Website owner: James Miller
Cause of blighted areas across America
Nick Johnson has a number of YouTube videos showing very depressing looking blighted areas of abandoned buildings — homes, stores, etc. — in America. (See Nick Johnson YouTube channel) Many large cities, such as Detroit and Cleveland, have big areas of abandoned houses and other buildings. It is quite shocking to see. It seems so sad. You wonder what happened. Actually, it is really very easy to understand how such a thing can happen. Suppose the owners of some large factory employing several thousand people decide to shut the factory down and move their operation to China. Suddenly all of those employees are without a job and if the factory was the main employer in the area these people are forced to move to some other area to find a job. So everyone suddenly wants to sell their house and with everyone wanting to sell their house and no one wanting to buy, what happens? The Law of Supply and Demand tells us what happens. With a big supply and no demand the price of those houses falls to zero. Everyone is simply unable to sell their house. So everyone abandons their house, losing all of the equity they have in it, and moves to some other area where they have been able to find a job. With all of the people in the area leaving the area all of the supporting businesses in the area (grocery stores, shops, restaurants, etc) are also forced out of business leaving a lot of vacated buildings. Over time roofs start caving in and the buildings fall apart. The homeless and drug addicts start moving into the area and it becomes a high crime area where no one would want to live. It becomes a very sad looking mess. This kind of thing has happened all across the midwest, the former industrial heartland of America, in the area now called the rust belt, (See Rust Belt) as factories closed down and moved to places like China. It also happened in the coal mining areas of Appalachia when all the coal mining companies went out of business when America turned away from coal. How could such things be prevented? You would have to create conditions where it is in the factory owner’s best interest to stay where he is and not move. Like, for example, enacting high tariffs on imports.
If, for any reason, everyone in an area wishes to leave and few wish to stay you can expect a precipitous drop in the price of houses and deterioration of the community.
15 Mar 23
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