Tragedy of the Commons: Bubbles, China Nail Houses and US Public Housing

Confounded Interest ^ | 12/01/2012 | Anthony B. Sanders

[whitedog57]

China seems to be on track to promote private housing in somewhat the same manner that the USA has done. China, like the USA, is suffering from “The Tragedy of the Commons” problem.

Here is an excellent video about China’s property rights problems and housing. This story is an example of “The Tragedy of the Commons” coupled with government cronyism. The “Nail House” is an interesting phenomenon where property rights are not owned by the private market.

Here is a Chinese “Nail House” sticking out like a nail in the middle of a highway. This truly boggles the mind.

Then there is the infamous apartment building in China that fell over. Notice the pilings are hollow!

Finally, there are the infamous “ghost cities and malls” in China where the government encouraged massive real estate construction to support GDP growth and the China commercial estate bubble.

My favorite is the “ghost arcade” which looks like a failed Epcot village in Orlando Florida.

China has a lack of well-defined property rights and a central government that desires to manipulate GDP growth.

The US, of course, had its own housing bubble generated, in part, by government housing policy. And the swing to renting and green, multifamily housing, is a return to the Tragedy of the Commons that resulted in fiascos like Chicago’s notorious Cabrini Green project.

Moral to the story: when government owns the land or is strongly influential in encouraging development, bad things can happen. It comes from the overuse of the public good (land) or even public housing.

Perhaps Kevin Costner from “Field of Dreams” should be the spokesman for government housing policy. “I have just created something totally illogical.”

And if the government builds it, they won’t necessarily come.

[whitedog57]

And just wait for Obama to force the UN's Agenda 21 on the US!