Artificial Scarcity Two Ways

Listening to the radio and drifting in and out of sleep this morning, I thought I heard somebody say that "destroying stockpiles of ivory will dampen demand" for it. Eh?Apparently, Hong Kong is planning to destroy 28 tons of elephant ivory that it has confiscated over the years. Other countries, including the USA, have been doing similar things to reduce demand for ivory. I thought that when you reduced the supply of something, it would tend to increase the price of that thing.

It makes sense to me to destroy weapons or drugs that are seized, those things could be dangerous if somebody got hold of them, and might not be safe enough to general re-use. But with ivory, the damage to the elephant is already done and the criminals have already lost their goods, so what's the additional benefit of destroying it? Even PETA gives away fur coats to the homeless.

Wouldn't releasing all this ivory onto the market drop the price of the stuff and make poaching less attractive? Couldn't the proceeds of those sales also support anti-poaching law enforcement, education and elephant conservation? I understand the desire to make a point and tell the world that it's not OK to kill endangered elephants for decoration but these high profile destructions just seem like advertisements for ivory - "it's getting scarcer, so you better buy some now!"

That seemed entirely too loony, so I turned over and went back to sleep for while. The next time I stirred, the story had shifted to the controversy over "micro-apartments" in Boston's "Innovation District," formerly known as part of South Boston.

People have got their real estate panties in a knot over whether or not developers should be able to build small apartments, even tiny ones, to chip away at Boston's 25,000 unit housing shortage. After a great deal of wrangling, it sounds like developers have been approved for 350 such units, and 77 are under construction or already built.

These "innovation units" are apparently super modern and somewhat less than 450 square feet. That doesn't really seem like some weird new form of housing. I've got a 450 square foot condo in Cambridge, and I know there are plenty more. Of course, I'm enjoying the profits from renting out my condo, but if the city would allow the housing it needs to be built, prices for both rentals and sales would most certainly fall. Allowing a few hundred new units of just one kind when thousands of every kind are needed won't change a thing.

I can't help thinking that if the tech innovators whom Boston wants to attract were subjected to the same kinds of restrictions that real estate developers are to meet the market need, they'd be trying to develop mobile apps in BASIC.

Maybe allowing a trickle of additional supply to make product more affordable is less crazy than destroying product to reduce demand, but neither path seems quite optimal. Can't we do better for elephants and Bostonians?

No Comments Yet.

Leave a comment