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3/09/2010

Myth 218 – The market forces determine the prices of public housing

Who believes in this shit? Can repeatedly telling this will make it another fictional truth like affordability? Who controls the supply of land sales? Who controls the minimum price of land sales through reserved price? If not equal or above the reserved price, don’t sell. Who controls the building of public housing, how many, when, where and sizes, ie the supply? Who sets or determines the price of public housing? No, sorry, it is the market that determines the price of HDB built flats. Just like the Pinnacles, the market or buyers decided to pay $200k more for the same flats in the same estate. It is all due to the magical market forces. Adabracadabra…., Ladies and gentlemen, the price of public housing is...., according to market forces....

8 comments:

Wally Buffet said...

Hi Redbean,

I and I am sure lots of your fans are bored to death with this obsession with housing prices. Just let shorty Mah handle this lah. After all, he is handsomely rewarded to come up with solutions to make everyone happy, yourself of course included. Trust him lah. He ain't what he is today if he is not brilliant ok? So let the poor man work it out. I have full confidence in the man.

How about a juicy write up on the film director's dalliance with aspiring actresses. He sure want to model himself after those Hong Kong and PRC directors who demanded some recompense for making starlets famous. He is now my role model. Work hard, play hard. Way to go, "Money Not Enough!" Next film should be "Sex With Wife Not Enough!". Sure win the Golden Horse Award for best picture one (the Eastern equivalent of the Oscars).

Kaffein said...

Seriously, these ministers and MPs should just shut up, sleep and take the millions. Market forces do play a factor, but to sweepingly say it's market forces is pulling the wool over our eyes and ignoring the sky-rocketing issues with housing. Just like the popular word - globalisation so often abused.

Kaffein

Chua Chin Leng aka redbean said...

No juicy write up and kiss and tell stories here lah. They have settled the matter among themselves so let them have some peace. You may want to talk about your kingdom in Lijiang and your favourite concubines huh.

Like Kaffein said, the people cannot keep accepting nonsense as truth.

Wally Buffet said...

This man should have heeded the well known adage. Never shit in your own backyard.

There is nothing like having 3000 km separate the objects of desire and the homemaker.

He is thinking with little dick instead of with his head. No wonder his movies never ever make it outside this little island.

Chua Chin Leng aka redbean said...

Hehehe,

Money is attractive, power is sexy. This is a potent formula. enjoy while the going is good.

Matilah_Singapura said...

Nope. The govt determines the price of housing indirectly in a "market" which is controlled and distorted by government intervention.

Matilah_Singapura said...

How? One might ask.

Assume the amount of land in Singapore as fixed, or at least constant. Yes, land can be reclaimed but that requires resources – namely capital and labour.

The state controls all the land in Singapore – as that is the one of the definitions and functions of the state. Some of the land has “private ownership” type of title, the rest of the land essentially “belongs directly” to the state. The state decides how this land is to be used – how much for military, for govt buildings, for public hospitals and schools, for roads and transport system and for public housing.

In a free market this usage is determined by what users are willing to bid for the land – i.e. the more “important” uses (as determined by market forces) bid higher and/or sooner. By this process the result is a “smoothness” of capital structures of production. As certain uses of land become more or less productive, they are exchanged in the market by the same process.

However, when the state is involved, it uses essentially “guess work” to determine who, what and how the land is to be used. A lot of this “guess work” uses mathematical models which are themselves based on arbitrary abstractions of (statistical) data available. Underlying that is also the assumption that the stats are correct – from the methods used to create the stats to the methods employed to make interpretations and implement policy from the stats.

Do player in a market ever make mistakes? Of course! Markets and humans are not perfect. Markets are simply a reflection of collective individual human behaviour relating to the satisfaction of wants and needs. However in a market, everyone is responsible for the choices they make in the market: i.e. if you make a “right” choice, you win (profit). Should you make a “wrong” choice, you lose (suffer losses). In this way capital structures (dynamic) are preserved, nothing “runs out” – because of the price mechanism, and production becomes sustainable.

However if there is no price mechanism and profit and loss to send appropriate signals, then the allocation of resources is bound to be full of error. That is why you get shortages and misallocation of resources when the government (state) gets involved. Also the state has absolute power and can (usually does) pass laws to prevent anyone from dissent or suing the state for personal private loses incurred – which is something one can do to seek redress for an injustice in the private market.

HDB is a state-run institution. Therefore the state not only will but has to make up rules as they go otherwise the whole thing will collapse.

Because HDB is non-free market, users do not and should not have choice. Individual choice only works if the market is (reasonably) free – where losses and profits are taken individually, as are choices to act or not, guided by an efficient price mechanism.

The HDB prices are influenced by govt regulation and the state’s huge monopoly on the territorial land. To some degree – even in a “hampered market” like HDB, prices are determined by “market forces”. However those “market forces” are a result of government interference with fixed supply, wiping out the price mechanism and replacing it with govt-controlled prices, and wiping out the profit-loss mechanism such that you – the average Jo and Jane loses and the state always wins.

Also bear in mind that as a state institution, HDB has been corrupted by the political process. He who gets political power controls the HDB. And he who controls HDB controls a huge amount of the political power.

Anonymous said...

The Market is owned by the Government, oh..the whole country belongs to the Government. It is only right that it dictates the market, the sheeples and their(leaders) own rewards.
Anyone dare protest ???