If food and housing gets too expensive, then sorry mate, nothing we can do about it, that's just how the free market™ works, try working harder.
But when labor gets too expensive pushing wages up, then it's no longer the free market, but it's a "labor shortage" catastrophe all over the media and we have to shed tears about the poor business owners wo can't afford a second Porsche, so immigration gets turbocharged until wages come down to their desired levels that businesses can agree is "fair".
have you ever tried building a house? it's one of the least free markets there is. the quickest way to get arrested is to buy cheap land and start putting up houses willy nilly
>have you ever tried building a house? it's one of the least free markets there is.
The "free market" in the context of housing was meant in a satirical way hence the TM symbol. Of course that market is 100% fixed by design but we get parroted the story where it's 100% "free" as if the government has no control over the levers that wholly impact it's pricing (zoning and building regulations, immigration, interest rates, banking and loan duration regulations, banning overseas investors, banning AirBnBs, property taxes, etc)
well, there are genuinely dumb people out there who think that housing is a market failure. like homebuilders are unwilling to take necessary risks or something. and they definitely don't mean the risk of going to prison (100%)
Certainly in the U.K. house builders sit on masses of land but don’t develop it for fear of lowering sold prices. If building a house costs £100k Better to sell 5 at 400k each year for 10 years than sell 50 at 250k
That's not a failure to take necessary risk or a problem of a too-short time horizon. Quite the opposite. And it is certainly not a tragedy of the commons situation.
At least not until you factor in government. What landowners and land speculators clearly don't fear is huge swaths of land suddenly becoming available for building. Or sharply increasing interest rates. Or mass deportations.
A market failure is more like how a CEO is often incentivized to maximize the stock price in the short run at the expense of the long-term health of the company. That is how his compensation is structured.
Not only that, have you ever tried understanding building code in order to construct a "legal" residence? Sometimes it is regulated to the point where I could not build a house unless it had the right angle and shade of red terracotta roofing tiles.
House builders in the UK can employ independent, non Govt, inspectors to ensure they are building to regulations (our equiv of your building code). You can imagine how well that works since these inspectors only have one client.
The beauty of housing going up is the “work hard” in tears wages which then increased the price of housing.
The land owners take all the extra work and laugh all the way to the bank.
Of course if people collectively decided to work half as hard there would be less money for housing and then prices would come down. Workers wouldn’t lose out.
Then when wages do come down and questions get put to politicians and the central bankers about the lack of wage growth they shrug their shoulders and act confused like it's some unsolvable math problem.
What are the profit margins for Austrian retailers?
In the US, all the retailers earn razor thin profit margins (except Home Depot/Lowes), indicating if prices were lower, the businesses would fail, or at best become charities.
Edit: for the one Austrian retailer I could find numbers for, they are not pretty. Not sure how the retailer can lower prices without going out of business if they already have sub 1% profit margins.
We're talking about grocery stores here, not just general retailers. I have a really hard time believing that US grocery stores are operating on razor-thin margins here, given how extremely expensive groceries are (when adjusting for income, other cost of living etc.) compared to e.g. Germany.
One problem of the Austrian grocery store market is that there's just way too many branches per capita (compared to the otherwise pretty similar market of Germany again), which brings down margins.
It is all public information. Plus, logically, it is a low barrier to entry business with zero moat. There are lots of sellers willing to sell for barely above cost.
These are the two biggest grocery only retailers in the US:
That could be an explanation if the entire Eurozone were affected uniformly by inflation. It's not, though, and Austria is seeing the highest levels.
A big contribution to this is the government's policy of heavily subsidizing various costs: Energy, rent, even groceries were subsidized via various vouchers and payments for a while, and now there's even discussions of "capping interest rates" – of course inflation won't go down if the purchasing power remains inflated!
Note that I'm not concluding that this is necessarily a bad development: It might just be an effective way of redistribution – but only time will tell, and personally I'm glad to not be part of the experiment.
