What can be done about the cost of living?

[Mach]

I totally agree here. So how do we start fixing this through policy? I've talked about raising taxes on unearned income, which is basically a wealth transfer from poor (those who pay interest) to rich (those who collect interest). Arguably limiting immigration would also help. This is the same principle as labor unions that set up a closed shop. If you limit the pool of labor, wages have to go up.

Generally I agree that hitting big finance first, is probably best for the vast majority of Americans. The Financial sector is basically an organized effort to game people out of money, through high IQs, incredibly sophisticated AIs that you have no hope of beating, let alone trying to engineering as a laborer, etc. And what does it do for us? Mostly nothing. Some finance is good, some adds value...but nothing even approaching the enormous industry we have. Limiting immigration or birth rate...isn't our GDP basically reflective of our population growth rate? Seems like the entire economy is based around borrowing on tomorrow's earnings in a way. Kind of out of my depth here, but I think you know what I mean.

Currently though, we have an incredibly strong right wing propaganda machine, and getting any of those is difficult, even for a democrat. Funny how much big finance goes to fund that machine too. C.A. was developed on the backs of the finance industry(!).

In this country that's not even close to true.

Yeah but in terms of desirability, it's always true. Coastal/lake front, proximity to jobs, good climate.

Which is a travesty. People without a physical stake in their country are going to drop out of the management in the country, leading to a corrupt government that only serves the needs of the richest in the country.

We're in uncharted territory. Enlightenment brought us this far, but we have a very anti-enlightenment chunk of the demographic these days. Asian's seem to think education and careers are of top importance. Average American, I don't see that same zeal. Maybe immigrants are what carries us after all. The advent of enlightenment also brought about the dark ages...then the renaissance...maybe we'll try another dark age, who knows. AI, once advanced enough, will be able to solve all of this IMO. It's the next big "age". We'll have some minor ones along the way, but if we make it to AI...either we fall or it raises us up, roll those dice!

 

[MrWonka]

Reading this post, I come back to think of decades ago when families could buy a home with one income. Today we're in a situation where one income isn't even enough to rent a one bedroom apartment without creating financial stress. What's changed in those decades? I argue it's a massive increase in debt which, as you allude to, exacerbates inequality as the rich get richer and the poor get poorer. How do you see it?

Yes, debt is part of that, but one of the things that get people so deeply into debt is the fact that wages are not rising to keep up with inflation. It is, in fact, the rich getting richer, and consolidating more and more wealth in one place that drives wages down and forces more debt which in turn exacerbates the problem. But yes, making it easier to pay for college without massive debt would also be a big big help.

 

[phattonez]

Capitalism is antithetical to survival when it becomes an aristocratic tool to sequester wealth, which is what we're seeing now.

Which specific part of capitalism would that be? That seems to me to be finance.

The middle class is effectively disappearing. We're seeing similar circumstances to the Great Depression, except on a much larger scale. The only thing that has staved it off has been immediate bailouts, the second that problems were observed. Really though, we have been seeing decades of gradual erosion of the very policies put into place after the Great Depression which were meant to stop it from happening again.

I think you're on to something here:

Wealth sequestration and corporate welfare are the biggest economic problems we face right now. We are gradually shifting back to a two tier system of rich and poor because the middle class are losing purchasing power more and more each year.

I think we're in total agreement about the problem. Now how do we fix it?

 

[phattonez]

Oh well. Then I wouldnt move there if I was you.

Btw, people have been moving there for decades as well. They're paying those prices.

They're paying it by either bringing in large sums of foreign money (see Arcadia, CA) or cramming lots of people into them (most of the poorer parts of the city).

 

[Nap]

Generally I agree that hitting big finance first, is probably best for the vast majority of Americans. The Financial sector is basically an organized effort to game people out of money, through high IQs, incredibly sophisticated AIs that you have no hope of beating, let alone trying to engineering as a laborer, etc. And what does it do for us? Mostly nothing. Some finance is good, some adds value...but nothing even approaching the enormous industry we have. Limiting immigration or birth rate...isn't our GDP basically reflective of our population growth rate? Seems like the entire economy is based around borrowing on tomorrow's earnings in a way. Kind of out of my depth here, but I think you know what I mean.

Currently though, we have an incredibly strong right wing propaganda machine, and getting any of those is difficult, even for a democrat. Funny how much big finance goes to fund that machine too. C.A. was developed on the backs of the finance industry(!).


Yeah but in terms of desirability, it's always true. Coastal/lake front, proximity to jobs, good climate.


We're in uncharted territory. Enlightenment brought us this far, but we have a very anti-enlightenment chunk of the demographic these days. Asian's seem to think education and careers are of top importance. Average American, I don't see that same zeal. Maybe immigrants are what carries us after all. The advent of enlightenment also brought about the dark ages...then the renaissance...maybe we'll try another dark age, who knows. AI, once advanced enough, will be able to solve all of this IMO. It's the next big "age". We'll have some minor ones along the way, but if we make it to AI...either we fall or it raises us up, roll those dice!

Ummm....the age of enlightenment was after the dark ages.

 

[phattonez]

Generally I agree that hitting big finance first, is probably best for the vast majority of Americans. The Financial sector is basically an organized effort to game people out of money, through high IQs, incredibly sophisticated AIs that you have no hope of beating, let alone trying to engineering as a laborer, etc. And what does it do for us? Mostly nothing. Some finance is good, some adds value...but nothing even approaching the enormous industry we have.

I really cannot think of a good defense for consumer debt.

Limiting immigration or birth rate...isn't our GDP basically reflective of our population growth rate? Seems like the entire economy is based around borrowing on tomorrow's earnings in a way. Kind of out of my depth here, but I think you know what I mean.

I do, but I disagree. Immigration is not adding to GDP per capita, which is the more important measure.

Currently though, we have an incredibly strong right wing propaganda machine, and getting any of those is difficult, even for a democrat. Funny how much big finance goes to fund that machine too. C.A. was developed on the backs of the finance industry(!).

The left as a whole wants more immigration, while the elites of the Republican party want more immigration. It lets you know who's really in control of politics here.

Yeah but in terms of desirability, it's always true. Coastal/lake front, proximity to jobs, good climate.

Sure, but it's not like this has ever caused a nationwide problem like it is now.

We're in uncharted territory. Enlightenment brought us this far, but we have a very anti-enlightenment chunk of the demographic these days. Asian's seem to think education and careers are of top importance. Average American, I don't see that same zeal. Maybe immigrants are what carries us after all. The advent of enlightenment also brought about the dark ages...then the renaissance...maybe we'll try another dark age, who knows. AI, once advanced enough, will be able to solve all of this IMO. It's the next big "age". We'll have some minor ones along the way, but if we make it to AI...either we fall or it raises us up, roll those dice!

I disagree with you on a number of important political positions, but I just have to say it's refreshing to talk to a liberal who's not a shill for corporations and big business.

 

[phattonez]

Yes, debt is part of that, but one of the things that get people so deeply into debt is the fact that wages are not rising to keep up with inflation. It is, in fact, the rich getting richer, and consolidating more and more wealth in one place that drives wages down and forces more debt which in turn exacerbates the problem. But yes, making it easier to pay for college without massive debt would also be a big big help.

How do you think that they're able to do that? Through debt!

 

[Nap]

You think the Chamber of Commerce doesn't know exactly what it's doing?

Sent from my HTC phone. Instaurare omnia in Christo.

If they don't understand that the way to counter high costs is to increase supply, then yes I am saying they have no clue as to what they are doing. The entire concept of a housing crisis is rather ridiculous. Incentivize people to build more housing units and prices will fall.

 

[phattonez]

If they don't understand that the way to counter high costs is to increase supply, then yes I am saying they have no clue as to what they are doing.

Apply that same concept to labor. What do you get?

The entire concept of a housing crisis is rather ridiculous. Incentivize people to build more housing units and prices will fall.

We already have record low rates and the Fed buying nearly $2 trillion worth of mortgage backed securities. How much more incentivization does the housing market need?

 

[Nap]

Apply that same concept to labor. What do you get?



We already have record low rates and the Fed buying nearly $2 trillion worth of mortgage backed securities. How much more incentivization does the housing market need?

Saturation of the labor market will depress wages and also lower costs of living.


I'm not saying to give incentives to buy homes (there are plenty if not too many now), incentives (or in many cases simply removing the disincentives) to builders to build more units.

 

[phattonez]

Saturation of the labor market will depress wages and also lower costs of living.

Exactly, so while we're dealing with this problem, let's limit immigration.

I'm not saying to give incentives to buy homes (there are plenty if not too many now), incentives (or in many cases simply removing the disincentives) to builders to build more units.

And giving lots of aid to the mortgage market is a big incentive to homebuilders.

 

[Lursa]

They're paying it by either bringing in large sums of foreign money (see Arcadia, CA) or cramming lots of people into them (most of the poorer parts of the city).

Regular people move there too, but they are probably getting alot less for their money.

 

[Nap]

Exactly, so while we're dealing with this problem, let's limit immigration.



And giving lots of aid to the mortgage market is a big incentive to homebuilders.

What you are talking about increases demand, the problem is supply. Low interest rates for homebuyers will increase home prices as more are looking to buy. If you want to lower prices then there needs to be an increase in supply and to do that you need people to build more units. Last thing I had read about California was that over the last decade production of housing units dropped to like 100k per year, the demand is 3 times higher than that. So of course housing prices will soar out of control.

Edit: Here is a good article. https://www.politifact.com/californ...-california-ranks-49th-capita-housing-supply/

California is 49th in per capita housing.

 

[phattonez]

What you are talking about increases demand, the problem is supply.

What did I say that would increase demand?

If you want to lower prices then there needs to be an increase in supply and to do that you need people to build more units. Last thing I had read about California was that over the last decade production of housing units dropped to like 100k per year, the demand is 3 times higher than that. So of course housing prices will soar out of control.

We actually have more housing today relative to population than we had in 2000.

 

[Nap]

What did I say that would increase demand?



We actually have more housing today relative to population than we had in 2000.

Check the article I added to my last post.

 

[Nap]

What did I say that would increase demand?



We actually have more housing today relative to population than we had in 2000.

The aid to the mortgage markets were done to aid the homebuyers and help with lending. That is going to boost demand as well as low interest rates.

 

[HowardBThiname]

This point is contradictory. Less demand and higher supply will lead to lower prices. How is that good for those who are heavily invested?

I meant the Big Boys, venture capitalists and the like, the ones who have plenty of money and they invest their money. When the interest rates go up -- they're the ones that make a killing.

Do you not take out loans to finance property purchases, labor, and supplies? What happens to your profits when the price of the loan goes up?

When we first started out -- we took construction loans that were repaid when the spec house sold, but the bank took a chunk of interest, so that greatly reduced our profit. Today, we have the capital to finance the specs, so when they sell the profit is all ours, minus, of course what the IRS takes. And -- they take a lot, too.

More supply would help, that is true, but how much building do you think would be going on if home prices were at levels that those under 35 could afford? You seem to know this market pretty well, so tell me, how much does the cost of property itself factor into the equation? Would you be able to build more properties if the land itself were cheaper?

Land is expensive, and developing it is more so. We've come out the best when we purchase large sections (many acres) and then have the land subdivided. That's costly, but most of the time, the community helps out with the cost of streets and sewers because they need housing for residents. Then they charge some of that back to the new homeowners in the form of "curb and gutter taxes," which typically expire in about 15 years.

That's about the cheapest way to buy land, but, of course you have to either have the money to buy a big chunk or you have to have investors, and those always take a cut of your profit.

When it comes to the under-35 crowd, that's a whole different thing. They buy "starter homes," which are typically small older homes, and then, after they live in them for a few years, their equity (because the house increased in value) is often enough to "trade-up" to a more expensive home.

If you're talking about the past year, sure, construction equipment has become much more expensive. Over the past decade, however, these costs have been inflating at about historically normal rates.

This mentality is what I see as the problem. We treat housing in this country as a commodity, as an asset that we expect to increase in value. But why? All other consumer goods we expect to go down in price over time (at least in real terms). Why is housing special? And doesn't viewing it this way lead to the problems we have now where young people cannot afford a place to live?

I know exactly what you're saying but it's an uphill battle to build "affordable housing." I used to pick one or two distressed houses with good foundations in good neighborhoods and completely remodel them in a year. They were "my projects" and I had success at flipping them, but then I had a massive fight with one of the guys on the City Commission who tried to condemn three homes that I'd just purchased (all in a row) because he wanted the land for himself. I eventually won, but it took having to file a suit against the City and it was an expensive victory. After I finished those three I never bought anymore. Whenever you get into that sort of thing, there's someone, somewhere who tries to take it away from you. I would pick up the homes for under 50K (I got one for 10K) and flip them for 70-90K. They were adorable, and they all had contracts within two weeks of being on the market. Perfect starter homes that were basically all new except the foundations and framing.

I know there's a market for that, but doing it is difficult because of the trouble from others.

Seriously, I suggest Habitat. We build for them and you'll get a house for about 60% of what it would sell for on the open market.

You don't see anything wrong with young people not being able to continue to live in the town they grew up in? That they're forced out of their home?

I do. I really do. I remember what that was like, but seriously, if interest rates go up -- you'll just end up paying more interest.

Is the problem that you can't get a loan? Or, is it that you can get the loan but you think the payments are too high? Have you tried to pre-qualify with a bank so you know what price range you're looking at?

 

[HowardBThiname]

If they don't understand that the way to counter high costs is to increase supply, then yes I am saying they have no clue as to what they are doing. The entire concept of a housing crisis is rather ridiculous. Incentivize people to build more housing units and prices will fall.

They will only fall if the "cost to build those houses" falls. Right now, construction materials are very high and it doesn't look as if they're coming down anytime soon. Houses cost money to build and then the builder wants his cut too. If the builder can't make a decent cut, he won't build. That's where it all starts -- with the builder's wallet.

 

[phattonez]

Check the article I added to my last post.

I understand that it explains why California is more expensive than the rest of the country, but this doesn't make a nationwide problem.

 

[phattonez]

I meant the Big Boys, venture capitalists and the like, the ones who have plenty of money and they invest their money. When the interest rates go up -- they're the ones that make a killing.

I'm not so sure, since they'll feel pain from lowered amounts of debt.

When we first started out -- we took construction loans that were repaid when the spec house sold, but the bank took a chunk of interest, so that greatly reduced our profit. Today, we have the capital to finance the specs, so when they sell the profit is all ours, minus, of course what the IRS takes. And -- they take a lot, too.

But higher rates that lead to decreased home prices would also cut into your profits, no?

Land is expensive, and developing it is more so. We've come out the best when we purchase large sections (many acres) and then have the land subdivided. That's costly, but most of the time, the community helps out with the cost of streets and sewers because they need housing for residents. Then they charge some of that back to the new homeowners in the form of "curb and gutter taxes," which typically expire in about 15 years.

That's about the cheapest way to buy land, but, of course you have to either have the money to buy a big chunk or you have to have investors, and those always take a cut of your profit.

Interesting, that's what I thought. So if land becomes cheaper, homes become cheaper.

I know exactly what you're saying but it's an uphill battle to build "affordable housing." I used to pick one or two distressed houses with good foundations in good neighborhoods and completely remodel them in a year. They were "my projects" and I had success at flipping them, but then I had a massive fight with one of the guys on the City Commission who tried to condemn three homes that I'd just purchased (all in a row) because he wanted the land for himself. I eventually won, but it took having to file a suit against the City and it was an expensive victory. After I finished those three I never bought anymore. Whenever you get into that sort of thing, there's someone, somewhere who tries to take it away from you. I would pick up the homes for under 50K (I got one for 10K) and flip them for 70-90K. They were adorable, and they all had contracts within two weeks of being on the market. Perfect starter homes that were basically all new except the foundations and framing.

I know there's a market for that, but doing it is difficult because of the trouble from others.

Seriously, I suggest Habitat. We build for them and you'll get a house for about 60% of what it would sell for on the open market.

I don't think that specifically building affordable housing fixes anything. I'd rather see home prices in general come down.

I do. I really do. I remember what that was like, but seriously, if interest rates go up -- you'll just end up paying more interest.

Is the problem that you can't get a loan? Or, is it that you can get the loan but you think the payments are too high? Have you tried to pre-qualify with a bank so you know what price range you're looking at?

The problem most have is saving up enough for a down payment. The payments aren't bad, but that down payment is too high.

 

[Northern Light]

Which specific part of capitalism would that be? That seems to me to be finance.

Yes, the banking system, the Federal Reserve. There needs to be a central bank that is under public control, for one. The other is that we need to decouple business from government. The time has come. Corporations that own wealth comparable to nations will easily overshadow constituent priorities. It's a hindrance to democracy. That in turn causes problems with how wealth is allocated and the rate at which standard of living increases with wages.

I think we're in total agreement about the problem. Now how do we fix it?

Honestly, I think it's too late to fix it, based on our history and the history of revolutions in the western world. We've arrived at the tipping point where government is so infiltrated by non-state actors that it's very difficult for democracy to function anymore. I'm not an anarchist or a chaos theorist, I'm just a historian. History shows that revolution is good for countries. It refreshes them and brings in new values. A huge problem with the U.S. right now is that our polity has stagnated and the means to refresh it have all been corrupted by the non-state actors, through the sequestration of wealth. Whoever owns the money owns the country.

Unless the government is willing to seize funds, things can't change; and if they did they would just be called communists.

 

[Nap]

They will only fall if the "cost to build those houses" falls. Right now, construction materials are very high and it doesn't look as if they're coming down anytime soon. Houses cost money to build and then the builder wants his cut too. If the builder can't make a decent cut, he won't build. That's where it all starts -- with the builder's wallet.

That is most definitely part of it, but you also have various regulations (for instance the recent solar panel requirement in California), tons of red tape to go through, rent control, councils blocking construction for various reasons, environmental protests blocking or prolonging construction, zoning requirements. There are so many taxes and fees some states require before even lifting the first 2x4 that it is ridiculous.

 

[Nap]

I understand that it explains why California is more expensive than the rest of the country, but this doesn't make a nationwide problem.

It isn't as bad nationwide, it is mainly metro areas and outside of larger cities. Rural areas aren't near as bad because there is generally more supply than demand (less regulation and fewer people).

 

[Nap]

I'm not so sure, since they'll feel pain from lowered amounts of debt.



But higher rates that lead to decreased home prices would also cut into your profits, no?



Interesting, that's what I thought. So if land becomes cheaper, homes become cheaper.





I don't think that specifically building affordable housing fixes anything. I'd rather see home prices in general come down.



The problem most have is saving up enough for a down payment. The payments aren't bad, but that down payment is too high.[/QUOTE]

You don't need a down payment for a home (it is better to have one, but not necessary). For your first home simply use an FHA loan, build equity, sell that home and use as down payment on the next.

 

[phattonez]

You don't need a down payment for a home (it is better to have one, but not necessary). For your first home simply use an FHA loan, build equity, sell that home and use as down payment on the next.

But taking out an FHA loan means you're paying PMI and thus you get higher payments that maybe you can't afford.

Sent from my HTC phone. Instaurare omnia in Christo.