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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

#111

Post by trhway »

adam419 wrote: post #100
tcbawo wrote: post #74

Earlier quoted context omitted.

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.

Creating too bigger to fail out of already too big to fail industries does nothing except throw good money after bad, and increase systemic risk for an even worse repetition of a failure. Not to mention the fact that continuously proceeding with such bailouts is simply unsustainable. The problem lies in our modern inability to stomach losses and handle austerity. It's something no one rightfully wants, but when marke…

>The economy is like an organism, not a washing-machine. The most optimal repairing mechanism is itself.

organism have finite life, they die. Washing machine can be maintained/repaired indefinitely. Of course cyborg is the best way.

Re: Why Rent Is So High and Pay So Low

#112

Post by danieltillett »

rm_-rf_slash wrote: post #103
danieltillett wrote: post #101

Earlier quoted context omitted.

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.

Actually all professions are much more stratified by intelligence than in the past (this is side effect of meritocracy). There is lots of research on this - this is just the first paper I found on google [1].

In regards the rulers have a look at their educational background. In the roles that really matter they are all very clever.

1. https://www.staff.ncl.ac.uk/daniel.nettle/britishjournalpsyc...

Re: Why Rent Is So High and Pay So Low

#113

Post by adam419 »

trhway wrote: post #111
adam419 wrote: post #100

Earlier quoted context omitted.

Creating too bigger to fail out of already too big to fail industries does nothing except throw good money after bad, and increase systemic risk for an even worse repetition of a failure. Not to mention the fact that continuously proceeding with such bailouts is simply unsustainable. The problem lies in our modern inability to stomach losses and handle austerity. It's something no one rightfully wants, but when marke…

>The economy is like an organism, not a washing-machine. The most optimal repairing mechanism is itself. organism have finite life, they die. Washing machine can be maintained/repaired indefinitely. Of course cyborg is the best way.

Individual organisms die. Short of existential events, ecosystems last.

Re: Why Rent Is So High and Pay So Low

#114

Post by juliangregorian »

adam419 wrote: post #48
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…

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…

Markets are not wise by any stretch. No one agrees what a "free" market would look like, but in general they tend to favor incumbents and the powerful.

Re: Why Rent Is So High and Pay So Low

#115

Post by danieltillett »

cinquemb wrote: post #102
danieltillett wrote: post #91

Earlier quoted context omitted.

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 "othe…

This is actually a very good question. There are really a few possible answer to this. The main one is that those clever people that can make it into the ruling class, but choose to reject it, are not a worry to the ruling class since these people are not going to organise a revolution from outside. If you are not interested in ruling then you are not a worry to those in power.

More fundamentally most very smart people realise that they are outliers and that their children are likely to regress to the mean. While the elite welcome the very clever into their club, they also use their power and status to benefit their not so clever children (e.g. legacy students).

Re: Why Rent Is So High and Pay So Low

#116

Post by tomp »

MaysonL wrote: post #63
tomp wrote: post #46

The money quotes: "If house prices fall, the middle aged and middle class will be in an uproar. [...] Perhaps even more critically, banks need house prices to rise, or at least not collapse." "More quality housing would increase its stock, and with supply rising to meet demand, prices would fall. This would be great for young renters, bad for middle-aged property owners, bad for banks. Thus it is not likely to happen…

Of course, that's only nominal house prices that shouldn't fall. If inflation-adjusted real house prices fall, not really a problem. Perhaps a little more inflation than we currently have would be a good idea (4-5%).

When housing accounts for 30-50% of your income, house prices are inflation.

Re: Why Rent Is So High and Pay So Low

#117

Post by tomp »

ryandrake wrote: post #69
tomp wrote: post #46

The money quotes: "If house prices fall, the middle aged and middle class will be in an uproar. [...] Perhaps even more critically, banks need house prices to rise, or at least not collapse." "More quality housing would increase its stock, and with supply rising to meet demand, prices would fall. This would be great for young renters, bad for middle-aged property owners, bad for banks. Thus it is not likely to happen…

> I couldn't agree more. I'm young and capital-poor, so this fact is a huge problem for me. I don't see a solution. Vote for politicians not obsessed with propping up the business and real-estate portfolios of wealthy middle-aged people? (assuming you can find such politicians)

Easier said than done. Unfortunately, these issues are so far removed from the public's mind that no politicians even bother talking about it.

Re: Why Rent Is So High and Pay So Low

#118

Post by tomp »

juliangregorian wrote: post #114
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…

Markets are not wise by any stretch. No one agrees what a "free" market would look like, but in general they tend to favor incumbents and the powerful.

That's what politicians do. Markets favor future money (i.e. profit).

Re: Why Rent Is So High and Pay So Low

#119

Post by [deleted] »

kuni-toko-tachi wrote: post #92

Utter leftist nonsense. Reagan was responsible for the biggest and longest economic boom since World War 2, he freed millions of people from the miserable tyranny of communism. His tax cuts and deregulation revitalized the American economy. By winning the cold war through strength, he allowed Clinton (forced by strong Republican leaders in Congress) to demilitarize and reap the cost savings which balanced the budget.…

[deleted]

Re: Why Rent Is So High and Pay So Low

#120

Post by meric »

jrbancel wrote: post #105

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.

I rented a 3 room apartment. Sublet out 2.5 rooms. (I'm sharing one room.) Reduced my rental expense to 0%. Paying bills only. Only 15 minutes train to the second most expensive city by property prices relative to income in the world. (Sydney)
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