Gary's Economics claims wealth inequality is at the root of housing unaffordability. Basically as wealth concentration grows, the ultra-rich bid up the assets. See the price of gold doubling in the past few years. Government stimulus is also captured by the richest. It's also a global phenomenon, i.e., every major city is now unaffordable for most people.
There's some truth in that, and I support the idea of shifting the tax burden from work to wealth. But I also think this is too simplistic. Remember that Gary was a financial trader, so he has a zero sum game perspective.
The UK had a decades long phase where they built a ton of affordable housing (council housing). This program was largely dismantled under Thatcher. Also over time, building regulations became more restrictive in the wrong ways, which makes supply more expensive.
Regulation plays a large role. But the right keyword is "reform". The right outcomes don't just happen magically if you deregulate.
There are places where housing got drastically increased in recent years, like in Paris under Hidalgo (7000 units/year).
This! Since our money is being inflated away, hard assets like precious metals, bitcoin, and real estate get bid up because those with cash bleed out purchasing power.
Where I live, housing cost is directly proportional to school district quality - and local school funding (vs. state-level funding) is a significant cause of inequality.
Rapid growth of cheaper housing in a town is a financial challenge for the town because it creates a larger student base without creating a meaningfully larger tax base. In towns with a commercial tax base, the costs increase more than the tax base; in towns without a commercial tax base, taxes typically increase on the oldest / most established residents - which drives fixed-income people from the homes and towns they supported for decades.
In my suburban area, there are two main arguments to anti-growth zoning: (1) people don't want the density increase; they built lives in a less-dense area by choice and want to see that choice preserved. (2) There are legitimate school funding issues and tax base issues that encourage controlling the rate of growth.
I'm dubious of _any_ argument that finds a singular cause for housing prices. It's an extremely tangled and complex issue that touches on taxation, local control vs. state control, education, property rights, politics, a cyclical capital-intensive industry, immigration and labor supply, interest rates...
Personally, I vote for denser housing and more liberal residential zoning. But I also understand and respect the opinions of my neighbors who disagree. Looser zoning gives control of land-use to capital and takes that control away from the people who built and sustained the town for, sometimes, generations.
I know very little about economics so I can only parrot what I've heard from others but the consensus from everyone I've personally heard talk about Gary - not just Abundists - is that he's a crank when it comes to economics.
a quick google for 'garys economics critique' throws up a good few places to get started :) - I would summarise here, but I'm no expert and am just digging into this myself.
I had a quick search and there's a Reddit thread where the first comment is critical but they get corrected by replies. Then some right wing blogs that spend more time on ad hominem and remarks about "lefty" admirers than actually going into detail.
Did you find any intelligent criticism you can point out? I'm too lazy to trawl through endless stupidity to try and find a nugget of truth! :)
This doesn't make sense. Each wealthy family can only live in one house at a time. Yes, they might have multiple homes, but a billionaire having a luxury vacation home in Lake Tahoe or a penthouse in Manhattan are not the reason housing is unaffordable. The type of home a billionaire would buy would never be affordable anyway.
You assume they are buying homes to live in. I don't think that's a reasonable assumption. Maybe they buy real estate because it's a useful part of a portfolio. They can rent it or just sit on it and sell it later.
Renting it still increases the housing supply, someone can live there.
I doubt there is any significant amount of housing that is just bought and left vacant. Why would you do that? It’s a stupid and expensive place to park money. You have to pay taxes, possibly condo/co-op/HOA fees, pay someone to do maintenance and keep out squatters, pay transaction costs both buying and selling, it can’t be sold quickly.
Why would you do all that instead of just buying treasuries or some other liquid instrument that actually earns money?
There may be some of this from foreign investors that don’t have easy access to financial markets, but again, some Russian oligarch buying a $50M penthouse in Manhattan is not the reason an average 3 bed 2 bath suburban home is $700k. They are not remotely in the same market.
They definitely will. JP Morgan for example charges SOFR+1.85% for 10M+ accounts[0], which is better than the mortgage rate they offered me. Or depending on what you mean by wealthy, you might be able to afford having someone get you a better deal by trading on the markets (e.g. selling SPX box spreads) assuming you don't have the expertise to do that kind of thing yourself/aren't interested in doing your own wealth management.
Why would you borrow money and use it to buy a house and leave it vacant? Now you're paying interest on top of everything else. Do you think wealthy people just light money on fire for no reason?
If there are more buildings than people who want to live in them, then the owners have no leverage. They have to compete for renters. You make that happen by building more housing.
But once you own a house, it's in your interest financially to stop others from building them. Either as a bloc or as a massive corporate landlord, pressuring cities to "retain the historic character of a neighborhood".
> I doubt there is any significant amount of housing that is just bought and left vacant. Why would you do that?
In high-demand areas property value often increases in value over time. You can literally “buy and hold” property, keeping it empty, doing nothing with it and expecting to sell it for a profit at some point in the future. It’s relatively safe and the rate of return can be significantly greater than inflation.
This ignores property taxes and costs of doing business of course. But there are also situations where you might want a reported tax loss on a profitable asset.
And zoning restrictions are part of the reason why housing prices "always go up." Constrained supply is exactly and precisely what makes housing a profitable investment.
One of many reasons. Supply is also constrained because people are buying it as an investment. It’s a feedback loop.
If I were extremely rich and had a lot of properties to rent in California, I’d look at relaxed zoning laws as an opportunity to buy even more properties.
Bill Gates owns 275,000 acres in the USA. I doubt he's even gazed upon half of it. The billionaires aren't buying homes to live in like us proles, they're buying lots of finite land and water rights and such.
That is about .01% of the US land area, and I’m guessing it’s not downtown in major cities or other places that people want to live. It’s probably mostly undeveloped wilderness for conservation, right? That has zero effect on home prices.
There is no shortage of land in the US. There are huge, huge empty spaces. There is only a shortage of housing in places where people want to live because local governments won’t let anyone build new housing.
Edit: Looked this up, and Bill Gates owns farmland, which is producing food, so this also wouldn't be available for people to live on anyway.
I really want to like volvo, especially their plugin hybrids, but their bad reliability of late is a dealbreaker. No way I'm wasting my life in mechanic hell.
I'm patiently looking to upgrade from my great 2018 subaru forester xt touring, but nothing new seems much better.
Had a 2006 or so XC90, everything was great. Now driving a 2016 XC90, had one issue with the engine cooling, was repaired in a day, 0 issues otherwise.
I had one of the first newly redesigned Volvos after the Ford acquisition, an S80 T6, either the first or second year released in the US. It was a fantastic car - extremely comfortable, fast, and analog controls for everything.
After five or six years it spent more time being repaired than not, and I sold it. It was one of the few times where having an extended warranty paid off. Haven't really considered a Volvo since.
I was so excited to get my S60 PHEV. Mechanically it is an amazing machine, great handling, great power, I rarely have to put gas in it. BUT. It is a nightmare with the technology.
Like most new cars, everything is tied into the center display/computer. It will crash while driving, which will remove all sound from your car, and I don't mean just the radio/spotify/whatever. You can be in mid-turn with your turn signal on and then just absolute quiet. It is so off-putting. Your blinker stops, you can't really tell your engine is on, and every screen just goes black. Thankfully I don't have a pure electric, so I my car still physically moves, but I really can't believe I haven't gotten in an accident when my screen crashes.
Thankfully I leased this vehicle, and I'm almost done with it, I honestly can't wait to turn it in.
Pure electrics also work when the screen crashes. My Tesla behaves almost exactly as you describe. When the screen crashes / reboots, you loose all displays, all sound, signals, etc. But the car still drives.
I have a rock-solid but aging Kia niro phev and I love it.
I’m thinking of turning it in for an updated model, but the updated model has displays instead of actual gauges and indicator lights like the older niro, and that just makes my skin crawl. It should be damn near impossible for the gauges and indicators to blink out of existence, and reassurance about nothing-but-screens has not been forthcoming.
20 years ago, I believed the expression "the internet interprets censorship as damage and routes around it". It's pretty clear we're far beyond technical solutions to political problems, now: whatever the internet might have been when it started out, it isn't any more - censorship is just too popular.
Tor still exists. Once ordinary porn can only be found on Tor, Tor will become a lot more popular and everyone will be able to access all kinds of censored things (from deepfake nudes, to pirated movies, to drug marketplaces, to AI that can tell you how to make a bomb). Of course, they'll just make Tor illegal then.
good, not only is it malware/spyware, the chinese government can shape the beliefs and behaviors of > 100,000,000 americans at the flip of a switch. albeit users are idiots for giving their attention in the first place. and because capitalism = god, will probably end up selling to the saudis and/or elon co.
reply