Woodside Terraces | 6 fl | U/C

[plam]

I mean, I guess I believe in the market to some extent. My position would be that, yes, one should expect for this apparent market failure to get fixed over sufficiently long timescales. Perhaps it's best not to interfere in this case. But the market isn't necessarily efficient at timescales that we care about.

There are times when government intervention in the market is appropriate. Safety requirements, long term flexibility, maintenance of fairness, and the forced internalization of externalities are important examples of this. Some markets should be highly regulated; for example, I think all tobacco packaging should be identical, and designed by Health Canada — the only input the manufacturers should have is which short string of letters to print on the package to identify them.

But the specific size of units to be made in condo towers is definitely not one of them. Remember, the last time we had a big discussion about unit sizes seeming to be out of whack with what some people wanted, it was because the developers were building lots of 5-bedroom units. And why where they doing that? In part because of parking requirements that were defined to be per unit. Given many students’ cooking habits (i.e., fast food), I’m surprised the developers didn’t create 10- or 20-bedroom “apartments” and really shrink their parking requirements. The point is that the problem there was an extremely ill-considered intervention in the market, in the form of parking minima, which are a bad idea in the first place and then on top of that were implemented in an incompetent fashion.

I do agree that government intervention is more likely to cause unanticipated side effects in this case. But that doesn't mean that the market does the best thing at all times.