This is the Cato Daily Podcast for Monday, September 27th, 2021.

I'm Caleb Brown. State governments want more housing, particularly in California.

Local governments, not so much.

Tim Lee runs full-stack economics.

We talked about the coming shifts in housing policy

at the state level and the new changes in California

and why the politics of housing will mean big fights for decades to come.

It seems like a pretty straightforward point, the idea that building luxury units helps people who are of lower income and yet online

when I hear the phrase affordable housing, it is never used to refer to market rate housing and

ab surely never used to refer to so-called luxury housing.

So how, walk us through the intuition

on why building luxury apartments actually

helps lower- income renters.

Sure, yeah. I mean I think some people have this intuition that there's the luxury

market and there's the affordable market and so if you go luxury apartment that helps luxury

people I guess rich people but you know if you're luxury apartment that helps luxury people, I guess rich people, but you know, if you're not in that market, you're not helped.

But if you like think it through, like the, you know, the rich person who moves into the new luxury apartment they previously in most cases lived somewhere else

Probably in the same metro area and often you know people as they're kind of moving up in life

They're moving maybe to a nicer apartment or a apartment in a better location. And so the apartment they leave was, you know, becomes open that somebody else can move into that apartment.

And this is a chain that happens out

over the course of a few months.

That second apartment, the person moves into that,

...