We Don't Have a Housing Shortage. We Have a Paycheck Shortage.

I have once put on an economist wedding card like, congratulations on your upcoming household formation for your successful household formation. I wish I clearly I would only give to an economist because everybody else would be like, this is not right. Hello and welcome to Optimist Economy. I'm Katherine Anne Edwards, economist. I'm Robin Rousey and I'm an editor. On this show, we believe the U.S. economy can be better and we talk about how to get there one problem and solution at a time. Today on Optimist Economy, we're going to be talking about the housing market. Housing. And there's really a shortage of housing. And if supply is the answer to all of our housing cost woes, and I'm going to say no, but you should listen anyway. do we have any announcements uh give us money oh yes we do have an announcement oh wonderful optimist economy relies on people like you donating to our show over the hiatus we got donations at the spiritual sponsor level from four people including sonia gill and we want to thank her for her donation you too could become an on-air named spiritual sponsor by giving us money at optimisteconomy.com. Yay. All right. Our next section is really the one that I own, which is retcon, where we go back and talk about episodes, reflect on episodes, as well as fix things that I said that were wrong. But Robin has one today. I do. You mentioned Bend It Like Beckham in our last episode, and it is Parminda Nagra, who is the actress from that movie who shows up at the Angel City Football Club women's soccer games here in Los Angeles and everybody goes wild. I would lose my mind. Yeah. Yeah. People, I imagine if you're seated, I'm not in those expensive seats, but if you are, I'm sure it would be like, it would be crazy. Okay. Next chapter is terms and conditions. Catherine, I see you looked something up. I did. I looked up bloviated. Bloviate. Yeah. Bloviate. It means to talk or write at length. to talk yourself hoarse. Yeah. Okay. The only reason why I wanted to include it is I'm trying to get back into writing Bloomberg columns and man, it was slow going. I was trying so hard to get words on the page. And I was having my favorite Bloomberg subject, which is to knock Congress for being bad at its job and not doing anything. And I brought up a hearing that they had in which they took turns yelling at health insurance CEOs and then yelling at each other for being like the real cause of the problem. And I was trying to come up with a term for talking into dead air. And then I was like, maybe I don't want to look it up. Maybe it doesn't exist and I shouldn't look it up and bring it up. Anyway, it's bloviate. It's bloviate. It's a good word. I looked up a term that turns out is not an economic term, but it is one-legged stool. So there's a story in the paper today, as we're recording this, about the one-legged stools holding up the fragile economy. And in this case, they're talking about in the space of consumer spending, it's just highly wealthy people doing most of the consumer spending. In the labor market, it's healthcare and social assistance jobs that are creating all the job growth. And in the stock market, it's basically seven tech companies creating all the returns. So all of these are unstable, like a one-legged stool. But when I looked it up, I also discovered that apparently when Alfred Nobel had his first nitroglycerin factories, he actually had one-legged stools for the guys who had to supervise the vats of chemicals making nitroglycerin so that they stayed aware. It was also called a suicide stool. So you didn't fall asleep while sitting down on the job. I was like, is a one-legged stool just like a pole? it's no it's got a you know a seat on it yeah just but just one it looked a little and they had a picture of it on the nobel website i was like is this a real thing and indeed it was a real thing we're gonna take a quick break and we'll be back with the biggest pilcrow of them all the big take from bloomberg news brings you what's shaping the world's economies with the smartest and best informed business reporters around the world we cover the stories behind what's moving money in markets and help you understand what's happening, what it means, and why it matters every afternoon. I'm Sarah Holder. I'm Salaya Mohsen. And I'm David Gurra. Listen to The Big Take and Big Take DC on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. The biggest pill crow. The biggest pill crow. Bigger than any pill crow we've ever recorded. Bigger than any pill crow. I don't know if you did. You see this poll yesterday that the New York Times CNN poll about affordability. No. It said that basically Americans are deeply pessimistic about their economic future. But also specifically, they said more than half of people surveyed said that housing and education are now so expensive that they are actually unaffordable. Housing was 54 percent, I think. Fifty eight percent said education is unaffordable. Yeah, I mean, Americans have said quite clearly housing is unaffordable. And the narrative you hear around this is supply. We need to build. We need to deregulate. We need to juice the market in order to ease prices. And I think what we try to do on this show and what we want to do specifically today is to get at what's wrong with that story. It's not – is that wrong, wrong, wrong? It's just not the whole – It's not the whole story. It's not the whole story. And if you don't think about the whole story, if you don't think about the actual cause of the problem, you'll never solve it. And we want to solve housing affordability, but it's not as simple as let's just build some stuff. I think the other things that we, you know, just to keep in mind about what's been going on is, of course, the president has proposed and then backed away from the idea of 50-year mortgages as a way to make housing more affordable. Sorry. Is that a spit take? Okay. It's such a bad policy. It was so bad, I just deleted it. But then I did remember, I don't know if you saw the reporting of the 50-year mortgage, where the guy who, Bill Pulte. Yeah, Bill Pulte. He put like a poster board with FDR's face and then Trump's face. And under one, he put 30-year mortgage. And on the other, he put like 50-year mortgage. He's like, you're going to be like FDR. And then as soon as it came out, people were like, this is the stupidest thing I've ever heard. That just made me cry. I'm like, nailed it. Fascinatingly, Bill Paltty. So Bill Pulte, he directs the Federal Housing and Finance Agency, like overseas Freddie Mac and Fannie Mae. And they've been just like firing all the people whose jobs were about housing affordability programs, fair lending programs, teams that focus on counseling, people on mortgages. His idea is just like let banks do whatever they want to. We don't get rid of all the regulations that came in the wake of the 2008 recession and housing crisis. It's just that's the solution. Boom. 50. You're welcome. And here we are. So failing that. Yeah. Failing that. Failing that. You know, how do we how do we talk about housing? What do you need to know to have a proactive, productive conversation of what is going on with housing in the U.S.? I think that there's like kind of a north star here is that when we're talking about home affordability, we should look at the home ownership rate. it peaked in 2005 with the peak of the housing bubble. And after the housing bubble crashed, the homeownership rate in the U.S. fell for 11 years, and it went down to 62 percent from a peak of 69. And it didn't stop falling until 2016. And then it started to rise again. Now, a lot of weird things happened with the homeownership rate in the pandemic, but right now it is around 65 to 66 percent, it's kind of bouncing between there. So it's stable. Maybe you would argue it should be rising, but it's not crashing. It has been stable for the past few years. So the homeownership rate is not like falling off a cliff the way that it did after the housing bubble burst. The second is if you look at mortgage debt service, this is the amount of money that all Americans piled together are spending on their mortgage payment and express that as a share of income and all the disposable income they have, mortgage payments now are a smaller share of disposable income than they were before the pandemic. Again, it peaked with the housing bubble, peaked a couple of years later in 2007, but we now spend less on mortgages as a country than we did even six years ago as a percentage of income. Were there some kind of catastrophic crisis in the housing sector, those two things would not be stable. And so that's, I don't say that to, to be like up and here's the economist with the data that says your struggle is fake because the data says you're wrong. It's to, in some ways, allay the concerns of how big of a problem we're dealing with, because we have some basic level of stability in the market and in home ownership. So that's, that's good. It's good. It might make you, it might make you feel like I'm erasing your experience, but it is good that those things are stable and they're not flashing red. But I think the second thing to understand, and this is also pretty important, is that when we think about housing and how many houses we need, like what are the total number of units we need, the denominator isn't people, it's households. And we build housing for households, not people. You mean how many housing units you need is based on how many households there are, not how many individual humans there are in the country? Right, right. So a bit of a terminology here. A household in kind of the economics definition is whoever has a key. So if you live in an apartment with three roommates, you and your roommates are one household. If you live in an apartment by yourself, you are one household. If you live in a house, but there's two families in the house and you guys are split up, you are one household, two families. The household is basically whoever is under the roof, whether they're related or not. over the past 15 years, we have seen a big slowing of household formation, which means you go out and you get a new key. So when I moved in with my boyfriend, I left my group house with three roommates and he left his group house with two roommates and we moved into a place together. We have formed a new household. So there has been a lot of reasons why we have not had new household formation. And one of them was after the Great Recession, a lot of people were staying with their parents like living with their parents longer Marriage rates are down Independent living amongst young adults is down And some of this is because housing is expensive but at the same time, it also reduces the total need for housing. So it's definitely a two-way street. The total household formation in the U.S. is down by several million over the last 15 years and is projected to stay down. One question I've always had about this is whether there's also a mismatch between the types of housing that are available and the housing that people need at various stages of their life. So when you just moved into a house in Texas, you've got kids, you wanted to be in a house with multiple bedrooms. In Southern California, where I live, a huge amount of the construction that's happening is apartments. They are mostly one bedroom and two bedroom apartments. They are probably not ideal for people who have children or more than one child. And granted, you know, Southern California thinks it's the Midwest and we should all have backyards. But I've often wondered if there's also that, right? And likewise, a shortage of not just the size of the units, but whether you are at a stage where you want to be buying a house versus renting. Like, I think a lot of these things get really mashed up together into like housing shortage. When the shortage could be, we've got housing, it's just what you said, it's not affordable. Yeah, I think that's the exact instinct that you can understand at a really fundamental level what it means to be mismatched to the housing supply because you want to live in a house, but there's only condos or you want to live in an apartment, but there's only like houses far from the city center. Right. That mismatch of preferences translate that to income. And that is the housing affordability problem we have is that the distribution of housing is mismatched to the distribution of income. And we have a to the extent that we have a housing shortage. It's not a net shortage like we have more people than houses. It is a distributional shortage where we don't have enough housing for the people at the place that people can afford. Right. Supply is not like it's a it's a problem, but it's a really subtle version of the supply problem. And maybe some would say not really a problem at all. It's about mismatch between what people can afford in the bottom. Yeah. And what is being built. Yeah. Right. So it's not a matter of like as long as we got rid of certain regulatory and tax policy, people are suddenly going to build housing that someone who makes fifty thousand dollars a year can afford. Yeah. That's why the supply answer is not fitting with the actual supply problem, which is income. Yeah, we don't have housing for people who don't make that much money. That is the problem. It's not that we don't have housing is that we don't have the right price of housing. And what people are building is not at that price point. At least what private developers want to build is not at that price point. Yeah, that's interesting. And this affordability problem, I mean, again, I live in Southern California, the affordability problem came to us a long, long time ago. So it's been kind of interesting to see it catch up to other places. Like, for instance, we lived for two years in Spokane, and I watched it happen in Spokane in this period of time between 2019 to what is it, 2022 or 2023, when housing prices shot up, like, what was it, 48% or something? There was, in fact, this gigantic leap in home prices as people moved, and then also a gap in purchasing power largely because of interest rates and housing prices outpacing wage growth. So I wrote about this in 2024. I wrote about it at the start of summer, like really getting into home buying season and interest rates were high. And there was all this talk about how like we had to push housing supply and construction forward. And I said, you know, affordability is a function of price and income. Like if I can't afford something, it could be that it's expensive or I just don't have that much money. And I said, I think the U.S. will have a housing crisis so long as it pursues a low wage policy in the labor market. So if you assume that 30 percent of your income is affordable, right, if you give no more than 30 percent of your income towards housing, that's that's the typical standard for affordability. And that standard has a policy precedent behind it because that subsidized housing is paid back based on 30 percent of your income. So if you were in federal subsidized housing, they're tagging it around 30 percent. So it's not just like a number that came out of the air like there is a lot of federal policy behind it. Yeah. So it's you know, we can talk about housing supply, but like there are wages in the U.S. for which there is no housing that is affordable for someone who makes that little money. And we will not build it. No one out there is like, we've got to go out and build housing for people who are going to pay me less than $800. Yeah, they're not. It's not that's not what they're building. One of the things I read was that the change between 2019 and now is that in 2019, 54% of houses were affordable to a median household income. And now that number is like 28%. So I was just also curious if half the houses are affordable, is that like kind of where you would want it to be? Like to me, 2019 already felt unaffordable, but I live in Southern California. I know that I'm in this hyper, totally crazy real estate bubble. We merely adopted the dark. You were born in it. No, I moved here. But anyway, back to my question, which is if like 54% of the housing stock that was for sale is affordable to the median household income, is that in balance? 54% of the housing stock that was for sale is affordable to the median household is an imbalance. Not necessarily, because it all depends on the distribution of home prices relative to the distribution of income. And it could be that at the exact middle point, the middle person could afford middle housing, but that says nothing about the people underneath. The U.S. income distribution has a big clump of people below average. And we have more people below the average income than we do above it because the tail is really, really long, right? So if you take an average, right, just one of my favorite measures of central tendency, but if you take an average, right, you're just like, here's the total income, here's the number of people we divide. That average can be above what even 60 or 70% of Americans make because we have a big clump of people that are below average and then a long tail of people that are above average. So I say all this because, you know, what that big clump can afford really depends on if it has an equally big clump of housing right there. And the middle point is instructive, but it's not necessarily going to be indicative of what happens to everybody else below them. Does that mean the crisis or the real crunch point is people trying to get into the housing market. It's people trying to buy their first home. Yes, I think that that's... Or I guess maybe trying to move. In a lot of ways, that's a function of interest rates. The interest rates have pushed up mortgage payments, which they're intended to do. And that as a result of that, you either can't afford the mortgage payment because it's higher than rent or it crowds out other spending. Now, not to be like, I don't know, that jerk economist that's like, actually. It's not supposed to be. But like this is one of the reasons why we push up interest rates when inflation gets out of control is because when you push up interest rates and it makes things like mortgage payments more expensive, that crowds out other spending and that reduces demand, lowering the pressure on prices in the economy. And this is we're essentially all feeling the pain of having to try and conquer inflation. This is one channel of doing it. I mean, it is a blunt tool to raise interest rates and you get all kinds of pain points like this. So that's one reason why the supply concern and the need to build, build, build is, I think, out of step with the reality that the escalation of homeownership affordability and the crisis around it does coincide really well with interest rates climbing. And then the second part would be that I'm not convinced that we are actually millions and millions of short of units, so much as I am convinced that we do not have a housing stock that reflects the accumulated toll of five decades of income inequality. And a lot of developers will build for the top of the market and the bottom market becomes affordable, you know, basically when it grows so old or dispossessed that like other people can afford it. Well, that's not an affordable housing strategy. Just a way to just wait for houses to get old and need rehab? Yeah, that's actually called NOAA, Naturally Occurring Affordable Housing. NOAAs. Okay. Yeah. And there are people who are like work in urban areas to try to preserve NOAAs because you have people who come in with a lot of income and they decide a neighborhood is desirable and they push up the home price in a neighborhood. and you have all these NOAs that are lost because people are willing, you know, kind of going back to what we said about hedonic pricing, the neighborhood itself has become more desirable and then that has altered the home price and the affordable housing is gone. Yeah. And you certainly see that in big cities where even the houses that probably should be torn down because they weren't ever really, like I live in a neighborhood where tons of houses, let's say it just boomed in the 1920s. They built so many houses that they just, they weren't built to last. but they do because it would now be so expensive to rebuild them on those lots, in part because of engineering, things that they didn't do a lot of 100 years ago. And so if you want to live in the center of the city, you live with the old housing stock and you pour money into that instead of trying to build something new or move farther out where there's land. Yeah. Yeah. It would be really nice to just like be able to sprinkle some housing on a city and say like there like the problem's solved. But I think what I want to stress about housing is that the problems go much deeper than just is there a pile of bricks for you to move into? And I think it's a function of how we remunerate workers in our economy. You know, you go decades and decades without meaningfully reforming the labor market regulations without raising the minimum wage. And then you have a housing affordability crisis and you're like, and the answer is to build more. I'm like, or think about it. We might have enough houses and not enough income. And one of those problems is a lot. There are a lot of people who want to jump in the game and say, like, well, let's develop and let's build stuff here as opposed to, you know, let's start getting incomes higher. I mean, I was looking up this morning, the median mortgage payment in the U.S. right now is $2,259. The median weekly earning of a full worker in the United States is around a lot lower for women But is a median weekly You say it's a lot lower for women. I'm sorry. Yeah. It's $1,200, but it's around $1,000 for women and $1,300 for men. Okay. So median weekly earnings, $1,200. Median mortgage payment, $2,200. dollars. That comes out to needing $7,500 a month of income in order for that payment to be affordable. So you can think of that $7,500 a month of being around $1,700 a week. So there is a $500 weekly gap between what your median mortgage payment is and what the median worker earns. That $500 gap is not going away with a supply, like an infusion of supply. That is an income and wage problem. And the more we focused on supply, like supply is not getting you out of this. Supply will only get you out of this if you have the government aggressively building homes that are below market rates. The market will not build below market rate homes. The government can go out and build below market rate homes. That is what they would have to do to actually change supply in a way that matters for affordability. I mean it's worth going back to history and thinking that like we have had housing supply shortages in the United States. They were very acute during World War II and people who worked at factories related to wartime production, they were living in shanty towns and tent villages even though they were making good money because there was truly not a house. No house to bed. That happened here. And there, in fact, are still literally quonset huts that were divided into like duplexes that were housing into the 60s, I think, because they just couldn't build housing fast enough to absorb all the people who moved here after the war. In addition to all the returning soldiers and, you know, all the people who had worked in the ports and such and in the aerospace industry here. Well, I mean, the U.S. coming out of World War II, you had a lot of constrained household formation, as it were. You had people, like they were married, but they were in their parents' house because there was just not a house to be found in the city. And it was not about preferences and it was not about what they could afford. I mean, it was just there was not enough housing where people lived. And you saw a just absolute flourishing of home development, a lot of it with the government's help, if not the government building directly. some of the histories you'll read will say like, yeah, because otherwise people would have like outright revolted. Like they need, like people were so desperate for housing. They wanted to get out of their parents' house. They didn't want to, and they wanted to all live alone. And you saw this like era of single family housing as a reaction to how much doubling up occurred out of necessity during World War II when there wasn't enough houses, especially in areas near production. Well, you know, I think about that, not just because of what we should build, but like, I do this all the time, but like this is not your grandfather's housing shortage. This is like people can't afford housing because we've been building too much expensive housing, not enough affordable housing, and incomes have started to, you know, have just not taken off the way that they should have. And if we don't have incomes rising at the bottom, like we will never have affordable housing for half of Americans if the market is building for the top. And I think there's this kind of idea of like, oh, but more supply would reduce payments I just, you haven't seen it. I haven't seen it. I actually found this story, by the way, about what it would take just to get back to the 2019 affordability levels. The analysis was from actually realtor.com, which I believe put out a report about it, but they said to get things back to what you were talking about, where the mortgage payment would be about 21% of median household income compared to more than 30% today. They say mortgage rates would have to fall to 2.65%, or home prices would have to fall 35%, or incomes would have to rise 56%. Yeah, so it's not going to be just one. Yeah, it's not going to be just one thing. And I guess the income side is overlooked here. And there's a degree to which enough income can solve this problem. Enough housing cannot solve this problem. More housing can help, but it cannot solve this problem if people don't have enough income or if incomes are being left so far behind housing price. Now, there's a whole other piece to this, that there are a lot of people out there who do not want more housing. Now, they say that they do and they want housing to be affordable, but I get the sense that really they want to keep housing as kind of the privileged good that it is because they treat it like a piggy bank. I mean, most Americans view their home as an investment, like they're trying to get equity out of it. Yeah, I guess. I mean, I can't speak to everybody, but to have savings out of their house, if not an investment, you know, does that distinction make any sense to you? And so when I bought my house, I was very young compared to my peers. I was 27 when I bought my house. And I did it because housing prices were low, but I was paying so much in rent that I really couldn't afford to save at the rate I wanted to save. So I wound up buying a duplex. And it allowed me to at least use the money that I was putting towards rent to a certain extent that it was also going to build up the principal and the equity in the house. I did not expect that the housing market would do what it did. What year did you buy your house? 1997. 1997. Now, you know, I mean, I was a newspaper reporter. I wasn't making a lot of money, but I did also read the newspaper, and it told me that housing costs in Southern California were at 10-year lows because of riots, the earthquakes, the recession. Like that combo pack meant that housing prices were at 10-year lows, and I was like, this is my chance. I got to go. I do it now. I think a lot of people view housing as an investment that, you know, the boomers bought houses for 50 grand in 1980 and now they're worth millions and like they want to do the same and that they want they think of a house as this like equity, you know, skyscraper of like once you get in, like you go straight to the top and like all you need to be a millionaire is buy a house and have it like just hold on to it and it just goes up, up, up, up and up. I don't think people should make money off their houses. I think it warps a lot of decision making to have so much of an investment, you know, putting a lot of money in just one stock, like it warps decision making. Yeah, it does. I mean, we keep passing laws and constitutional amendments and all sorts of things in California, trying to incentivize people to do different things with their housing, right? So we have rules that say you can take your property tax basis with you when you move if you're over 55 because I just feel like people are locked in the same way that people talk about being locked into low mortgage rates that it would cost so much more you'd have to essentially downsize your house the feeling is it was for you know boomers but now it's going to be gen xers and you know that housing prices shot up so much that you can't afford the property taxes on the place that you would go and I mean we live in Los Angeles in part because we are locked into all those things. Yeah. I mean, yeah, portable mortgages, which we talked about once on a Q&A episode. If you're credit worthy and you're paying down a 25-year mortgage and that's worth $500,000, why does it have to be fixed to that one address? You could pay a fee and just move basically your house. The thing about portable mortgages is like, sure, sure. It's basically someone is giving you an asset-backed loan and kind of letting you like swapping assets. You're swapping like the little a asset for the big a asset of like, I own a house, but like that kind of changes the perspective that people have on mortgages, as well as how they like, how long they stay in a house, how they invest in a house, what they think of equity out of the house. It's almost like you're prepaying rent for 30 years. And then you're shifting location of I'd rather prepay rent with an interest on a loan rather than pay it in like real time. And then And that, I think, would change a lot of people's calculus of like, do I need to buy? When do I need to buy? I mean, there's so much wrong with the housing market that's not supply. I think every time I hear a supply thing, it's just this like eye roll for days of like, yeah, let me guess. We need to be able to kill more birds and build houses in floodplains. Like, I get it. We shouldn't have regulations. And that's the answer to all of our problems. Or hear me out, fixing all the problems that we have. All right. Optimism. Optimism. I'm going to do. two things. One is I bet someone's going to be listening and be like, nice for two homeowners to talk about it. And we're going to get like a lot of slack, especially if this goes up as a TikTok. We're not going to get any slack. Flack. Why do I? That's why you have me here. I don't know. I know that people think that I correct you because like I'm an but I really am trying to help. You help so much. I think we will get flack because we're two homeowners talking about. I'm a landlord. I'm the worst kind of homeowner. You're a landlord. Yeah. Oh, my God. You're one step away from being a pawnbroker. I should just like draw a mustache on my face and like twirl. We just lost production. Yeah, just quit. But I think people. I have a rent-controlled unit. Oh, snaps. Okay, they're back. We got production back. Derek also listens to the show. He's going to be like, wait, what? I mean, yeah, it's a lot for like two people who own houses, refinanced houses, to be like, supply isn't the end-all be-all. And it's not to downplay how hard it is to buy a house that I bring up all these other things. I think it's to make the narrative much more empowering, right? Like, hey, y'all, good news. Our salvation doesn't come from housing developers deciding to take a chance on a market. That's good. Don't listen to our housing developer president or whatever legion of bros who are following him. It's not there. Our fate is not in their hands. Our fate is in the hands of better banking policy, better lending policy, and better labor market policy where people actually earn an income. And that is where our salvation comes from and not from whenever some a**hole decides to build a big building and say it's mixed use and one of the units are affordable. F**k you. Come on. Y'all, let's put this power – this is back in our hands here. You need to go out there and demand unionization if you want affordable housing. We need better income. Sorry, I didn't mean to rant. So I know I focus on income. But think for a minute about if you listened to the first episode we talked about the just enormity of income inequality We have over the past 50 years seen this incredible increase in incomes at the top versus this positive growth for the bottom 90 missing out on so much of the economic growth. So if I were to tell you, think of like two housing markets, one in 1975 and one in 2025 or 2026, how much has our housing supply kept up with the gross income inequality? Right. Like these are fixed buildings, many of them built before the time we're talking about. If you were to just like kind of close your eyes at the end of the first episode and say, what are the consequences of having five decades of growing income inequality in which the top incomes are taking off and the bottom are not growing enough at all? Well, yeah, we're going to be mismatched with our housing stock eventually. This is a consequence of long-term income inequality that we now are mismatched to our housing stock. And that is a big part of the problem. And that is not just a matter of like stripping down environmental regulations and making sure that we can build like at a watershed or at a national park. It's a bigger problem than that, but it's also that makes that solution seem so like... And that solution has so many other benefits, right? I mean, there's so many things that are happening because of housing affordability, including like far reduced mobility of Americans. People just aren't moving anywhere because they don't have the money to move and buy a house in a new city. There's a lot of things that people get locked into because they can't afford to move. The answer to that is not new housing. Or maybe the answer to that is not more market-built housing. I think that government building below market housing is the answer. Americans are terrified of that now. We're terrified of it now. We weren't always. But I mean, the government building below market housing that is actually affordable, you know, most of our intervention into the housing market is for the very poorest. Yeah. Right. We don't have median public housing. We have low, low, low income public housing. We kind of ask private developers to like in some places set aside some units for people who are at like 30 to 50 percent of area income. that is not the same thing as building housing for the middle or having government subsidized housing for the middle, which we don't really have. We do more at the bottom, not enough in the middle, and the private action takes place kind of at the top half. We do also act as if, I don't know, that it's anathema to American capitalism for the government to be interfering in the housing market, right, that it's a market. But of course, they interfere in it in all sorts of ways. So why not in a way that actually increases affordability? instead of, I don't know, subsidizing banks with mortgage interest deductions. It strikes me how often there's like the right kind of intervention and it never applies to like most of us. It seems to apply to JPMorgan Chase more than me. Yeah, I know. Yeah. Like we have low-income housing tax credits to help build very low-income housing, but there's not enough. And there's no reason why the government can't build housing alongside of housing building that it's subsidizing. If it wanted to try, if it wanted to take a chance on housing affordability in a way that it had control over, I think it's all a matter of like the solution to the housing affordability problem is truly about what we are willing to ask for. And that is optimism because that puts agency back in our hands. It's not waiting for a developer to decide that our neighborhood or our city or our price point is suddenly worth it to them or they can squeeze the government for more in order to make it worth it. Right. If we make this about what the government can directly intervene in the housing market, we get to design our solution. And we are more empowered in that process than just build, build, build. Yeah. So let's become empowered. Let's tell them exactly what we want them to do and make sure that the housing that is built and the supply that is addressed is something that will benefit the bottom 70 percent of Americans and not the top 30 who can afford a housing anyway. All right. We're going to take a little break and we will be right back with executive orders. And we're back to continue to tell people how to live their lives, how society should be organized, smaller ways. Exactly. So I have an executive order. As listeners of the show know, I was in Houston last week visiting Catherine and her family, and I flew back on Delta Airlines. and I'm just going to say bathrooms on airplanes have become criminally small. I am an average-sized woman. I don't know how anybody larger than me is fitting into this bathroom. I'm waiting for an Americans with Disabilities lawsuit. They're criminally small. Some listener is going to know how airplanes get around ADA. I don't understand. And how bathrooms on planes work for people with a disability. I mean, try going in there with a kid. Oh, yeah. Yes. I endorse this executive order. Make bathrooms on airplanes bigger, a la Amtrak, where like you and your eight best friends are going to go to the bathroom together. Like everybody on the, let's all go. Why don't we all go? It's a big group. Down to the bathroom on the Amtrak. All right. What's your executive order? My executive order is very self-serving, but I need to be involved on the remaining casting decisions for the movie that that they're making about the 1999 Women's World Cup about the 99ers the girls of summer I need to be involved in the rest of casting they did great with the I mean they Mia she looks just like her I'm very excited but like you can't exclude me anymore I need to be a part of this I have so many ideas of who should play everyone and I swear to God I swear to God if they cast the wrong person as Michelle Akers like I don't know what I'm going to do who do you think should play michelle acres god i don't know i don't have everyone yet i just need to be in the room when the decisions are made to make sure that there's like you want approval i need producer approval a lot of actresses are like five foot nothing 75 pounds and i'm like michelle acres stall is like a force of nature and i you can't just do casting and you can't just do like angles like i need a person of substance in the most amazing wig yeah let's not skimp out on the wig budget for this one. Like, let's, let's make sure that this, I've got so many. Anyway, so me being a producer with like a lot of opinions on the 1999ers movie is my executive order. Benefits no one but me, but I just, I feel like I'm going to install myself there. Okay. That sounds good. All right. Optimist Economy doesn't have any financial sponsors, except you guys, but we do have spiritual sponsors and those are the things that are keeping us going. Catherine, what's your spiritual sponsor this week? Lily Allen's new album, West End Girl. I listened to this on your recommendation while I made dinner the other night. Oh, what did you think? It's great. It's great. I mean, just a reminder, don't break up or screw over a songwriter, man. That's all I keep thinking is like, wow, this sounds so painful and she's been through so much. But at the same time, I have benefited from this personally by having such a banger album. I feel like I'd read a novel by the time I finished cooking dinner. I've been through such a journey. Yeah. And also the SNL skit that features her where they reference the album is like equally as good. It's when Josh O'Connor hosted, but I would recommend watching the Lily Allen SNL skits. But I can't help but thinking that like that one song of like Love and Light, Madeline. I'm like, that is the new Bless Your Heart. Like if I walk up to someone and I'm like, love and light, love and light. I'm like, wow, that's what a devastating thing to say. Love and light. The new bless your heart. If there's hope in the world, the new bless your heart will be love and light. Madeline. Oh, man, it was so good. Who is your spiritual sponsor? What is your spiritual sponsor? My spiritual sponsor this week is actually Japanese grand sumo tournaments. I won't go on and on about it, but here's what I can tell you. The champion sumo wrestler in Japan right now is a guy who's actually a 21-year-old Ukrainian. So everybody's a wrestling name, and his wrestling name is Onishiki. And it references, because he's Ukrainian, blue as the Ukrainian flag, and then Shiki is the name of his mentor. But anyway, his real name is Danilo Yavushishian. And he's a 21-year-old Ukrainian. He moved to Japan after the Russian invasion of Ukraine, but he had been a wrestler and a sumo wrestler. And sumo is done like this. There's like 20 odd guys, and they each wrestle one person one day every day for 15 days. Each wrestling match, I mean, sometimes they last seconds. For a sumo wrestling match, it lasts like two minutes. It's like epic. And it's full of ritual, and it's full of these amazing outfits. and this huge stadium full of people looking down on this one little doyo, which is the ring where they wrestle. And anyway, it's pretty great. There was a Wall Street Journal article. Actually, it turned out just, I think, today or yesterday about this guy, the wrestling champion. But we watched the whole tournament. And you can also watch a day's bouts in about 30 minutes because they're so short. And they're on YouTube on NHK, which is the national broadcaster of Japan's YouTube. Sumo, yeah. And, you know, for our video listeners, I do have sumo wrestlers in the painting on the back wall here. Oh, my God, you do. Yeah, I do. I've never pieced together what your painting is of because of the window. My mind is blown on so many levels. That's it for another episode of Optimist Economy. Optimist Economy podcast is edited by Sophie Lalonde. Our video production for social media is by Andy Robinson Video Consulting. Thank you, Andy and Sophie, for making us sound like a podcast. If you agree with the things we say, we post video clips from the show for you to share with your friends or your foes. We're on TikTok, Instagram, YouTube, and LinkedIn. You can find us on those platforms to share some highlights from the show. If you're on Substacks, you can follow us there, too, and we have an Optimist chat going. And while Optimist Economy is a labor of love for me and Catherine, we do have bills to pay. So if you have the means to contribute, you can do so at optimisteconomy.com, where we will also happily sell you a T-shirt or a hat. Or a really good tote bag. Or a really good tote bag. Okay. Thanks, y'all. Thanks. Love and light. Madeline. no house i will ever own will ever come close to how cool my chicago apartment was that we rented it was just it will never nothing will ever come close it was one block south of like the northern border of the chicago fire so it was in that like beaux art style it was just Sophie I have the opposite experience in Chicago sorry Sophie my Chicago apartment was so cool