Observations from the nations capital

At a bar near the capitol in DC, I am sitting next to a middle age woman with a nearly-empty martini. I say something and awkwardly, a conversation begins. She's had a rough day because of a zoning meeting where "business won" and her ideals of historic preservation and appropriate density and use of property were defeated is some way or another. So she isn't opposed to a friendly face, and so we begin to chat.

[it must be understood in this medium that the author assumes different roles depending on the conversation. I seek to wring every ounce of possibility from every encounter, and I adjust my "opinions" to get more from people. That said, I usually don't lie, I just embelish]

We get to talking more about housing, since this is her thing. She makes a simple and not-incorrect statement "if they get rid of the housing tax credit, maybe that will drive home prices down" and it's true and it's simplistic and it's right and it's wrong, all for the right reasons. But more importantly, it opens my eyes wider to what I consider an absolut truth:

There is a fixed "value" that our culture places on things (e.g. housing). Indeed the cost of these things is fixed as well (relatively. It's valid in this case to assume the cost is fixed). Wherever value exceeds cost (read: most places and in all functioning economies), there is profit on this equation.

(it should be noted that the cost is also influenced or derived from the value, but it's actually OK to assume for the purpose of this understanding that cost is fixed and value is fixed. Society will always value housing highly, but there is always going to be a similar relative relationship between the cost of housing and the cost to look at an attractive naked female teenager at a strip club, because society will always value both things and society will always value housing significantly higher, but not "infinitely" higher).

The more I think about this particular example, the more convinced I become that the ideas apply to all things that we need where government gets involved. Marijuana? Yep, basically fixed demand and basically fixed cost to supply. When we "legalize" it, we avail the profits to "legal" entities, nearly entirely to the detriment of the "illegal" entities. With marijuana it's easy to follow the example but I believe this to be true with housing too.

The demand is fixed because every family needs exactly one home. The cost is fixed because it just is, it does not change based on demand. If taxes on homeowners goes up, then prices of homes will go down, because demand is not correlated to taxes. Currently, profits go to real estate agencies, title companies, title insurers, etc. A change in taxes on home ownership would simply take this profit away from these businesses and give it to the federal government. I can't say right now whether that is good or bad but I believe it is true.