their calls a chorus, soft beneath the trees.


We share our stories, threads of joy and pain,


Each word a ripple on the lake’s serene domain.

No grand design, no fate’s unyielding hand,


Just us, this moment, on this gentle land.


Grateful am I, for this sweet chance to know,


The peace of hearts aligned where wild things grow.

When the public and the private look each other in the eye

This is a super Conversation with Tyler. Helen Castor is an historian specializing in the Middle Ages.

When asked what drew her to her scholarship, she answers.

CASTOR: What an interesting question. I think I’m preoccupied by the human dimension, and that’s why the focus of my interest goes in two directions. One is psychological, that I am always trying to work out what makes my protagonists tick from moment to moment, even though I’m trying to work across five or six hundred years. That’s what I love, trying to get inside their minds and see through their eyes.

The other thing I’m preoccupied with is the functioning of power. I think that’s why I love the Middle Ages, because I’ve always felt, in looking at modern history, that I get bamboozled by structures, by the institutions through which power is expressed and mediated.

What I find fascinating about the Middle Ages in England is that you’re looking at a very sophisticated structure of power, but it’s present in bare bones because we don’t have the great apparatus of state. Therefore, individual choices and individual psychology become extremely exposed, so it’s that point where skeletal structures of power are being inhabited by particular individuals, and how that plays out. I think that’s where my interest lies, and therefore that’s where I’m hoping to contribute.

The Middle Ages, the family, the state and the people are so tightly held they look each other in the eye.

A way to think about transaction costs

Me: Could you say the friction occurs at the intersection of markets for goods and markets for institutional services? It’s a settling of accounts between two spheres

Grok: Yes, that’s a sharp way to frame it. Transaction costs can indeed be seen as frictions arising at the intersection of markets for goods (where the primary exchange of products or services occurs) and markets for institutional services (the mechanisms, like legal systems, information platforms, or intermediaries, that facilitate those exchanges). These costs reflect the “settling of accounts” between the two spheres, as you put it, because they emerge from the interaction of the core transaction (buying/selling a good) and the supporting infrastructure needed to make it happen.

For example:

  • In the goods market, supply and demand determine the price of, say, a car.
  • In the institutional services market, the costs of searching for the car (e.g., via a platform), negotiating the contract (e.g., legal fees), or ensuring delivery (e.g., escrow services) create frictions that add to the total cost of the transaction.
  • These frictions are where the two spheres “settle accounts,” as the efficiency of institutional services (or lack thereof) directly impacts the ease and cost of completing the transaction in the goods market.

This interplay can be sticky—high institutional costs (e.g., slow courts, opaque information) don’t always adjust smoothly to market dynamics, creating persistent frictions. Conversely, competitive institutional markets (e.g., streamlined online platforms) can reduce these costs, aligning the spheres more seamlessly. Your metaphor captures how transaction costs are a bridge—or sometimes a barrier—between the idealized exchange of goods and the real-world systems that enable it.

Damages- Series Review

This 2007 made for TV series started slow. But the actors involved were some of my favorites like Glenn Close who plays the villain well, and Ted Danson and Zeljko Ivanek who is always a ringer for the man behind the power player.

By the third episode the interplay in the plot becomes entangled and interesting. Slowly the story is revealed with further complications for all the players. Back and forth the favor seem to switch from one party to the other.

The writers seem particularly tuned in to playing off the balancing act between privates lived and work commitments. The whole ‘how wealthy people live in expensive cities’ add a dimension to this. The videography of Manhattan is fun.

This legal drama series is worth your time!

Externalizing and Internalizing

What does it mean? When a party externalizes or internalizes? Let’s consider how Edward Glaeser uses the terms in his article, “Reforming Land Use Regulations,” published by Brookings.

Theoretically, it is at least conceivable that America’s web of locally-constructed zoning codes have worked out to be a finely tuned system that functions like a perfect Pigouvian tax internalizing all the offsetting externalities of all new construction.

The article explores how zoning, particularly single-family zoning, restricts the market from generating more livable units, such as multifamily buildings. This restriction causes an internalization of benefits to the group of homeowners who wish to limit growth near them. And this is indeed how it works. A developer wants to build a high-rise, and the neighbors show up at the planning commission meeting to complain that the new structure will cast shadows over their properties.

The reference to offsetting externalities refers to the implication that new construction will generate some negative outcomes in the form of increased vehicles and hence air pollution, for example. Glaeser suggests that the motion of externalizing and internalizing, which is a dynamic effect of value transfer between individuals and groups and greater groups, can arrive at a balance: a perfect Pigouvian tax.

Here’s another observation about externalities.

Our attempt to assess the total externalities generated by building in Manhattan found that they were tiny relative to the implicit tax on building created by land use controls (Glaeser, Gyourko and Saks, 2005).

This comment also suggests that an equalizing measure can be achieved by balancing the flow of social costs and benefits between groups. Here, the researchers were unable to add up enough costs to validate the internalized benefits to property owners of land-use restrictions. However, perhaps this is a framing issue. Maybe people only see the costs and benefits in their very reduced sphere because they haven’t been presented with the resonating effects up and down a nested system of groups.

Internalizing and externalizing are dynamic terms for the balancing of social costs and benefits.

Delays are not all due to Land Use Regs

There’s some good stuff in this 2017 article, Reforming Land Use Regulations, written by Edward Glaeser for Brookings.

First, there is the concept of Minimum Profitable Construction Cost.

But the regulatory approach on housing should compare housing prices to the Minimum Profitable Construction Cost, or MPPC. An unfettered construction market won’t magically reduce the price of purchasing lumber or plumbing. The best price outcome possible, without subsidies, is that prices hew more closely to the physical cost of building.

Many people outside the real estate industry discuss ‘building new housing’ as if it were something that can be grown if you simply plant the right seeds. Whereas the reality is that a construction project won’t get off the ground without incentives. The MPCC validates this model and provides a benchmark for measuring the starting point at which a project can be launched.

The following noteworthy observation is that old properties are valued less than new. Thus it follows that rents for older properties are less than new construction.

We then compare these construction costs with the distribution of self-assessed housing values in the American Housing Survey. The distribution of price to MPPC ratios shows a nation of extremes.  Fully, 40 percent of the American Housing Survey homes are valued at 75 percent or less of their Minimum Profitable Production Cost. 

What this means for the public is that it is 25% cheaper (or more) to subsidize a renter in an older property than in brand new construction. Now that a Harvard man has written it down, can everyone stop with the ‘let’s build affordable housing’ rhetoric? New is never the least expensive option.

In reference to the 2008-2011 downturn, Glaeser remarks.

Our painful housing bust eliminated some of the affordability problem in our most expensive areas, but that problem has returned.

So, housing prices go up and down. Yet it seems that the topic of housing is always making the intellectual rounds when prices are on the rise —why? There is as much to learn about the dynamics of real estate when the market deflates as when the market inflates.

Here is a most underinvestigated observation.

 Getting the right national policy requires comparing the social costs of building in one location versus the costs of building elsewhere. 

The two social costs mentioned are environmental damage and the downsides of local growth. But think about who shows up at council meetings and what they complain about. Insufficient parking, increased traffic, noise and disruption, putting a strain on the schools, criticism of luxury buildings, and on it goes. The social aspect of this is extensive and profound. And each person in the chain of events that end in new construction has the ability ot use social norms to enhance or detract from the project.

Land use rules are a factor in shaping the development and redevelopment of an area. But there is so much more.

Composers in the time of *War and Peace*

Leo Tolstoy’s epic, War and Peace, is set during a period of significant change on the European continent. During this time, the musical patronage system was also transitioning. “While the Napoleonic Wars (c. 1792–1815) and the broader European revolutions disrupted or dismantled many traditional aristocratic institutions, a handful of European courts managed to maintain strong systems of musical patronage well into the 19th century. These courts often had a mix of economic resources, political insulation, and cultural identity-building motives that allowed them to keep composers and ensembles under their employ.

Here are the royal courts that held onto the aristocratic support model longest — and why: the full link (from chat).

The stories of Napoleons voracious conquests are felt in Beethoven’s rhythms.

Here is the full playlist of music heard in the Vienna court in 1810.

Put and Take Lakes

Fishing is an integral part of Minnesota’s culture. People fish off their boats. Clusters of folks fish off piers at public parks. High school students have developed fishing as a competitive sport. And there’s purse money involved. Partly, it’s evolved due to the abundance of lakes. Almost all lakes have public access, and the waters are open to those who wander.

The Scandinavian countries have counted on the waters for fish for centuries. Rod Hsu, a fisherman blogger, recounts a trip to Denmark where he learned about put-and-take lakes, Urban Fishing in Danish Lakes.

Denmark is made of several large islands that were formed during the glacial melt. Unlike British Columbia, it lacks mountains and streams. However, it is surrounded by productive ocean waters and there are many small lakes that can be excellent for sportfishing. Fishing is a year round activity, and wintertime can be extremely productive. For the adventure seekers, testing your strength with huge Atlantic cod up to 20kg or flyfishing for sea trout along the beach are definitely the way to go. However, if you can not brave the windchill, lake fishing can be just as exciting. Target species in lakes include rainbow trout, brown trout, northern pike, walleye and several species of carp, perch, roach and bream.

While a fishing license is required, there are also private waters where anglers need to pay user fee to fish in them. One such type of waters is known as the “put & take lakes”. These natural lakes are privately owned and stocked with rainbow trout by the owner. The lakes are generally quite small, most BC anglers would call these ponds. The concept is simple, the owner put fish in the lakes regularly while the anglers pay a certain fee based on the length of their fishing time and are allowed to take their catches home.

Fishing licences are required in Minnesota as well. And they are enforced. A ranger will stop boats on the lake and ask to see their documentation. They will also check the boat to ensure fishermen are not taking more than their limit. This is all organized through public means.

It’s interesting how, in different countries, different goods are considered better managed by private parties versus keeping them open to the public.

These privately managed put & take lakes are great ideas for a country such as Denmark that does not have enough natural resources such as streams and large lakes like the ones we have in British Columbia. These lakes are extremely popular, especially during the summer months. By providing good fishing lakes such as these to meet the angling demand, it takes away the fishing pressure on the protected wild stocks. I think the user fee is reasonable, since anglers are fishing in a well managed lake that has all the needed facilities such as washroom, fish cleaning area and kiosk. I justify it by comparing to going to an amusement park, movie theatre or golf course where you also have to pay to enjoy the facilities. 

Heat Maps

In some parts of the country, particularly the south, people are noticing a slowdown in real estate home sales. That’s not the case up north. The image below is of the seven-county area that comprises the Greater Twin Cities metro, which is predominantly painted in red, a representation of only a few days on the market.

But the more interesting insight is that there are patches of yellow throughout the area, indicating a nook where market times approach forty days. Averaging loses nuance. Nuance is precisely where the interesting observations are to be had.

For that reason, heat maps are wonderful visuals.

Two Parent Privilege and more?

Perhaps you’ve heard the term ‘two-parent privilege’ used lately. It seems to be in the air. The “two-parent privilege” refers to the socioeconomic and developmental advantages often associated with children raised in stable, two-parent households compared to those raised in single-parent or other family structures. It’s a concept rooted in statistical trends and sociological research, though it’s debated due to its implications and the complexity of family dynamics.

Please note that there are two key aspects to the potential benefits. First, there is the straightforward sharing of resources that two working adults can bring to a shared household, versus one. Think of paying for everything on your own in a home, or being able to split all the utilities and household purchases. Consumables like food even benefit as it is easier to cook for a crowd than for a single person.

Many people may quickly lean in on the second component of the privilege, which anticipates benefits to the child in terms of emotional support as well. This is an essential factor, yet it too depends on the time a parent has to devote to the child’s needs and ambitions. If there are two adults in the home, then the number of hours available for the youth tends to increase.

The point is that the money and resources and time are resources transfered in households from adults to children. We don’t really have a separate name for these things. Or we don’t subscript them to give a sense of benchmarks for what a typical child consumes to thrive. And if we don’t tag the resources to outcomes in the household, we certainly don’t do it in clusters of households or groupings by, say, school districts. And why not? It seems like a valuable form of analysis.

Grok gives a complete response to the prompt: What does the two-parent privilege entail? Give details on the mechanics?

Floorplans, Voila

Getting the floor plan of the bank is always a prelude to a great heist movie plot. A secondary actor would have some contact who knew the architect and could somehow finagle the plans. The thieves would then strategize on how to rob the bank.

Now, plans are ordered on demand based on a simple walkthrough video of the property.

On the one hand, it seems like people would be concerned with divulging this information about their house. On the other hand, home buyers find it very useful.

Beyond the Numbers: The Hidden Social Triggers Behind Arizona’s SB 1070

I was at a family gathering this week in Montana, and somehow the conversation landed on the 2010 immigration controversy in Phoenix. Following a period of lax immigration enforcement, the people of the Grand Canyon State rose up and said, “No more.” They passed the most restrictive immigration legislation, SB 1070. While several factors are credited for triggering the political backlash, the perception of increased crime is among the leading ones cited. Opponents of enforcement are quick to point out that, on paper, crime was steady. But does that tell the whole story?

While official statistics showed no dramatic rise in crime prior to the passage of Arizona’s SB 1070, it’s a mistake to assume that public concern over disorder was baseless. The real story lies in the rise of unreported, low-level disruptions and the erosion of civic reciprocity—factors that rarely appear in data but deeply affect social life.

In neighborhoods experiencing rapid demographic change, residents noticed shifts in everyday norms: unfamiliar languages, informal labor markets, overcrowded housing, or changes in how public space was used. These behaviors weren’t necessarily illegal, but they violated shared expectations around cleanliness, quiet, parenting, or neighborliness. What was being felt wasn’t crime in the strict sense—it was a breakdown in social trust.

At the same time, public institutions like schools and emergency rooms were absorbing new burdens, often without visible new funding. To some longtime residents, this looked like one-way civic obligation: they paid in, others drew out. Whether or not that was accurate, it felt unfair, especially in the wake of the 2008 recession. That resentment built a political appetite for laws like SB 1070—not just to target undocumented immigrants, but to restore boundaries between insiders and outsiders, contributors and perceived free riders.

Support for SB 1070 was less about a spike in violent crime and more about a sense of dissolving norms and a loss of control. The law functioned as a signal: that the state would step in to defend social order where federal and informal mechanisms had, in many people’s eyes, failed.

Herbal Gardens

I’m usually a fan of Frederick Melo- but herbal gardens as a necessity of life? I’m a gardener, a pretty good one. I’m an active if not pretty good cook. I’ve tried to tend to herbs and they always fall away. But someone whose life is messy and needs supplemental help is going to grow herbs?

I’d love to see an outcome report from the attendees of the herbal garden classes, as down to earth and healthy as they sound.

About Buchanan, faith in people, and self-governance

Me: It sounds like he (James M Buchanan) wants to believe in self-governance, yet he doesn’t have faith in the distribution of the groupings, hence ‘free riding’, so in the end he supports the cohesion of the state after all.

Grok:

Your observation captures a tension in James M. Buchanan’s work that’s worth unpacking. You’re suggesting that while Buchanan champions self-governance and individual liberty, his concern about free-riding and coordination problems leads him to rely on formal institutional structures, which might seem to endorse the cohesion of the state—potentially contradicting his critique of the organismic view. Let’s explore this interpretation, addressing whether Buchanan’s focus on institutions implies support for state cohesion and how it aligns with his belief in self-governance. I’ll keep the response concise yet thorough, tying it to your previous questions about the organismic concept and group cooperation.

Buchanan’s Commitment to Self-Governance

Buchanan, a classical liberal and founder of public choice theory, strongly advocates for self-governance, meaning individuals should have maximum control over their choices and the rules governing their interactions. His rejection of the organismic concept—where collectives like “the state” or “society” are treated as unified entities with their own goals—stems from his belief that only individuals have preferences and agency. He envisions governance as a system of voluntary agreements among individuals, not top-down control by a cohesive state. Key points:

• In The Calculus of Consent (1962, with Gordon Tullock), Buchanan proposes that political systems should emerge from unanimous or near-unanimous consent at the constitutional level, where individuals agree on rules for collective decision-making. This reflects self-governance, as the state’s authority derives from individual agreement, not an inherent collective will.

• His concept of “politics as exchange” sees government as a mechanism for individuals to cooperate for mutual benefit (e.g., providing public goods like roads), not as a monolithic entity imposing order. This contrasts with organismic views that assume the state naturally serves a unified “public interest.”

The Free-Rider Problem and Institutional Needs

Your point about Buchanan’s lack of faith in the “distribution of the groupings” (i.e., how individuals naturally organize) and his concern about free-riding is spot-on. Buchanan recognizes that self-governance faces challenges in large groups due to:

• Free-Riding: Individuals may benefit from collective goods (e.g., clean air, defense) without contributing, undermining cooperation. For example, someone might enjoy a community-funded park without paying taxes if contributions are voluntary.

• Coordination Problems: Diverse preferences and large group sizes make spontaneous cooperation difficult without agreed-upon rules. Informal norms work better in small, homogeneous groups but falter at scale.

To address these, Buchanan emphasizes formal institutions, particularly constitutional rules, to facilitate cooperation. In The Limits of Liberty (1975), he argues that a social contract—a set of rules individuals consent to—prevents free-riding and ensures fair contributions to collective goods. For instance, a tax system with constitutional legitimacy compels everyone to pay for public goods, solving the free-rider issue while respecting individual agreement to the rules.

Does this mean Buchanan lacks faith in self-governance? Not quite. He believes self-governance is possible but requires designed structures to align individual incentives with collective outcomes. His focus on constitutions is about enabling individuals to govern themselves through agreed-upon rules, not deferring to a centralized state.

Does Buchanan Support State Cohesion?

Your suggestion that Buchanan’s reliance on institutions implies support for the “cohesion of the state” is a nuanced critique. Let’s break it down:

• Not State Cohesion in the Organismic Sense: Buchanan explicitly rejects the idea of the state as a cohesive, sentient entity with its own goals (the organismic view). He sees the state as a collection of individuals—politicians, voters, bureaucrats—each pursuing their own interests. His work in public choice theory, especially in The Calculus of Consent, models government as a system of checks and balances to prevent it from becoming a monolithic, coercive entity. For example, he warns against a “predatory state” that exploits citizens under the guise of public interest.

• Institutions as Tools, Not State Worship: Buchanan’s support for formal governance is about creating minimal, consensual frameworks to enable cooperation, not endorsing a strong, centralized state. His ideal is a limited government constrained by constitutional rules that individuals have agreed to, ensuring that state actions reflect individual preferences rather than a supposed collective will. For instance, his admiration for Knut Wicksell’s principle of “just taxation” requires taxes to be tied to benefits and approved by near-unanimous consent, minimizing state overreach.

• Tension in Practice: You’re right that Buchanan’s reliance on formal institutions could, in practice, lead to a state with some degree of cohesion, as enforcing rules (e.g., tax collection) requires authority. Critics of Buchanan argue that his constitutional framework assumes a level of rational agreement that’s hard to achieve, and the resulting institutions might take on a life of their own, resembling the cohesive state he critiques. However, Buchanan would counter that this risk is mitigated by designing rules that prioritize individual liberty and limit government power.

Reconciling Self-Governance and Institutional Reliance

Buchanan’s position is that self-governance is not spontaneous but requires deliberate institutional design to succeed at scale. He doesn’t distrust individuals’ ability to cooperate but recognizes practical barriers like free-riding and coordination costs. His solution is a two-level governance framework:

1. Constitutional Level: Individuals agree on rules (e.g., voting systems, tax policies) to structure cooperation. This is self-governance in action, as the rules reflect individual consent.

2. Post-Constitutional Level: Within these rules, individuals make choices (e.g., voting, paying taxes) that produce collective outcomes. Institutions enforce these rules to prevent free-riding, but their legitimacy comes from prior agreement, not state supremacy.

This framework contrasts with the organismic view, which might assume society naturally coalesces around shared goals without needing explicit rules. Buchanan’s skepticism of such assumptions drives his focus on institutions, but he remains committed to individual liberty and minimal state intervention.

Addressing Your Critique

You’re correct that Buchanan’s concern about free-riding and group coordination could seem to undermine his faith in pure self-governance, pushing him toward formal institutions that resemble state cohesion. However, he would argue that these institutions are tools of self-governance, not endorsements of a cohesive state. The state’s role is to enforce rules individuals have chosen, not to act as an independent entity. His ideal is a decentralized system where individuals retain maximum control, but he acknowledges that some formal structure is necessary to make self-governance scalable and sustainable.

Conclusion

Buchanan believes in self-governance but sees formal institutions, particularly constitutional rules, as essential to overcome free-riding and coordination challenges in large groups. This doesn’t mean he supports state cohesion in the organismic sense; rather, he advocates for a limited, consensual state that enforces individual-agreed rules to enable cooperation. His focus on institutions reflects a pragmatic solution to make self-governance work, not a retreat to statism.

The Lake- Series Review

This Slovenian series is quite good. And best of all, it’s very local. I didn’t even have a good grasp of where this country, with a population of just over 2 million people, was situated. The star, Sebastian Cavazza, plays the moody, ever-searching lead detective of a band of four. His co-workers are a bit quirky and a lot loyal. A new girl joins to stir in some romantic interest.

The story holds, but what makes the whole thing interesting is the glimpse into a new country with all its subtleties and unique characteristics. Even the lead-in music feels Slovenian.

Laissez Faire while preserving Status

I was just starting to remind myself how tiresome the war scenes are in nineteenth-century literature. Dragoons and flanks, musketeers and battery, Cossacks and campaigns- all so tiring. But then, Tolstoy, that timeless genius, throws these wise words across the page in War and Peace.

Prince Andrey listened carefully to Prince Bagration’s colloquies with the commanding offi-cers, and to the orders he gave them, and noticed, to his astonishment, that no orders were really given by him at all, but that Prince Bagration confined himself to trying to appear as though everything that was being done of necessity, by chance, or at the will of individual officers, was all done, it not by his order, at least in accordance with his intentions. Prince Andrey observed, however, that, thanks to the tact shown by Prince Bagration, notwithstanding that what was done was due to chance, and not dependent on the commander’s will, his presence was of the greatest value.

Sometimes you can see two structures melding in real time. On the one hand the underlings, those closest yo the knowledge, are given the right to choose; on the other hand a charade of power preserves the status of those in charge.

Sometimes, it’s best if public life is not too exacting.

Reasons for Regional Thinking

This is from Bloomberg’s news letter a few days ago:

This example comes from South Africa, but the pattern is familiar in city neighborhoods across the United States. A single area becomes highly sought after—often because of a natural amenity like a lake, a hilltop view, or tree-lined streets. As people concentrate their attention and investment there, surrounding neighborhoods are overlooked. That neglect can manifest in subtle forms—like disrepair or increased petty crime—which only reinforces the appeal of the original “best” area.

At first, residents welcome the rising property values. But over time, that early advantage turns into a burden. Friends and family are priced out. Local businesses close as commercial rents climb, replaced by boutique shops that cater to outsiders. What began as a benefit morphs into a form of isolation.

A regional perspective offers a solution. If planners and policymakers ensure that all neighborhoods remain livable and desirable—not just one or two—the pressure on any single area can be eased. Without that balance, scarcity drives runaway prices, and the community as a whole suffers.

Warfare commitment 200 years gone by

After reading Anna Karenina last August, our reading group decided to tackle War and Peace in 2025. It’s a behemoth. But with all the war talk, I was curious to know what percentage of the male population was tromping across Europe and how many young men were left for other pursuits closer to home. It turns out a lot- although Chat is quick to say that the data is complex to pinpoint due to inconsistent records.

Summary

• France: ~50–60% of males aged 18–55 served, driven by universal conscription and mass mobilization (2–2.4 million from 3.6–4 million).

• Russia: ~20–30% served, with serf-based levies mobilizing 1–1.5 million from 3.5–5 million, supplemented by militias in 1812.

• Austria: ~40–60% served, with 1–1.5 million mobilized from 2–2.6 million, using selective conscription.

• Prussia: ~40–65% served, with 500,000–800,000 mobilized from 1–1.25 million, increasing after 1813 reforms.

• Britain: ~25–40% served, with 400,000–500,000 mobilized from 1.2–1.5 million, relying on volunteers and naval press-ganging.

In the Context of War and Peace

The novel reflects these varying conscription rates through its portrayal of Russian serf-soldiers and officers like Andrei and Nikolai, contrasted with the French Grande Armée’s mass-conscripted forces. Russia’s lower percentage reflects its selective serf levies, while France’s high rate underscores the levée en masse’s impact, as seen in the exhausted French troops during the 1812 retreat. The differences in mobilization rates highlight the social and military dynamics Tolstoy explores, with Russia’s feudal system and France’s revolutionary conscription shaping their respective armies.

Note: These percentages are estimates based on historical data and demographic assumptions, as precise age-specific military participation rates are not fully documented. Variations across campaigns and years (e.g., 1812–1814 being the deadliest) affect the figures.

Conscription is a type of forced labor. A citizen’s time is donated to the public good in exchange for some compensation (or at least room and board for the serfs). One can see why, in two hundred years, boots-on-the-ground warfare is unpopular. Too many human hours could be devoted to other public goods or to earning a wage in the commercial market. The opportunities to leverage capital even further should the young men choose to invest in education or learn a trade.

War also produces wounded. This can also shift the stage-of-life abilities of a young, able-bodied male. The labor costs of war are too dear.

Airport Expansion- Missoula Edition

I flew into Missoula today and the Montana Airport is wrapping up a major multi-phase expansion that reshapes regional travel and brings broader economic shifts in its wake. Here are some of the details:

The Physical Build-Out

  • Total Cost: Over $110 million for the full terminal expansion.
  • What’s New: New gates, expanded baggage claim, rental car lanes, security upgrades, and room for new routes and carriers.
  • Who’s Paying: a combo of the Feds and private interests
    • Federal: More than $50 million in grants, mostly from the Bipartisan Infrastructure Law.
    • State & Local: Matched funds from the Missoula Economic Partnership, businesses, and banks—no local tax dollars used.
    • Recent Boost: A $6M federal grant (2024) will help complete the next terminal phase.

Skyward Travel Growth

  • Missoula set a passenger record in 2024: Over 1 million flyers, up nearly 12% from the year before.
  • Targeting 1.5 million by 2044 as travel demand soars.
  • Now offering more frequent flights and year-round service to Chicago, thanks to an $875k federal grant.

The Ripple Effects

📚 University of Montana Perks

  • Easier access = stronger recruitment, research partnerships, and conference travel.
  • Out-of-state students now find Missoula more reachable and appealing.

🏘️ Housing Pressures

  • Expansion is fueling demand for housing, especially near the university and airport.
  • Rent hikes are real: Locals report steep increases, with “affordable” now starting near $1600/month.
  • Development impact fees (passed on to buyers) may also be contributing to rising costs.

💼 Local Economy

  • Jobs during construction and in airport operations.
  • Tourism boost: More flights mean more visitors spending at hotels, restaurants, and shops.
  • Stronger air links help regional business and health access.

🚧 Challenges Ahead

  • Affordability squeeze: Residents and students are feeling the pinch from rising rents.
  • Infrastructure stress: More travelers and new residents will test city roads, utilities, and services.
  • Equity concerns: Growth must be balanced to include long-term residents and low-income communities.

Final Approach

Missoula’s airport expansion is more than a construction project — it’s a gateway to growth. With smart federal funding and local vision, the region is positioning itself for a more connected future. But keeping Missoula livable as it grows will take coordination on housing, transportation, and community needs. How would one go about making some projections? Estimates of impacts and time frames could be interesting to local public leaders.

Compare, Contrast, Visualize

This is an excerpt from my working paper, which examines how contemporary economic realities challenge conventional price formation models. Traditional price theory, rooted in neoclassical equilibrium models, struggles to explain modern markets characterized by digital platforms, behavioral anomalies, and network effects. Rather than viewing prices solely as equilibrium outcomes, this section explores price as an information system and coordination mechanism shaped by institutional contexts and evolutionary market processes, proposing alternative approaches that better capture the dynamic nature of pricing in today’s economy.

B. Comparative Analysis: Evaluating Theoretical Frameworks

This section provides a systematic comparative analysis of the proposed philosophical framework against conventional economic approaches to price theory. By examining how different theoretical perspectives conceptualize the relationship between price mechanisms and social dimensions, we can better understand both the limitations of current approaches and the potential advantages of the proposed integrated framework.

Conventional Economic Frameworks: The Separation Paradigm

Mainstream economic theory has predominantly operated within what might be termed a “separation paradigm” that artificially divorces economic processes from their social contexts. This approach has taken several forms, each with distinct philosophical underpinnings but sharing a common tendency to externalize social dimensions from core economic processes.

The neoclassical framework, beginning with Marshall (1890/1920) and formalized by Samuelson (1947), represents the most influential expression of this separation paradigm. This approach treats social costs and benefits as “externalities”—phenomena that exist outside the market mechanism and require correction through policy intervention. As Pigou (1920) argued, these external effects constitute market failures that prevent the price system from achieving social optimality. While this framework recognizes the existence of social dimensions, it philosophically positions them as external to the fundamental operation of price mechanisms.

The public choice tradition, exemplified by Buchanan and Tullock (1962), maintains this separation while focusing on the strategic calculations of political actors. As Tullock (1965) argues in “The Politics of Bureaucracy,” individuals navigate institutional structures to advance their interests, with social dimensions treated as constraints within a fundamentally individualistic calculus. This approach offers valuable insights into how individuals respond to institutional incentives but maintains the philosophical separation between private calculations and social contexts.

The social capital literature, following its evolution from Loury (1976) through Coleman (1988) to Putnam (1993), increasingly adopted what might be termed an “instrumental network” approach. This perspective treats social connections as resources that individuals can access and deploy strategically, maintaining a philosophical separation between the autonomous individual and their social networks. While recognizing the importance of social factors, this approach treats them as external assets rather than constitutive elements of economic valuation itself.

The Integrated Framework: Embeddedness and Unified Valuation

In contrast to these separation paradigms, the proposed philosophical framework offers what might be termed an “integration paradigm” that recognizes price as inherently incorporating both private and social dimensions of value. This comparative analysis highlights several key distinctions:

1. Outcomes vs. Processes

Conventional frameworks focus predominantly on outcomes—the results of market transactions as measured by efficiency or utility maximization. The Pigouvian approach to externalities exemplifies this orientation, focusing on the divergence between private and social outcomes while giving limited attention to the processes through which valuations emerge. Similarly, Coase’s (1960) analysis, while introducing the importance of transaction costs, maintains a focus on the efficient allocation of resources as the primary outcome of concern.

The proposed framework, in contrast, emphasizes processes—the embedded social practices through which valuations emerge and evolve. Drawing on Zelizer’s (2012) analysis of how economic practices constitute social relationships, this approach recognizes that price mechanisms do not simply produce outcomes but actively construct social meanings and relationships. For example, the organic food market is understood not merely as generating a price premium that reflects environmental benefits but as constituting a set of social relationships and meanings around food production and consumption.

This distinction becomes particularly evident in analyzing wind turbine effects on property values. Where conventional frameworks focus on measuring the divergence between private and social costs as an outcome, the proposed framework examines how property valuations emerge through processes of social negotiation that inherently incorporate both dimensions. The hedonic price model becomes not merely a method for measuring externalities but a window into how social values become embedded in market valuations through processes of negotiation.

2. Calculation vs. Negotiation

Conventional frameworks conceptualize price formation primarily as a process of calculation—the aggregation of individual utility functions or the balancing of marginal costs and benefits. As Becker (1976) argues, this approach extends the calculative paradigm to social domains by treating even non-market behaviors as the result of rational calculation. While powerful in its analytical clarity, this approach imposes an artificial separation between the calculating individual and the social context in which calculation occurs.

The proposed framework, drawing on Callon’s (1998) analysis of market devices, understands price formation as a process of negotiation—the ongoing social construction of value through interaction. This perspective recognizes that prices do not simply reflect pre-existing preferences but actively constitute relationships and meanings. For instance, when a business owner decides to provide flu vaccinations, they are not merely calculating financial costs and benefits but negotiating a complex set of relationships among employees, customers, and the broader community.

This distinction helps explain why conventional approaches often struggle to account for phenomena like voluntary green premiums or corporate social responsibility initiatives. These practices make limited sense within a purely calculative framework but become comprehensible when understood as negotiations of meaning and relationship that inherently incorporate both private and social dimensions of value.

3. Autonomy vs. Interdependence

Conventional frameworks generally assume economic actors as fundamentally autonomous—making decisions independently based on their preferences and constraints. This philosophical stance, most explicitly articulated in Arrow’s (1951) impossibility theorem, treats social choice as the aggregation of independent individual preferences rather than the expression of interdependent social relationships. Even when acknowledging social influences, this approach maintains a conceptual separation between the autonomous individual and their social environment.

The proposed framework recognizes economic actors as fundamentally interdependent—embedded within networks of relationship that constitute both their understanding of value and their capacity for action. Drawing on Davis’s (2003) critique of the “separative self” in economics, this approach understands economic decisions as emerging from interconnected patterns of relationship rather than isolated individual calculations. When consumers pay premium prices for organic products, they are not making autonomous decisions but acting within interdependent networks of meaning and relationship that shape their understanding of value itself.

This distinction helps explain why conventional approaches often treat environmental values or social justice concerns as external to economic valuation—they maintain a philosophical commitment to autonomous individuals whose interdependence is treated as secondary rather than constitutive. The proposed framework reverses this priority, recognizing interdependence as the fundamental condition from which economic valuations emerge.

4. Strategy vs. Meaning

Conventional frameworks typically conceptualize economic behavior as strategic—actors making choices to advance their interests within given constraints. This understanding, exemplified in game-theoretic approaches to externalities (Dasgupta, 1982), treats social considerations as strategic factors within an essentially competitive calculus. While offering valuable insights into how individuals respond to incentives, this approach tends to reduce social dimensions to strategic considerations rather than recognizing them as constitutive of meaning itself.

The proposed framework understands economic behavior as inherently meaningful—constituting social relationships and identities through exchange. Drawing on Bruner’s (1990) concept of meaning-making, this approach recognizes that economic actions are not merely strategic moves but expressions of meaning that constitute social worlds. When a business owner provides flu vaccinations, they are not simply making a strategic calculation but participating in the construction of meaningful workplace relationships and identities.

This distinction helps explain why conventional approaches often struggle to account for the emotional and symbolic dimensions of economic behavior—they maintain a philosophical commitment to strategic rationality that marginalizes considerations of meaning. The proposed framework incorporates these dimensions as intrinsic to economic valuation rather than treating them as irrational anomalies or external constraints.

Comparative Empirical Implications

These philosophical distinctions generate substantively different empirical expectations and interpretations. Where conventional frameworks predict that social costs will appear as externalities requiring correction, the proposed framework predicts that market participants will often incorporate social dimensions into price mechanisms through their embedded decision-making processes.

The hedonic pricing model provides a useful comparative lens. Conventional approaches interpret price differentials near wind turbines as evidence of uncompensated externalities, emphasizing the divergence between private and social costs. The proposed framework interprets these same differentials as evidence that market participants are already incorporating social dimensions into their valuations, demonstrating the integrated nature of price mechanisms rather than their failure.

Similarly, the willingness of consumers to pay premium prices for environmentally friendly products receives different interpretations. Conventional frameworks treat this as either an anomaly requiring explanation through modified preference functions or as evidence of externality internalization through separate transactions. The proposed framework recognizes this behavior as the natural expression of embedded valuations that inherently incorporate both private and social dimensions.

Integration with Existing Economic Insights

While the proposed framework challenges fundamental aspects of conventional economic theory, it does not require rejecting valuable insights from existing approaches. Rather, it offers a philosophical foundation for integrating these insights within a more comprehensive understanding of how price mechanisms operate.

The framework incorporates Coase’s (1960) insight that transaction costs matter but extends this recognition to the social relationships that constitute economic exchange rather than treating them as external constraints. It integrates Arrow’s (1963) analysis of information asymmetries but recognizes that information itself is socially embedded rather than objectively given. It acknowledges Williamson’s (1975) focus on institutional structures but understands these structures as constitutive of economic behavior rather than merely constraining it.

This integrative approach offers potential pathways for resolving persistent theoretical tensions in economics. For example, the divide between behavioral economics’ empirical findings and neoclassical theoretical foundations becomes less problematic when economic behavior is understood as inherently embedded rather than anomalously constrained. Similarly, the tension between institutional and individual-focused approaches finds resolution in recognizing institutions as constitutive of rather than external to individual decision-making.

Comparative Philosophical Robustness

A final dimension of comparative analysis concerns philosophical robustness—the capacity of theoretical frameworks to accommodate complex realities without artificial simplification or ad hoc modifications. Conventional frameworks have demonstrated remarkable flexibility in addressing new empirical findings, but often at the cost of theoretical coherence. As anomalies emerge—from voluntary carbon offsets to corporate social responsibility—these frameworks typically accommodate them through preference modifications or externality redefinitions that preserve the underlying separation paradigm.

The proposed framework offers greater philosophical robustness by recognizing the inherent integration of private and social dimensions in economic valuation. Rather than treating phenomena like green premiums or ethical investing as exceptions requiring special explanation, this approach understands them as natural expressions of the embedded nature of economic decision-making. This philosophical coherence allows the framework to accommodate diverse empirical realities without sacrificing theoretical integrity.

In summary, this comparative analysis demonstrates that the proposed philosophical framework offers substantive advantages over conventional approaches in understanding how social dimensions operate within price mechanisms. By shifting from outcomes to processes, calculation to negotiation, autonomy to interdependence, and strategy to meaning, this framework provides a more comprehensive and coherent account of how prices already incorporate social costs and benefits—not as external corrections but as intrinsic components of economic valuation itself.