Technological disruption of the housing market

There has been no lack of talk in the past few years about the potentially disruptive effect of technology across a range of areas. The effect on the music industry, as well as the demise of the video store are well documented, as is the supposed risk of automation to various vocations and professions.

What there does not seem to have been so much of, is a discussion of how technology might disrupt the housing market. The kind of disruption that I am thinking of is not primarily captured by the rise of apps that facilitate transactions between vendor/landlord and buyer/tenant. This might disrupt the real-estate business. What they do not do, in my opinion, is disrupt the fundamental basis of supply and demand of housing.

What I am going to sketch, very vaguely and hastily, are two ways that technology could disrupt the housing market. One relies on changing the nature of the transaction, the other on a more profound disruption of how people relate to their homes. The likelihood of either of these occurring, as well as the potential ramifications, is as much a question of politics as technology.

Disrupting power relations in bargaining

Apps such as Uber and Airbnb function to take out the middle-man – exposing buyers (and sellers) to unmitigated (or less-mitigated) market forces and individual bargaining. The residential rental and real estate market is not dissimilar. Or that is how it can appear to people on the buyers’ side. If you want to buy a house, or rent it, you face the market forces that influence the price, and then you bargain with the seller. I say ‘bargain’ – in Australia, as a renter, the main bargaining that occurs is for potential tenants to offer to pay more for a property, such is the level of rental housing scarcity in some areas. In the end, you need somewhere to live, and it has to be close enough to your place of work/study etc. Your landlord, and the real-estate agent acting on their behalf, is much less likely to have this same problem. Hence, even if you have a long record of perfect tenancy, you are bargaining from a position of such weakness, that any concession is vanishingly unlikely. This situation contributes a range of undesirable outcomes – ranging from housing stress to pressure on animal shelters as people are forced to give up their pets in order to gain tenancy.

How could this power relation be disrupted?

What if there was the rental equivalent of an ‘anti-Uber’ app? I mean this in the sense that it allows buyers, i.e: renters, to somehow collectively bargain against individual sellers.

I haven’t figured out what the methods for collective buyer bargaining would be. But a few things spring to mind:

  • Buyer rating – buyers indicate the price they wished to pay for a service, and then report on the outcome.
  • Buyers collectively decide (through peer network or whatever) what they feel the acceptable market price is. Note that sellers can’t be part of this network, lest they artificially inflate the price.

Either way, the system has to allow for the power of the collective of buyers to be brought to bear against the individual sellers in some way, (as well as sellers’ collectives). Thus an Uber driver, landlord, or vendor who sets the price unreasonably high needs to expect a loss of business from the buyers’ collective. For example, the buyers’ collective has decided, by as yet undetermined means, that the price for a given good or service is $100, but an individual vendors sets their price at $110. What the seller can (somehow) expect is less business from the buyers’ collective. Thus they are encouraged to keep prices as low as possible, even if some buyers are not part of the collective.

Where this might not work is in the case of seller’s markets where the good or service is scarce, and that good or service is essential – i.e: housing in much of Australia

In one sense, the effectiveness a renters’ collective might be stymied in a situation where renal property vacancy rates are low and property prices are high – people need to live somewhere. But where geographic concentrations of collective members are high, landlords are stuck too – especially if they need someone to rent the house in order to maximise the tax benefits of negative gearing as occurs here in Australia.

So it might be that the renter’s collective would need to provide some benefit to landlords. If there were, for example, some reason why a landlord might choose a collective member for a rent of $300 per week, rather than a non-member for $310, then we might have something. Obviously, the renter’s collective can supply a ready source of tenants. Whether or not they would be good tenants is another question. The interests of most members of the tenancy collective would not be served by having members who were bad tenants – they have to be at least as good as the average tenant in the eyes of the landlords & property agents – probably better. Thus the renters’ collective needs some way of managing this that is not prone to being gamed by the rent-seeking property owners and those who profit from them.

As I said, I have not worked out the details, but the bones of the idea are there, and I think it would be worth exploring.

Disrupting experience

There is another way that we may disrupt the housing industry – by disrupting our experience of the reality of where we live. This will not change that people have to live somewhere, but it could change where they choose to live, which could alter the kind of real-estate that experiences relatively high demand.

I was thinking about disruption and evolution of the music industry. In the past, people bought vinyl LPs, then cassette tapes and then, more recently, compact discs. Now, we download information, and our programs turn that information into the music we hear. If the thing people really wanted was circular vinyl discs with grooves in them, then the aforementioned innovations would never have been commercially successful. (Though some people do still buy LPs). Rather, what people wanted to pay for was the experience of the music. The disruption occurred when we minimised the physical object or token that had to move in order for us to have that experience.

How does this relate to housing? Surely real estate must be immune to disruption? You can’t digitize reality. This thinking is still in the mode of ‘vinyl discs’. All, or at least many, of the things that people want from housing can be thought of as experiences they want to have. All, or most, of these experiences could be provided by a properly developed Augmented Reality (AR) technology, especially if it includes a haptic interface.  Want to see great water views when you look out the window? Done. Want a view of Winterfell, Minas Tirith or Corasant? All achievable. A bathroom of finest marble? No problem (so long as your AR interface is waterproof).

You could have the illusion of living in a palace, or even outdoors, so long as you don’t walk into your physical walls, and your AR interface is more or less permanently glued to your head. The problem of interaction with the physical location can be overcome with good programming, and the likelihood is that the AR interface will be as unobtrusive as is technologically and financially viable, so don’t scoff too soon.

You could even have the illusion of continuity, security and ownership. If you have to move to another physical location, your digital home can go with you, so long as you don’t fall so far into poverty that you can no longer pay for the access to it. (Perhaps the fee will be pegged to the universal basic income?)

This second scenario seems a long way off – and that might be the case. But it is certainly conceivable. What effect would such innovations have on the housing market? I find this hard to predict. For example, a view of the ocean must surely be worth less when it is no longer restricted to those lucky or wealthy enough to live in certain geographic locations. On the other hand, there are people who will always pay a premium for the ‘real’ thing – just like the people who still buy their music on vinyl. What proportion of the population will fall into this category remains to be seen. In theory though, with an excellent AR setup and some clever programming, any utilitarian box with air conditioning can appear, to its occupants at least, as the home of their dreams. I find it difficult to image that this would have no effect whatsoever on the housing market.

So there is it, two very different ways that I imagine technology could alter the housing market. Both have technological, social and political impediments. An app that enables an effective collective of tenants is technologically viable right now, but would be politically unpalatable in any country where landlords and rent-seekers are so well-connected to politicians, such as is the situation in Australia (where they are often one and the same). An augmented-reality system, capable of the feats I describe, is some way off – though it could be as soon as years, rather than decades. The point is that the bricks-and-mortar side of housing may not be as immune to disruption as people think.

Ice, Straw Men and Decriminalisation

A brief exchange that occurred yesterday (largely via the media) gives a good illustration of a fallacious and incomplete argument, and further demonstrates why the scrutiny of politicians’ words is important.

First published in the Geelong Advertiser, and then on News.com.au, Senior Sergeant Tony Francis was reported (though not directly quoted) as saying that: ‘decriminalising ice could be the best way to fight the deadly drug epidemic sweeping through Australia’. The concept of decriminalising ice was reported as being explored by the Our Town’s ICE Fight taskforce.

Rather than debate the merits of such an idea, I’d like to look at the somewhat curious response from Assistant Minister for Health, Senator Fiona Nash.

Senator Nash responded the same day, with a press release of her own. She reiterates the damaging nature of methamphetamine use, acknowledges that police officers have told her that ‘we cannot arrest our way out of this problem’ and emphasises the need for education. Nothing particularly weird or controversial so far. Then things take a sudden turn as she further states:

However, legalising the drug would send the message that ice is not dangerous. This is the wrong message to send. Legalising what is arguably the worst drug Australia has seen is madness. A Coalition Government will never legalise a drug that destroys brain function, mental wellbeing, general health, employment, relationships, lives and families.

This is clear example of a variation of ignoratio elenchi – irrelevant conclusion, known as the straw man argument. Snr Sgt Francis never said ice should be legalised – he said it should be decriminalised. These are two different things. As a side note, I would expect my current students (2nd year B Social Science and B Soc Sci/B Laws) to understand this distinction. So that an Assistant Minister for Health may not, does not strike me as plausible.

So there is Senator Nash’s first problem. Even if her argument against legalizing methamphetamine was sound, it is irrelevant to whether or not decriminalisation is a good idea to the extent that they are not the same thing. For her statement to actually address what Snr Sgt Francis said, she would have to have concluded that ‘A Coalition Government would never decriminalise a drug a drug that destroys relationships’ etc.

There are, usurpingly, further issues with the logic at work here.

Consider this Sen. Nash’s argument.

  1. Ice causes bad things to happen – it drug that destroys brain function, mental wellbeing, general health, employment, relationships, lives and families.
  2. Therefore, we should not legalise ice – that is to say, we should not change it from being illegal to legal.

Now, as things stand, it’s not actually a valid argument – this is quite independent from the fact that premise 1 may well be true. There is nothing in the premise about legalisation, so it can’t be in the conclusion – that’s a feature of deductive logic. You need to add or tease out the hidden premises required to make it work. This is easily achieved though.

  1. Ice has negative effect on individuals and communities– it destroys brain function, mental wellbeing, general health, employment, relationships, lives and families.
  2. We should minimise the occurrence of these negative outcomes (including not doing things that increase them).
  3. Something being legal rather than illegal increases the negative outcomes associated with its use.
  4. Therefore, we should not legalise ice.

This argument, unlike the original, is logically valid at least. That is to say, the conclusion actually follows from the premises. The problem now is that we have a premise that might not be true – namely that something being legal rather than illegal increases the negative outcomes associated with its use. Where is the evidence for such a bold assertion? I’m going to go out on a limb and say that Senator Nash could not back this up.

I did over-simplify this for the sake of clarity. But it remains that a premise linking legality with increased negative outcomes (or linking illegality with increased positive outcomes) is required to make this argument valid. Until Senator Nash (or one of her staffers) can provide one, no one should feel obliged to accept the correctness of her conclusion.

I can’t help but add an observation on the phrasing of Sen. Nash’s press release. Note that she did not say that the Coalition would never tolerate the availability or legality of a drug that causes such damage. Because that would be untrue – due to the legality and availability of alcohol.

Perhaps I should give her the benefit of the doubt in. This could be a deliberately deceptive dog-whistle to her conservative constituency. After all, if the Assistant Minister for Health did countenance decriminalisation of ice in the future, she would not technically have broken her promise to never legalise it.

Do Australians Care About Personal Choice?

The Senate Standing References Committee on Economics is accepting submissions on one of several inquiries:  Personal choice and community impacts. The aim of this, ostensibly,  is to look into ‘measures introduced to restrict personal choice “for the individual’s own good”.’, (which actually sounds vaguely interesting).

The terms of reference cover a range of areas that I expected to generate some interest:

The economic and social impact of legislation, policies or Commonwealth guidelines, with particular reference to:
a. the sale and use of tobacco, tobacco products, nicotine products, and e-cigarettes, including any impact on the health, enjoyment and finances of users and non-users;
b. the sale and service of alcohol, including any impact on crime and the health, enjoyment and finances of drinkers and non-drinkers;
c. the sale and use of marijuana and associated products, including any impact on the health, enjoyment and finances of users and non-users;
d. bicycle helmet laws, including any impact on the health, enjoyment and finances of cyclists and non-cyclists;
e. the classification of publications, films and computer games; and
f.any other measures introduced to restrict personal choice ‘for the individual‘s own good‘.

The submissions received so far are available for download, other than any that have been submitted confidentially or whose authors chosen not to be identified publicly.

Given some of the conversations I’ve had over the years, I would expect that many of these terms of reference would attract attention. Having perused the published submissions, it is pretty clear that, thus far, only (d) – regarding bicycle helmet laws – has many submissions – that are publicly accessible at least.

I wonder, what is behind this occurrence? Is it that only anti-helmet activists are contributing? Is it that all the other submissions, on other matters, are confidential? Personally, I find that a little hard to believe. We have not reached the deadline yet, so perhaps cyclists are just more organised than everyone else.

Assuming that the makeup of the submissions does not change between now and the 24th of August, I would like to know what is going on here. Perhaps other campaigners are reluctant to be politically associated with Senator Leyonhjelm, who was behind this inquiry. Or maybe they are more jaded than anti-helmet activists, having spent more time struggling to have their voices heard.

Or maybe, despite the fact that Australians seem to break such laws pretty regularly, most are not interested in challenging laws that exist to restrict their personal choice.

Meaning and Marriage

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I pitched the following to The Conversation some time ago, was rejected, and since then I’ve been trying to work out what to do with it. In light of their publication of Kevin Donnelly’s piece arguing against marriage equality, I thought it was time to publish it here as it addresses many of his arguments.

‘We can’t have same-sex marriage, because that’s just not what “marriage” really means.’

This has been a theme of some comments at The Conversation, whenever marriage equality is mentioned. (Update: it actually the entire theme of a recent article published there) On a different scale, but with similar intent, some governments have legislated to define marriage in a certain way – examples include the Marriage Legislation Amendment Bill 2004 here in Australia and the Defence of Marriage Act (Sept. 21, 1996) in the USA. I would argue that in both cases, appealing to the real meaning of a word is problematic.

Most people don’t spend a lot of time thinking about how or why particular words seem to have particular meanings. The idea that words should be used in some ways (and not others) is intuitively appealing. But on closer inspection, the idea that particular words mean, or refer to, particular things is sometimes quite tricky. In the case of marriage, it turns out to be particularly unhelpful.

In arguing that we should not enact same-sex marriage legislation because of the real meaning of marriage, the following question must be answered: Why do certain words mean certain things? There are, unsurprisingly, a number of theories. At the more radical end of the spectrum, Saul Kripke argued that there was no such thing as meaning anything by any word. I’m not going to go quite that far, not least because I think Kripke was wrong. It’s worth looking at how we might respond to scepticism about the existence of meaning as it highlights some of the difficulties in using the supposed ‘real’ meaning of marriage to justify denying same-sex couples the right to use that word.

So what is on the table in terms of backing up meaning?

‘Just look at the definition of the word’, some might say. Well, the definition of a word is what it is in virtue of the meaning of the word. If we can’t agree on the meaning, we won’t agree on the definition. On top of that, words are defined in terms of other words – words that we can also disagree about. So while we might start off arguing about the definition of ‘marriage’, we quickly move to disagreements over the meaning of ‘man’. Then we might quibble over the meaning of ‘male’. Every time you use a definition, I can claim that your interpretation of some word in that definition is flawed. If I were willing to extend my scepticism about the meanings of words far enough, there is no limit to how far this argument could go. What we need is an account of meaning that does not rely on our interpretations of other words.

We might look at the history of how a word has been used. So marriage would mean what it meant in the past, and should be used in accordance with how it has been used in the past. This might be tempting for those on the conservative side of this discussion. But if you acknowledge the fact that meanings change, you have to justify why the meaning of marriage should not change in this case. Also, how do you decide which bits of history to privilege? Do we include the history of other some cultures and not others?

Letting history go, some might appeal to the aggregate or majority view of how a whole group of people use a word right now, in the present. This might seem helpful, especially if the majority thinks as you do. But it is problematic nonetheless. If one person can be wrong about what a word means and how it should be applied, then it’s at least possible for a whole community to be similarly mistaken. A group of people thinking that something is true, and that thing actually being true are not necessarily the same thing. I’m not saying that it isn’t either, just that now you need an account of truth as well – we’ll leave that conversation for another day.

This brings us to what might be seen as a more metaphysically loaded theory. Why does marriage mean one man and one woman? Because the correct meaning of that word is ordained by God. This is an appealing solution for some people. However, I think there are two main problems.

The first is that not everyone believes in God, and if they don’t they are not going to accept this argument. Worse, about something like marriage, there is disagreement between different kinds of theists. Let me be very clear, this isn’t about atheists versus believers. Nor is it just about same-sex marriage. If two people both believe themselves to be Christians and they have a disagreement of the form: ‘It’s not really marriage if it wasn’t solemnised by a priest’ or ‘It’s not really marriage if the woman doesn’t submit to the man’, then deciding on what grounds we pick one view over the other is going to be complicated. Going down the road of arguing about which one of these people are ‘real’ Christians is unlikely to lead anywhere constructive. All that has happened is that an additional can of worms has been opened and people of other faiths (or no faith) are no closer to being convinced.

Even if we accepted that a particular God does exist, and that They do have a particular idea of what a word means, we have to be certain that we have correctly interpreted Their meaning. Some might argue that God puts the correct concept directly into our brains, thereby bypassing the problem of interpreting His meaning. But if this were the case, how could we ever make mistakes in how we used this word? I imagine that even very devout people occasionally make mistakes when using words like marriage. If this is true, then it counts as evidence against God putting the concept of marriage into our minds in some direct way. And if that’s true, we are interpreting His word, allowing room for potential error. Humans are finite and fallible. And while an omnipotent being (by definition) could surely imprint a word on our brains so thoroughly and perfectly that we never use it in error, I do not see any evidence that this actually happens.

In light of these difficulties, legislating to protect the real meaning of marriage is difficult. Some might claim that we cannot change how the word marriage is applied in real life, because that new application is supposedly out of line with the real meaning. But this can only be rationally defended to the extent that the account of what constitutes meaning actually works – otherwise your argument is a house built on sand. Clearly, I don’t have all (or any) of the answers. But I would encourage people, whether they are people of faith or not, to think carefully about what philosophical baggage they might need to unpack whenever they talk about the ‘real’ meaning of a word.

photo credit: torbakhopper celebrate good times!!! marriage equality : castro rally, san francisco (2013) via photopin (license)