Solving the Housing Problem: Hunters and Settlers

European Straits #59

Dear all,

One of my most rewarding intellectual experiences in recent years has been reading a 2014 article by then-TechCrunch journalist Kim-Mai Cutler on the housing crisis in San Francisco—an article with a particularly entertaining title: How Burrowing Owls Led to Vomiting Anarchists.

There are two reasons why I’m now relentless in praising Cutler. One is her inspiring personal story (and talent at telling it). The other is that her chosen topics of urban planning and housing explain a great deal about why individuals have difficulties rebounding in the Entrepreneurial Age. In my eyes, Kim-Mai Cutler is a pioneer (and one who merits many more followers) in crossing institutional and policy ideas with a deep understanding of technology. In fact, ever since I read her article, I’ve been reflecting on how we can imagine a new housing market for the Entrepreneurial Age.

Following an intense brainstorming effort these past few days, one which involved members of my team as well as my wife Laetitia, I’ve finally come up with a framework to deepen that reflection. I think most of today’s problems exist because, as Clayton Christensen once put it, “we have the categories wrong”. We’re used to visualizing the housing market in terms of owners vs. tenants, or rich vs. poor, or housing vs. hotels vs. retail vs. office space. Those are the categories that preside over most government interventions on the housing market, notably through zoning rules and household subsidies. But in the age of digital nomads, coworking, coliving, and short-term renting of personal residences, we can see that those categories are no longer sufficient.

My thinking is that in the Entrepreneurial Age the housing market should be analyzed through a categorization scheme that simply separates two groups. On the one hand are what my wife calls the hunters: people who spend a relatively short amount of time in a particular area because they’re hunting for money (as workers), knowledge (as students), or experiences (as tourists). On the other hand are the settlers, those who need to have a fixed place of residence for the longer term—one that is attached to a steady job, their kids’ school, or simply their taste for a particular neighborhood that they eventually decide to call home.

Each group is indispensable for the prosperity of a given geographic area. Hunters bring the energy, diligence, new ideas, and money that help large cities thrive. Settlers provide the “eyes on the street”, the density of proximity services, and the underlying trust (the “ties on the street”) that make the local culture richer and more welcoming. What’s more, the two groups have many things that they like to share. Settlers can serve hunters, for example by hosting them through platforms such as Airbnb, while hunters can give settlers new connections to the world beyond their neighborhood.

In the past age of the automobile and mass production, the default way of life was that of the settlers. The majority of workers had a job for the long term, which delineated an optimal area in which they should locate a permanent residence. They could then decide on the school their children would attend and buy a home that complied with this set of constraints.

Hunters, on the other hand, were the minority. Their way of life was not regarded kindly. Hunting was tolerated as long as it was a passing phase. You could be a hunter as a student, then for the first years of your professional life, and then occasionally as a tourist visiting other places. Some people chose to hunt over the course of their entire lives because they had the money to hop from one 5-star hotel to another. But others kept on hunting simply because they didn’t have a choice. This was the case for many low-skilled immigrants, and their condition was miserable as a result: submission to predatory landlords; the impossibility of reassuring an employer or a bank; being constantly away from their family. This terrible fate of most perpetual hunters explains why settling was the preferred way of life in the age of the automobile and mass production.

The Great Safety Net of the past was thus designed to convert hunters to the settling way of life, because only the latter was in line with the techno-economic paradigm of the day. But as for the Greater Safety Net of the Entrepreneurial Age, it should have the opposite goal: to help settlers reverse back to the hunting way of life that provides them with the best jobs and the most opportunities.

That’s because in the Entrepreneurial Age, the urban world has been turned upside down. Nowadays our working life has become a constant hunting trip, with the many switches, overlaps, and unexpected events that you can count on in such an experience. And those who thrive and win in the Entrepreneurial Age are precisely individuals who embrace hunting as a way of life.

Technology is easily harnessed to help people become better hunters, as shown by businesses such as WeWork (which can provide an office desk in many cities), TransferWise (a solution for seamless cross-border money transfers), Airbnb (which helps you find shelter wherever you travel), and obviously Facebook (which has the power to connect you with almost anyone in the world). Technology is also a way to solve the loneliness problem that used to affect hunters in the past. Now they can hunt as a pack, connected through the networks that turn lone individuals into the powerful multitude.

Settling, however, is here to stay. Many hunters, however successful, will eventually be subject to constraints that will lead them to settle. One such situation appears when people get married. Having a spouse greatly multiplies your set of constraints. Your partner now counts on your steady income. And whenever you want to move and take up hunting again, it means that your spouse has to give up their current job if they want to come along. Then obviously the next set of constraints that reinforces the need for settling comes with having children.

One way to mitigate the risks that come with the need to settle would be drafting zoning rules that favor the constant mingling of hunters and settlers, rather than doing the opposite (as they currently do). There wouldn’t be a crisis of suburban housing if suburban areas were attractive for hunters—which they aren’t. Likewise, there wouldn’t be a crisis of urban housing if it was easier to settle in such areas.

The stakes are high. New legal frameworks should make it possible to harness technology and achieve a radical upheaval of the way of life for both adventurous hunters and settling families—in each case at every level of the income ladder. If they fail to accommodate both populations, the danger is for every large city to be inhabited only by very rich hunters and very old settlers.

This is what’s currently happening in Silicon Valley, and reading Kim-Mai Cutler’s articles should be enough to convince you that this is not a desirable outcome. Here are some that I highly recommend:

Warm regards (from London, UK),