The Intellect Consulted on Housing and Opportunity Costs in Trinidad Tobago - an email exchange in part August 2, 2010

‎" this place could really sell ignorance and make money off of it. that
is what we should diversify to: the production, sale and proliferation
of Ignorance, pressurized, compounded and zip filed"

My final word (I think):

quiet and enjoyable
thanks much
i often always come to very quick assessments and even though i have learned to go with it, without any information or under what terms others would need more info and ask a lot of questions. i come with my sense of it and dismiss it, even when i may still wonder and self doubt if i allowed myself, and surely when no one else agrees...so thanks for telling me i was on point

we say it all the time and i am tired saying it but this place could really sell ignorance and make money off of it. that is what we should diversify to. the production, sale and proliferation of Ignorance, pressurized, compounded and zip filed


Afra's sent back:

"Could not agree with you more - my first great open argument with John Humphrey was over the very model for the scarred Savannah Villas project in Aranjuez - that is the term they are using and it is necessary to de-construct to build...

Thanks again

How was your Emancipation Day?"

My response:

not following the train. nor do i want to go back and get info to get up to speed on this mail
but i will say, one of your jobs should be to blow holes in these made up models to justify the madness the people in this country have a penchant for doing

what the f&*() is a cost recovery model? can someone show me that in an economic textbook> Did someone construct that and it has been refereed and critiqued by colleagues in the field?

can opportunity cost ever  be totally accounted...what are the externalities? the myriad costs and charges not accounted for

without analyzing this too much, seems like any confusion may come from justifying madness by engaging it;
stuff will always be opaque when folk make up stuff and we come behind them using their shaky construcfabulations* (my made up word (construction + confabulation)

just a thought
---------- Forwarded message ---------- Original sent to me for comment---------
From: 
Date: Mon, Aug 2, 2010 at 6:55 AM
Subject: Opportunity Cost and Housing Subsidy
To:


...TO:

It is now being brought to my attention that this explanation may be a little opaque, hence this write-up....

using a typical home at Fidelis Heights as an example

• Unit Cost - $850,000 (and it is not even clear if land and professional fees were included)
• Selling Price - $850,000
• Market Value - $1.7M
  

In the prevailing cost-based pricing model, this is considered a satisfactory, 'zero-subsidy' result, since the State has recovered all of its costs.  Another phrase in the lexicon is the 'cost-recovery' model of pricing.

The danger, as shown in the example in my article, is that the 'cost-based'/'cost-recovery' model ignores opportunity cost.  As a result, there is an enormous 'leakage' of housing subsidy and opportunity cost .

The opportunity cost is therefore the difference between the actual selling price of the unit and the market value.  In this example, the opportunity cost is

$1,700,000 - $850,000 = $850,000

That sum can also be described as the housing subsidy since that is the difference between what a Fidelis Heights unit actually sold for and what a purchaser in the open market would have to pay for a similar unit.

The two terms are therefore synonymous - Opportunity Cost is exactly equal to Housing Subsidy.  ANy decent Economist or Public Sector professional ought to know that, hence my ripping into them on this fundamental point.

Let me know what you think

Afra