Our economic system is set up such that you either hit a bar at which you accumulate capital forever unless you make a mistake, or you're loss-making forever.
Once you hit that bar, your job becomes buying up housing like it's a Monopoly board.
As an individual you can either choose to win or lose this game. We're not going to change it, at least not within our lifetimes.
Agreed; I figure the necessary missing piece is government dampening this effect. Some way or another, to balance it out you need to “leak” capital faster & faster as you accumulate it. The size of the leak would be tuned to allow you to continue to grow your wealth if you are still rapidly creating new wealth, but if you just sit on a kings ransom in safe investments, it would leak away & attenuate.
Trouble being, this most likely takes the form of steeply rising taxes, which are ever-unpopular, and needs careful design. I also suspect just about everybody aspires to “make it” and then stop striving; this is somewhat antithetical to that (although the leak would be tiny at regular-people levels of wealth)
From what experimentation I've done it doesn't take much of a leak. I'm agreed too except that in the absence of us or somebody fixing it, the whole thing is going to blow up.
Dark ages are a thing. It's not at all guaranteed that you can preside over an injustice engine of this nature and have it persist at all: externalities will bite you.
I guess the follow-up is, 'given that this is going to blow up, how hard of a landing do you want? Do you want an apocalyptically ruined planet, or heads on pikes, or massive asset seizure, or all of the above in various combinations?'
IMO, owning a second property should be just as expensive in taxes as it needs to be to not be profitable to own one as an investment property, in the short and long term. That way people can _have_ second properties, but it's going to cost them, and they can choose to accept the cost or not. A yearly 5% tax on the property value should just about do it.
We need to start treating housing as a vital resource, not an investment, and rationing it.
Japan changed it. They passed sweeping zoning reform that made it easy to build and prices went down. New Zealand just passed sweeping reform to address their housing crisis as well. Reforms are being passed in the US too. Oregon, California, Minneapolis, Ann Arbor, and others have started to pass reforms.
> Japan changed it. They passed sweeping zoning reform that made it easy to build and prices went down
Japanese homes are generally prefabricated and have a lifespan of 20-30 years before they are disposed of and a new prefabricated home is put in its place. This is why housing is "cheap" in Japan.
> Because you know none of it actually pays for the building, it's just all for the artificial scarcity.
It depends on the quality you want for the build. There are homes being built today that use premium materials and the materials are expensive. You can easily spend $50k on windows, for example. Of course, lower end construction that price drops to like $10k.
You can buy prefabricated homes in the USA but it would be cool if "trailer" wasn't the only option. I don't think many people in the West would feel comfortable in a Japanese home though.
This doesn't explain why rent for apartments is cheaper in Tokyo than in the greater metropolitan area of similar cities in other countries like the US.
TL;DR Monopoly was based on The Lanlord's Game--a board game demonstrating the issues with land monopolism.
> In 1906, she moved to Chicago. That year, she and fellow Georgists formed the Economic Game Co. to self-publish her original edition of The Landlord's Game.
I've had this thought. Like we inevitably need a World War scale event every 100 or 200 years or the system will devolve into the most rent-seeking, unproductive, regulatory capture garbage.
Real estate speculation is just such an utterly unproductive endeavor just on the face of it, it's incredible it got this bad.
Exactly, and the ironic thing is that the most insightful comment in this page is coming from a throaway account (possibly because of the fear of reputation-burn or something...).
the fatal flaw in capitalism imo, a lot of wealth gets created which is good for everyone but eventually, a lot of that wealth also gets held by a smaller and smaller minority while the rest try to desperately compete over whatever is left over. After a certain point a certain portion of any new wealth created somehow trickles up to the capital owning class (think your VC's, fund owners, other rich investors), this capitalist system only works if "progress" happens in perpetuity, which if history is any indication society can always backslide
Not sure I agree with this worldview. The real currency of the world is labor, at least until we invent AGI. People need to be a certain amount of hungry before they will labor. Our current system supports a good number of older people being supported by the labor of younger people. That capital cannot magically increase the labor force and when you dump more capital into the system outside of a recession you get inflation, not more labor.
We might be able to support more idle people, but not at everyone’s current quality of life. That “excess capital” goes off to chase prestige goods like paintings and handbags that soak up a small fraction of the labor pool.
If a huge percentage of the labor economy were devoted to the quality of life for billionaires, then I would very much agree with “eat the rich.”
I’d say productivity is more of a currency than labor. Sisyphus isn’t producing anything, but sure is laboring a lot. The industrial revolution was huge, not because it had a lot of laborers but because the laborers were able to be more productive with their labor.
a very large portion of those goods and services are unnecessary, though. think about how frequently you have to buy a phone or replace a mechanical device - I've seen dishwashers from the 50s that still work, because they were built before artificial scarcity and planned obsolescence caught on. it's perfectly feasible to build a light bulb with an MTTF of hundreds of years. We're on a treadmill, because the economic incentives are contorted to favor unchecked consumerism.
We've gotten to a point where capitalism in it's current incarnation motivates a decrease in efficiency, which we call rent-seeking. it's maximise the dollars per productivity rather than maximise productivity.
It's not like people would do nothing without work, either. We've had periods of history where there was more time and more resources than there was work to be done, and it caused explosions of fields like art and science, both of which are stagnating under the current paradigm (relative to the capabilities we have as a species * population)
I'm just not sure that's true. The largest growing class of people over the last 50 years is the upper middle class going from a vert small percentage of the population 50 years ago (doctors, lawyers, and high level execs) to being a much larger percentage of the country, around 30% today. There are more "rich" people today than ever as the upper middle class is open to more professions like engineers, upper-middle managers, etc.
The issue is relative to a lot of people. There was a much large "middle class" 50 years ago and most people were much closer to each other. That middle class has shrunk because a lot of it graduated into a new upper middle class. The upper middle class has no problems buying up property in the most sought after areas as they are close to the places these people work. 50 years ago, it was a larger group of similar middle-income people competing for these places. Today, they can't compete and are pushed out to less desirable places or they rent and complain they'll never be able to buy a home. When really it's that they won't be able to buy a home in the place they dream to live because there's more people that can outbid them than there are properties.
You're missing a very important aspect: demographics.
In several nations, we're in a unique moment in time as the majority of the population is old-ish. Old people are conservative in that they're looking for the exit, they've worked longer (more time to save/invest) and they've benefited from favorable macro conditions.
So you might as well say the opposite: a lot (most) wealth is locked up in an enormous group of people (the majority), so not in a tiny group of people.
On top of that, yes, there's also a small group of super rich.
The other aspect you didn't mention is globalization. The former middle class is now the lower class. The "mail man" in the 60s that could own a home and run a family on unskilled labor no longer exists, nor will it return.
>a lot of that wealth also gets held by a smaller and smaller minority while the rest try to desperately compete over whatever is left over.
This is the tendency of every economic system that has ever been seen or theorized. The wealth creation is what makes capitalism distinct.
I don't mean to say that 'capitalism' is the answer to the world's problems, but I point out that it's not the source of that particular intractable problem.
This all-or-nothing thinking is, itself, a problem. Capitalism is a tool. And it's good at many things. Creating competition and innovation in consumer goods is one area it's obviously very good at. It is not good at equity. Externalities are a massive problem raw capitalism has no affordance for addressing. Regulations (another tool) are necessary to smooth out capitalism's rough edges.
You'll find very few people that actually want to whole-hog entirely get rid of capitalism. When you find people critiquing it, it's generally from the vantage point of "this is a rough edge that needs addressing via some government intervention". Housing (in addition to healthcare, education, transportation, and countless other areas) seems like one case where this is very obviously true.
One the the core issues with capitalism IMO is that it struggles to function as a meritocracy, because the reward for having merit - money - is itself an effective substitute for merit.
> because the reward for having merit - money - is itself an effective substitute for merit.
True! It's exactly what happens with, for example, the richest man in the world right now. Everyone loves him because they think he has so much merit, but he's just a glorified recruiter and/or magnate, he doesn't have any technical knowledge at all.
If you're talking about Elon, he does in fact have pretty deep technical knowledge. Both from reports of his employees and just watching technical interviews with him.
I get the hate about him, but it's reached the point where people just make stuff up and it gets swept up into "truth" just because it feels good.
Mmm ok it might be true that he has technical knowledge, I'll give him the benefit of the doubt there. But thing is, some things he does really suck big time, such as claiming he's the founder of Tesla (merit stealing smell right there) or maskerading their driving assistance system as FSD, when it's well known that his system is the worst in the market (probably will stay like that until they add Lidar sensors).
Once you hit that bar, your job becomes buying up housing like it's a Monopoly board.
As an individual you can either choose to win or lose this game. We're not going to change it, at least not within our lifetimes.