2
0

My Economics Manifesto


 invite response                
2014 Jan 12, 9:05am   7,362 views  31 comments

by Bellingham Bill   ➕follow (2)   💰tip   ignore  

Here's an email I fired off to someone today. Figured I'd repost it here for the helluvit. (Not that any of it is new to anyone here)

Part of the problem with economics is that it has been constructed to not see the crucial importance of land wealth.

(that’s Mason Gaffney’s thesis at least)

http://research.stlouisfed.org/fred2/graph/?g=qSM

is real (2009 dollars) per-capita (age 16+) monthly housing costs.

http://research.stlouisfed.org/fred2/graph/?g=qSL

is the same graph with per-capita age 25-54 instead since this is the time-period where housing costs hit consumers hardest.

That’s the thing, though, people don’t really “consume” housing, they mainly just occupy it. That’s why the economic rents — profits — in “income properties” are so immense.

And housing, being in such limited supply and having complete immobility, ALWAYS gets bid up to the absolute point of pain.

Even in depopulating Japan the land market is corruptly managed to limit new listings, keeping prices stratospheric most everywhere.

And in the Eurosocialist nordic states that are doing relatively well, private housing debt is truly colossal, since everyone is taking their wealth and bidding up the limited supply of housing.

Norwegians may have ~$200,000 each set aside in their sovereign wealth pension fund:

http://www.cnbc.com/id/101321953

but their current housing debt burden is 2X ours!

http://www.norges-bank.no/pages/93708/Staff_memo_2013_05_eng.pdf

The nordic examples show that without fixing housing, we’re not going to fix anything. And if we can fix housing, we’ll free up a lot of capital to be good middle-class consumers again.

And by “fix”, I think we have to build so much new, quality, supply that local real estate listings look like the toothpaste aisle at the supermarket.

(Unfortunately, the resulting lower housing costs would be detrimental to both our debt-based banking system and the majority who does not rent, the wealthy subset of the latter being very, very powerful interests, as are the banksters who've set up the current system -- and the vast home-owning/debtor middle class, who turn rather conservative once they've gotten on the "property ladder" . . . NIMBYism, Last-One-In, and Got-Mine-Screw-You is the general situation we face in attempting any meaningful reform.)

#housing

Comments 1 - 31 of 31        Search these comments

1   anonymous   2014 Jan 12, 9:10am  

*points towards the cat*
"I can see the cat"

What cat, where?- Everybody

2   justme   2014 Jan 12, 10:52am  

Bellingham Bill says

Norwegians may have ~$200,000 each set aside in their sovereign wealth pension fund:

http://www.cnbc.com/id/101321953

but their current housing debt burden is 2X ours!

http://www.norges-bank.no/pages/93708/Staff_memo_2013_05_eng.pdf

If recent home buyers in Oslo lost the also recent 20% bubble increase in price/sq.meter of a $1M 100m2 flat (condo), that would more or less equal their share if the "oil fund".

Poof! There goes the wealth.

3   indigenous   2014 Jan 12, 12:35pm  

I wonder about this in regards to China as there is no private property.

Having private property is essential to this country, it is part of the DNA. John Locke's ideas are an essential part of freedom it, imo is why the Chinese are corrupt, how can you steal when no one owns anything. It was organic to how men organized and motivated themselves.

Yet in Japan they do not take out mortgages.

Pat's book is essentially this point.

With the tax deduction for interest it is a huge incentive to own a home.

This might be more of a cultural problem, think meme, than a real problem.

While we are at it should we also tackle fractional banking? That probably sounds like tin foil hat stuff to most of you but it would sure get rid of the real enslavement that you are talking about.

4   curious2   2014 Jan 12, 8:29pm  

indigenous says

China as there is no private property.

China has a housing bubble, are you saying they don't even own those places?

indigenous says

Yet in Japan they do not take out mortgages.

What do they do with all those mortgages then, both from private banks and public programs?

http://www.bloomberg.com/news/2013-06-17/abenomics-mobilizes-japan-homebuyers-to-action-mortgages.html

5   indigenous   2014 Jan 12, 11:45pm  

In Japan it is customary for them to save and pay cash for the houses.

6   Heraclitusstudent   2014 Jan 13, 2:34am  

Bellingham Bill says

And by “fix”, I think we have to build so much new, quality, supply that local real estate listings look like the toothpaste aisle at the supermarket.

Why do you hate banks and boomers?

7   curious2   2014 Jan 13, 3:05am  

indigenous says

In Japan it is customary....

Do you have any source for that? Everything I've seen indicates a huge mortgage market, over $1 trillion outstanding, going back decades.

8   indigenous   2014 Jan 13, 3:19am  

curious2 says

indigenous says

In Japan it is customary....

Do you have any source for that? Everything I've seen indicates a huge mortgage market, over $1 trillion outstanding, going back decades.

Anecdotal, an employee who's wife is japanese

9   indigenous   2014 Jan 13, 3:29am  

curious2 says

indigenous says

China as there is no private property.

China has a housing bubble, are you saying they don't even own those places?

According to my understanding there is no private property in China. They do the communist thing

10   curious2   2014 Jan 13, 3:43am  

indigenous says

Is this free association? Do you have anything to add....

I was thinking the same of your comments. You don't link to any sources at all, only your "understanding" and some person we can't see whose opinion may have been misrecalled or lost in translation. How do you explain the real estate bubble in China, if they don't have private property?

http://www.cbsnews.com/videos/chinas-real-estate-bubble-50142079/

11   indigenous   2014 Jan 13, 3:50am  

curious2 says

indigenous says

Is this free association? Do you have anything to add....

I was thinking the same of your comments. You don't link to any sources at all, only your "understanding" and some person we can't see whose opinion may have been misrecalled or lost in translation. How do you explain the real estate bubble in China, if they don't have private property?

http://www.cbsnews.com/videos/chinas-real-estate-bubble-50142079/

This:

The law does not change the system of land tenure by which the state owns all land

From this

http://en.wikipedia.org/wiki/Property_Law_of_the_People's_Republic_of_China#Description

This :

Buying land[edit]
A foreign investor is not allowed to buy land in China. The land in China belongs to the state and the collectives.

From this:

http://en.wikipedia.org/wiki/Chinese_property_law#Real_property_rights

13   curious2   2014 Jan 13, 3:55am  

indigenous says

From this

http://en.wikipedia.org/wiki/Property_Law_of_the_People's_Republic_of_China#Description

Wikipedia is not a source, at best it is a place to find sources, and the linked article does not cite any source. Many private residences and commercial buildings in capitalist countries are constructed on leased land, for example Goldman Sachs HQ and the Commodities Exchange are both located in Battery Park City in Manhattan, on land owned by the government. Even where people "own" land in America, their ownership is a type of tenancy, whether they hold a tenancy by the entirety (limited to married couples) or joint tenancy or tenancy in common. In most states, the local government can raise property taxes at will, showing who really owns the land.

14   indigenous   2014 Jan 13, 3:59am  

curious2 says

Wikipedia is not a source, at best it is a place to find sources, and the linked article does not cite any source. Many private residences in capitalist countries are constructed on leased land, for example Goldman Sachs HQ and the Commodities Exchange are both located in Battery Park City in Manhattan, on land owned by the government. Even where people "own" land in America, their ownership is a type of tenancy, whether they hold a tenancy by the entirety (limited to married couples) or joint tenancy or tenancy in common. In most states, the local government can raise property taxes at will, showing who really owns the land.

You do understand that one of primary tenets of communism is that the "people" own the property?

Your examples are the exception not the rule, in China it is the rule.

15   curious2   2014 Jan 13, 4:01am  

indigenous says

You do understand that one of primary tenets of communism is that the "people" own the property?

I think you meant to say "the means of production," not necessarily "the property" (btw "property" can be real property, personal property, tangible vs intangible, etc.).

16   indigenous   2014 Jan 13, 4:07am  

curious2 says

real property

I'm talking about real property. If the leaders decide not to renew the lease you loose.

17   Reality   2014 Jan 13, 4:14am  

curious2 says

indigenous
says



China as there is no private property.


China has a housing bubble, are you saying they don't even own those
places?

Most real estate in China are structured as "70yr lease" because private land ownership is not legal in that country. . . as the communist party there 3/4 century ago embraced an agrarian version of Marxism that is rather akin to Georgism in viewing land. The result was utter stagnation of residential development in most parts of that country for half a century after the communist party take-over while the population there more than doubled in the first few decades the regime. By the 1990's, only the communist party high officials had decent housing; everyone else had to pack into multi-generational pigeon houses . . . as can be expected in any Georgist / Marxist society where market price signal has broken down. It was set again this background that the developer's usual bravado "if you build it, they will come" was given a new lease on life in China two decades ago. Up to this point, people there seem to have kept buying just because prices of "it" keep going up, even if "it" turns out to be just tulip bulbs . . . a classic bubble exacerbated by lop-sided male-female population at marriageable age, another unintended consequence of their government central planning.

It really doesn't matter whether the land lease there is 70yrs, or traded lease on the house itself is 70 years; most of those buildings and houses built there in the last decade probably won't last 70 years anyway.

18   MisdemeanorRebel   2014 Jan 13, 4:19am  

indigenous says

John Locke's ideas are an essential part of freedom it,

Did Harry the Realtor or Marcus the MBA investor mix their labor with the land?

Didn't the Indians mix their labor with the land? Sure didn't give them much legal status.

19   curious2   2014 Jan 13, 4:21am  

Reality says

Georgist / Marxist society where market price signal has broken down.

I thought Georgism required market signals. How would a Georgist society determine your land value tax in the absence of a market?

20   MisdemeanorRebel   2014 Jan 13, 4:23am  

Bellingham Bill says

And by “fix”, I think we have to build so much new, quality, supply that local real estate listings look like the toothpaste aisle at the supermarket.

@Bellingham Bill:

You might find this of particular interest:
http://www.insidehousing.co.uk/ihstory.aspx?storycode=6502790

Housing stock builds by UK Government, 1946-2006. Is the lack of government construction and rapid rental/home buying prices increases linked?

21   zzyzzx   2014 Jan 13, 4:26am  

errc says

*points towards the cat*

"I can see the cat"

What cat, where?- Everybody

Obligatory:

22   zzyzzx   2014 Jan 13, 4:28am  

Reality says

It really doesn't matter whether the land lease there is 70yrs, or traded lease on the house itself is 70 years; most of those buildings and houses built there in the lasts decade probably won't last 70 years anyway.

Obligatory Chinese building falling over picture:

23   indigenous   2014 Jan 13, 4:31am  

thunderlips11 says

Did Harry the Realtor or Marcus the MBA investor mix their labor with the land?

Didn't the Indians mix their labor with the land? Sure didn't give them much legal status.

What is your point?

24   indigenous   2014 Jan 13, 4:33am  

zzyzzx says

Obligatory Chinese building falling over picture:

How long did that building last?

25   MisdemeanorRebel   2014 Jan 13, 4:33am  

Locke said ownership came from mixing the labor with the land, as the basis for private property.

26   MisdemeanorRebel   2014 Jan 13, 4:36am  

"Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property. It being by him removed from the common state nature hath placed it in, it hath by this labour something annexed to it, that excludes the common right of other men: for this labour being the unquestionable property of the labourer, no man but he can have a right to what that is once joined to, at least where there is enough, and as good, left in common for others."

27   Reality   2014 Jan 13, 4:55am  

curious2 says

Reality says



Georgist / Marxist society where market price signal has broken down.


I thought Georgism required market signals. How would a Georgist society determine your land value tax in the absence of a market?

In the same way that Detroit tax assessors determine that your $10k house really is worth $200k for tax basis. LOL.

The central planners of the soviet bloc and the wannabe central planners in this country have long theorized that a socialist society can be built by copying the prices on the last day of the formerly capitalistic market, the day before the New Age. They don't understand prices serve a function in the market: directing where resources to where they are most needed. Therefore, as needs and wants change, prices change! Prices have to be set freely by the two parties engaging each other for mutually willing exchange.

28   MisdemeanorRebel   2014 Jan 13, 4:56am  

Didn't Central Planning put a Man on the Moon, Win WW2, Build the Hoover Dam?

While private enterprise has many successes, it also produced the Pinto, the Pet Rock, Lady Gaga, the Star Wars prequels, and New Coke.

29   Reality   2014 Jan 13, 5:05am  

thunderlips11 says

Didn't Central Planning put a Man on the Moon, Win WW2, Build the Hoover Dam?

Central planning put a man on the moon for no practical purpose whatsoever. Central planning started WW2, and most wars before and after it. Hoover Dam? That's the same big-government Hoover that brought you the Great Depression. It's debatable whether Hoover Dam is such a great thing, as after it the US stopped building big dams like that.

While private enterprise has many successes, it also produced the Pinto, the Pet Rock, Lady Gaga, the Star Wars prequels, and New Coke.

Of course people make mistakes; that's just human nature. That's why people making mistakes should be paying for those mistakes at their own expense, like Ford Pinto, Pet Rock, Lady Gaga, Star Wars Prequels, and New Coke . . . as in, get this, Privately Funded Enterprises. If you don't like Pinto, Pet Rock, Lady Gaga, Star Wars Prequels and the New Coke, there shouldn't be armed thugs in costumes threatening to throw you into the jail for not paying for those flops (as in "taxation").

30   curious2   2014 Jan 13, 5:11am  

Reality says

That's the same big-government Hoover that brought you the Great Depression.

You should really read some history. President Hoover was a laissez-faire capitalist, "self-made," and one of the richest men ever to hold the office. BTW, he deserves credit for the Oakland Bay Bridge, which many experts had said would be impossible to construct. But, you're right about the Great Depression.

31   Reality   2014 Jan 13, 5:16am  

curious2 says

Reality says



That's the same big-government Hoover that brought you the Great Depression.


You should really read some history. President Hoover was a laissez-faire capitalist, "self-made," and one of the richest men ever to hold the office. But, you're right about the Great Depression.

Hoover was a self-made rich man, and a decent humanitarian (post-WWI relief). However, as a POTUS, he was far from being laissez-faire. His policy to hold wages and prices high, instead of letting the market clear like his predecessors Harding and Coolidge did, was what brought on the Great Depression (to be made worse by FDR's continuation of his policies) and the undoing of his presidency. Ironically, FDR ran the 1932 campaign promising to get rid of the myriads of Hoover's government committees for price setting!

Please register to comment:

api   best comments   contact   latest images   memes   one year ago   random   suggestions   gaiste