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The Rate of Return on Everything, 1870–2015 (2019)

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Re: The Rate of Return on Everything, 1870–2015 (2019)

#91

Post by tehjoker »

twoodfin wrote: post #80
JumpCrisscross wrote: post #69

Earlier quoted context omitted.

> is an ultra simplistic formula No shit. What gave it away, the two terms or the inequality? :) Joking aside, it's simplistic because it's elementary. If real returns exceed real growth, ceteris paribus , you have a net flow of principal (so to speak) from labour to capital. That doesn't mean one can conclude the argument with those two variables alone. But it's a valid starting point, and concludes with many soluti…

Why is reducing “r” desirable? Why not try to raise “g” instead?

Inequality is a social poison all on its own. For example, democracy is meaningless when men of means can buy elections.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#92

Post by abduhl »

derf_ wrote: post #90
Seanambers wrote: post #85

Earlier quoted context omitted.

Compared to Europe the US has an unimaginable amount of land. Europeans don't know this really - no one has told them , because they never went to the US, the ones who did went for some coastal city. On the other side Americans don't realize the reasons why Europeans live in cities. Europe is much much smaller and with less desirable land to begin with and then there is the entire "walkable cities" which is utopia re…

The continental US is 8.08 million km^2 [0], while Europe is 10.18 million km^2 [1], almost 26% larger. Even adding the non-contiguous regions does not make the US bigger (still just 9.83 million km^2) [2]. [0] https://en.wikipedia.org/wiki/Contiguous_United_States [1] https://en.wikipedia.org/wiki/Europe [2] https://en.wikipedia.org/wiki/United_States

Subtract out Russia from this calculation and “Europe” is 75% the size of the US. When people talk about “Europe” and Europeans not understanding how big the US is they are not talking about Eastern Europe/Russia, they’re talking about Portugal to Poland, maybe to Ukraine. Sometimes they’re not even thinking of the Nordic countries which also have a lot of land.

This of course invites the counter argument that the US coastal areas are just as dense and small feeling as Central Europe.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#93

Post by acchow »

martincmartin wrote: post #84
Retric wrote: post #48

Earlier quoted context omitted.

People get much larger houses today because they can afford much larger houses. This comes from both increased prosperity and having fewer kids. 1950s: The average new home sold for $82,098. It had 983 square feet of floor space and a household size of 3.37 people, or 292 square feet per person. 2010s: The average new home ($292,700) offers 924 square feet per person (2.59 people per household, 2,392 total square fee…

$82,098 in 1955, adjusted for inflation, was worth $727,502.05[1]. So homes were actually much more expensive back then. [1] https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=82098&year1=19...

No, they already adjusted for inflation.

In nominal dollars, a home in 1955 would be under $10k

https://fred.stlouisfed.org/series/MSPUS

Re: The Rate of Return on Everything, 1870–2015 (2019)

#94

Post by JackYoustra »

smarm52 wrote: post #73

> In fact, the long decline observed in the past few decades is reminiscent of the secular decline that took place from 1870 to World War I. > The fact that returns to wealth have remained fairly high and stable while aggregate wealth increased rapidly since the 1970s suggests that capital accumulation may have contributed to the decline in the labor share of income over the recent decades (Karabarbounis and Neiman 2…

It's actually one of the big problems with Capital in the 21st century: if you strip out housing, r < g! Turns out it's all zoning and rent control all the way down! Fix zoning and you end up incidentally fixing inequality too because it's such a large part of economic rents.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#95

Post by defrost »

abduhl wrote: post #92
derf_ wrote: post #90

Earlier quoted context omitted.

The continental US is 8.08 million km^2 [0], while Europe is 10.18 million km^2 [1], almost 26% larger. Even adding the non-contiguous regions does not make the US bigger (still just 9.83 million km^2) [2]. [0] https://en.wikipedia.org/wiki/Contiguous_United_States [1] https://en.wikipedia.org/wiki/Europe [2] https://en.wikipedia.org/wiki/United_States

Subtract out Russia from this calculation and “Europe” is 75% the size of the US. When people talk about “Europe” and Europeans not understanding how big the US is they are not talking about Eastern Europe/Russia, they’re talking about Portugal to Poland, maybe to Ukraine. Sometimes they’re not even thinking of the Nordic countries which also have a lot of land. This of course invites the counter argument that the US…

For another comparison, the state of Australia I live in has 3x the land area of Texas, a current population of 2.9 million that largely live in the one concentrated urban area, farms and cattle stations large than those in the US, and had people walk out of the desert than had never met or heard of non indigenous people until that point in time in the mid 1980s.

I grew up in one of the more remote corners when the state population was less than 800 thousand and the local population within a few hours drive was barely a thousand or more..

Re: The Rate of Return on Everything, 1870–2015 (2019)

#96

Post by charlie0 »

lotsofpulp wrote: post #65
thbb123 wrote: post #53

Earlier quoted context omitted.

To add to that, a house a hundred years ago was nothing like a house today: building codes, square footage per person, heating, plumbing, connectivity... Building and maintaining a decent housing unit is far more expensive in material and energy than it was 60 years ago.

To add to that, household size also decreased. https://www.pewresearch.org/short-reads/2019/10/01/the-numbe...

Yet, almost no one makes those sweet starter homes anymore.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#97

Post by doubled112 »

derf_ wrote: post #90
Seanambers wrote: post #85

Earlier quoted context omitted.

Compared to Europe the US has an unimaginable amount of land. Europeans don't know this really - no one has told them , because they never went to the US, the ones who did went for some coastal city. On the other side Americans don't realize the reasons why Europeans live in cities. Europe is much much smaller and with less desirable land to begin with and then there is the entire "walkable cities" which is utopia re…

The continental US is 8.08 million km^2 [0], while Europe is 10.18 million km^2 [1], almost 26% larger. Even adding the non-contiguous regions does not make the US bigger (still just 9.83 million km^2) [2]. [0] https://en.wikipedia.org/wiki/Contiguous_United_States [1] https://en.wikipedia.org/wiki/Europe [2] https://en.wikipedia.org/wiki/United_States

I've always found it interesting that Canada and California have a similar population, although I haven't looked those up in a couple of years.

Canada has a couple more km^2.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#98

Post by cyberax »

m463 wrote: post #89
cyberax wrote: post #68

Earlier quoted context omitted.

> I don't understand how housing can increase in cost in a stable steady manner It's the density death spiral. Dense housing gets more expensive (yes, dense housing IS more expensive!), that in turn drives even more density. The only way to fix it? Promote suburbs and smaller cities. There is literally _no_ other fix.

I sort of think there are other things still at work here. People still live near infrastructure (although requirements change) Maybe 1000 years ago, they probably lived near a port, water source and source of food. Nowadays we have efficient transport with semis and container ships, but I would imagine that there are still things like say power infrastructure, sources of commerce and schools and even internet that m…

Not really. Pretty much all of the housing price increase (above the overall average market growth rate) is explained by the density death spiral.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#99

Post by rootusrootus »

lotsofpulp wrote: post #65
thbb123 wrote: post #53

Earlier quoted context omitted.

To add to that, a house a hundred years ago was nothing like a house today: building codes, square footage per person, heating, plumbing, connectivity... Building and maintaining a decent housing unit is far more expensive in material and energy than it was 60 years ago.

To add to that, household size also decreased. https://www.pewresearch.org/short-reads/2019/10/01/the-numbe...

This is the one I'm curious to see play out. How low can it go? Did it reach bottom? Maybe once it stabilizes at a new norm, housing supply will catch up and prices will settle down.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#100

Post by cyberax »

JumpCrisscross wrote: post #70
cyberax wrote: post #68

Earlier quoted context omitted.

> I don't understand how housing can increase in cost in a stable steady manner It's the density death spiral. Dense housing gets more expensive (yes, dense housing IS more expensive!), that in turn drives even more density. The only way to fix it? Promote suburbs and smaller cities. There is literally _no_ other fix.

> yes, dense housing IS more expensive Dense housing is more expensive. Dense living massively less so.

It's actually the inverse. The raw construction cost of a housing unit in a dense building is cheap. Living there is not.

People in dense cities spend a larger percentage of their paycheck on housing than people in sparse cities ( https://smartasset.com/mortgage/housing-spending-2021 ).

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