I was lucky enough to learn all about the lessons of supply and demand at a very early age. My family had an entrepreneurial spirit and owned multiple businesses. Growing up, my dad would always talk about business at the dining room table. Supply and demand was one of the concepts that came up most frequently.
All these years later, I can use those concepts to explain and make sense of some of the biggest issues and problems facing Clackamas County as I run for commissioner position 2.
These principles are actually pretty simple. If you have way too much of something that people don’t want, or demand, you won’t be able to sell it. Even if people do want it and you charge too much for it, they won’t buy it. If there’s competition, or anyone else making a similar product with better prices or service, people will just buy from them instead.
Conversely, if you have high demand and low supply, the prices will keep going up. If the product is scarce, it will become expensive because the supply can’t be increased.
Take the cost of housing, for example. The cost of a house is driven by many factors. The materials involved in its construction is one of them. Those are commodities whose prices vary and can fluctuate accordingly. There’s also labor. You have to pay people to do the actual, physical construction of the house.
The demand for housing in Clackamas County has been driven by the quality of life here. Much of the market here and statewide has also been driven by people wanting to leave the high-cost state of California. They sell their houses there, buy them here for less and pocket the difference. It’s been going on for decades.
Housing costs here are now very high, with no end in sight. That’s largely because the supply hasn’t kept up with the demand.
If you’ll recall, the entire national housing market completely collapsed in 2008, causing the Great Recession. People had gotten over-leveraged and could no longer pay their mortgages. Contributing to it was the fact that the demand in the housing market was propped up by low interest rates.
The demand for housing vanished overnight. Builders were losing money and struggling to stay in business, so they stopped building houses. It became a better time to buy, because the demand had to catch back up to the supply.
But the lack of building went on for years. That created pent up demand. Then the economy gradually improved. A new generation of buyers emerged, finally at the age where they were far enough along in their careers and established enough that they could afford their own homes.
Supply and demand also applies to transportation. Drivers create the demand for roads. And if there’s traffic congestion, that means the demand exceeds the supply.
The approach for decades in the Portland metropolitan area has been to invest billions of dollars in fixed route light rail public transportation systems. This has been done in the name of generating demand, and it hasn’t been working.
More people have moved to the area, nearly doubling the population over time. Yet we still have the same number of roads that we did back then, so of course there’s going to be more traffic.
These concepts are easy enough to explain and understand, but many of our policymakers don’t seem to get it. The answer is usually to double down and spend more public dollars on the same systems that have seen limited demand.
As your next Clackamas County Commissioner, I plan to use my years of business experience to make sure that public services meet the demands that are out there.
*If you’d like to find out more about or support the Mark Johnson for Clackamas County Commission campaign, please check out our website at https://markjohnson22.com/