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Why Rent Is So High and Pay So Low

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Re: Why Rent Is So High and Pay So Low

#101

Post by danieltillett »

rm_-rf_slash wrote: post #93
danieltillett wrote: post #35

Earlier quoted context omitted.

You might have noticed that I said the rich are smarter than in the past, but the ruling class are very clever. As you rightly point out there are plenty of dumb rich, but relatively few of these dumb rich are ruling. As for leaders who the figurehead is does not matter - ask yourself what do the rulers care more about; who is the POTUS or who is the head of the federal reserve.

Are the ruling classes more clever, or has technology and globalization allowed average cleverness to be more impactful than in the past?

This is not an either or question :)

The ruling class is both much clever than the past and technology and globalization has allowed their cleverness to result in more control.

In regards the level of control I am most impressed at how subtly it is used. To be able to shift the the share of production from 75% masses / 25% rich to 50% masses / 50% rich in 40 years with barely a peep is truly breathtaking. They have even been able to convince a large section of the population that this is all the fault of people with brown skin.

Re: Why Rent Is So High and Pay So Low

#102

Post by cinquemb »

danieltillett wrote: post #91
cinquemb wrote: post #79

Earlier quoted context omitted.

If we build upon your assertion ("to have an effective meritocracy you have to have universal education"), if some of those in power define universal education differently (which would seem to make any concept of universality in education void of such in practice), then it wouldn't be surprising to see a decline in the effectiveness of an economic system, which is what I would suggest is what we are seeing today.

Universal education is not the same as universality in education. If the aim is to identify the 0.1% it does not matter if the universal education is rather spotty in quality since the highly intelligent will manage to succeed no matter how poor the educational environment. If you want to be really clever you just give those smart kids who had a bad school environment bonus marks at the university entrance stage and…

What would stop any of such highly intelligent from eventually co opting the structures of today and doing something short term orthogonal (maybe even beneficial to the "share and status"), long term oppositional to some of those in power, if say, they reject to continue attending an ivy/elite league university after they attend for a couple of years after getting a scholarship, and realize that they can pursue "other interests" with such forces of coercion in mind?

Re: Why Rent Is So High and Pay So Low

#103

Post by rm_-rf_slash »

danieltillett wrote: post #101
rm_-rf_slash wrote: post #93

Earlier quoted context omitted.

Are the ruling classes more clever, or has technology and globalization allowed average cleverness to be more impactful than in the past?

This is not an either or question :) The ruling class is both much clever than the past and technology and globalization has allowed their cleverness to result in more control. In regards the level of control I am most impressed at how subtly it is used. To be able to shift the the share of production from 75% masses / 25% rich to 50% masses / 50% rich in 40 years with barely a peep is truly breathtaking. They have e…

This split is why I am not sold on why the rich or ruling classes are more clever than any other point in time, and not simply enabled by technology. I would like to see evidence of increased cleverness over time divorced from technological enabling.

Re: Why Rent Is So High and Pay So Low

#104

Post by natrius »

maxerickson wrote: post #64
natrius wrote: post #17

Earlier quoted context omitted.

This time is different. The new money enters the system via central bank asset purchases, which lower the returns on those assets. These purchases push investors into asset classes with higher returns, raising the prices of all assets as a result.

An additional buyer shouldn't have the effect of lowering the rate of return on an asset.

This ain't any old additional buyer. This buyer prints its own money.

http://www.economist.com/blogs/economist-explains/2015/03/ec...

Re: Why Rent Is So High and Pay So Low

#105

Post by jrbancel »

What is the ideal ratio of rent/net income?

Personally, I don't want to spend more than 20% of my net income on rent + utilities. That way, I can save 50% and use the remaining 30% for food and entertainment.

I am currently at 16% in Seattle and I leave in a very good apartment, but I got lucky.

Re: Why Rent Is So High and Pay So Low

#106

Post by jellicle »

WalterBright wrote: post #51
nostromo wrote: post #6

This article doesn't answer the question and seems primary based on nostalgia. My theory: the Fed's zero interest rate policy is very good at inflating asset values: S&P500, housing, you name it. Rising income is a second-order effect: we hope that rising asset values will lead to increased wages. That used to be the case, but no longer is. Why? Because of automation and globalization probably. So, the Fed has the pe…

One thing nobody mentions is the increasing share of the GDP that the government consumes: http://www.usgovernmentspending.com/total_spending_chart That wealth has to come from somewhere.

You mean decreasing share, right?

Re: Why Rent Is So High and Pay So Low

#107

Post by [deleted] »

tcbawo wrote: post #74
adam419 wrote: post #48

Earlier quoted context omitted.

Here's another solution: Respect the wisdom of markets. Allow corrections to take place and don't bury malinvestment under the rug only for it rear it's ugly head worse later on by acting as if you have a better intuition on what the price of money should be. Most people accept the virtue of free markets. Yet many don't see that the actions the Fed has been taking destroys the concept of a market by artificially supp…

This is a gray area. If we allowed a large automaker to go bankrupt, we probably would have lost the supply chain and many supporting industries which would be gone (from the US) forever. Same with banks. As much as we detest bailing out bankers, allowing the US to economy to be cut off from credit would create lasting collateral damage.

[deleted]

Re: Why Rent Is So High and Pay So Low

#108

Post by spiralpolitik »

tcbawo wrote: post #74
adam419 wrote: post #48

Earlier quoted context omitted.

Here's another solution: Respect the wisdom of markets. Allow corrections to take place and don't bury malinvestment under the rug only for it rear it's ugly head worse later on by acting as if you have a better intuition on what the price of money should be. Most people accept the virtue of free markets. Yet many don't see that the actions the Fed has been taking destroys the concept of a market by artificially supp…

This is a gray area. If we allowed a large automaker to go bankrupt, we probably would have lost the supply chain and many supporting industries which would be gone (from the US) forever. Same with banks. As much as we detest bailing out bankers, allowing the US to economy to be cut off from credit would create lasting collateral damage.

The counter example is Iceland who told the banks to get lost and is the only European country who's economy is now ahead of where it was in 2008.

http://www.independent.co.uk/news/business/news/three-charts...

Re: Why Rent Is So High and Pay So Low

#109

Post by dragonwriter »

tcbawo wrote: post #74
adam419 wrote: post #48

Earlier quoted context omitted.

Here's another solution: Respect the wisdom of markets. Allow corrections to take place and don't bury malinvestment under the rug only for it rear it's ugly head worse later on by acting as if you have a better intuition on what the price of money should be. Most people accept the virtue of free markets. Yet many don't see that the actions the Fed has been taking destroys the concept of a market by artificially supp…

This is a gray area. If we allowed a large automaker to go bankrupt, we probably would have lost the supply chain and many supporting industries which would be gone (from the US) forever. Same with banks. As much as we detest bailing out bankers, allowing the US to economy to be cut off from credit would create lasting collateral damage.

> If we allowed a large automaker to go bankrupt

The 2009 "bailouts" of GM and Chrysler involved each company entering bankruptcy, and having the desirable assets of those firms purchased in bankruptcy by new entities in which the US and Canadian governments were (together) major (in GM's case) or minor (in Chrysler's case) investors. So, any sentence that starts with "if we allowed a large automaker to go bankrupt..." that concludes with describing a result that didn't actually occur is demonstrably incorrect.

Re: Why Rent Is So High and Pay So Low

#110

Post by dougmany »

akamaka wrote: post #49

Can anyone recommend further reading that gives an in-depth analysis of housing costs? There's no end to articles exploring the various political angles, but what good are those without understanding the underlying economic constraints? I'd be most interested in sources that use raw data, introduce mathematical models, and take into account measurable factors such as land availability, construction costs, incentives…

I read a book on local investment and slow money but I can't remember the name of it. It talked about how the stock market has become divorced from putting money back into business creation. How it is just the sum of the money people have laying around. I want to extrapolate that to housing and blame the high values on investment divorced from construction but now I'm just repeating your question.
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