patrick.net

LILLL

The problem with hitting a "new plateau" is that it is effectively impossible to know that it is a plateau and not a peak until it is far enough in the past. That is, we won't know if housing prices are permanently higher or not for certain until we have enough time to see if they come back down.

It is almost always impossible historically, with a couple of extraordinary exceptions, to tell when you're in the midst of a real paradigm shift. Being a contrarian, the more people who insist we're in one now the more I'm inclined to believe we aren't.

I agree with randy here -- there is probably nothing new under the sun in 500 years of European-style market economies -- and 10 000 years of organised trading between peoples...

the only paradigm shifts I see are the sorts of shifts such as increasing affluence through industrialisation (methods of mass production), where the living standards of so many are increased quickly, right into the halcyon years of the 1950s and 60s, along with increasing expectations of good wages, a 'career', home ownership, ongoing wellbeing and so on, which is really an elevation of the working class to the middle class. we could be seeing the 'hollowing out of the diamond' now though, simply through the deliberate control of property by the 'want mores', a phenomenon unfortunately creeping right down to the middle-middle class. this would represent a regression to Victorian levels of wealth inequality and disenfranchisement if it plays out and is broadly endorsed as somehow being a Good Thing. things working against it are deliberate govt policy fostering home ownership, a massive supply of cheaper housing and releases of cheap land as a market response to under-supply (if there is indeed an under-supply), and so forth... but i have bad feelings about the 'stickiness' of housing prices and the fact that it is a price-fixing racket...

+ see the next thread 'the Ghost of Irving Fisher' for the belief in 'new plateaus' just prior to the Great Depression.

Here is a chart with GDP/hr productivity levels for various countries:

http://tinyurl.com/olzng

Note that Belgium, Luxembourg, The Netherlands, Norway and France (!) are all more productive German is 92% as productive. Note this is per hour worked, not per year. American per year values are higher because Americans work more. Rather than deny this fact, we should be trying to figure out how they do it and replicate their success.