Motion: THW drive a construction-friendly economic policy into the future
Role: Rep. (govt.)
Date: Aug 29th, 2016
Robert J. Shiller, professor of economics at Yale, wrote recently that land and homes have been disappointing investments for a century. They have doubled or tripled in value while the Gross National Product has typically soared over fifteenfold in comparable time. While his claim may be true, one quickly realizes that this is because losses in the ”middles of nowhere” offset the gains in metropolises and thriving cities. As real-estate agents say, ”it’s about location, location and location.”
Prime real-estate prices are high. Apartments are often scarce in big cities where the majority of migration domestically is bound for. There’s a mismatch between supply and demand.
Why is this? What has rendered real-estate holdings the best assets around?
The way I see it is that real-estate prices are far too high — IN GENERAL — because of two things:
- All social classes desire real estate for slightly differing reasons
- People inherently (or after a progress of history, which I’m going to digress into and demonstrate later) trust realty more than any other type of possession.
[[ We may sidestep for a minute and clarify what different social classes are and how they can be differentiated. For the sake of clarity, let’s pare down the classes to just four.
- Upper class – those who make their living from unearned capital income (money making money, usually by banks or investment funds)
- Upper middle class – those who earn their living working in a position that may lead to promotion and having subordinates. Different managers and directors and ”-ive/-ial” officers crowd this class.
- Lower middle class & Working class – those who earn their living working in a position that does not offer chances for promotion nor having subordinates. Self-employed entrepreneurs also often belong here.
- Underclass – those who make their living from different kinds of government social-security transfers or criminality. ]]
Now, all classes want real estate. The underclass wants to live in it on rent, not caring too much about who owns the piece of sh… property, but all the other classes want to own their own property. Furthermore, the upper class may buy property purely for profiteering and speculative purposes. This means that the not very rich, the quite rich and the very rich all pour lots and lots of money individually or collectively into real estate. This is cut out to push the prices upward and cause inflation and housing bubbles.
For all that, it can be that we couldn’t have a different world. Let’s consider the other options. If people had
a) cheap housing, b) big wages and salaries and c) low taxation
and they spent their big wallets instead on something else, terrible things might ensue. I’ll list the probable outcomes:
- If people bought securities, shares, stock or derivatives, there would be a speculative bubble somewhere along the way. This has happened many times over and it’s quite predictable. In that case, a lot of people would lose some of their money and a few people would lose all of their money. That’s not desirable.
- If people bought cars, planes, water scooters and other vehicles, the lakes and roads would be crowded by a different magnitude. Accidents would increase. Pollution would be on the rise. That’s not desirable.
- If people bought simply more stuff such as books, electronics, clothes, musical instruments etc., they would soon discover that their homes can only hold so much stuff and that excess is excess. Some would resort to storage hotels, garages and other means to store surplus items. In the worst case, people would need to build outbuildings or buy more real estate to house their shopping-spree private property. But many more would go minimalist and shed all the stuff at once in a desperate attempt to gain control over their lives. That’s not desirable.
- If people made more babies and had more children, thanks to having more disposable income, there would be a welcome upswing in the population demographics. However, too many children would rob people of what little time they had left for themselves to spend on leisure. Children would claim all of the time of their parents. That’s not desirable.
- If people began globetrotting, i.e. travelling more and to more faraway places (it’s a little hard to top Thailand or Australia, though), they would probably enjoy themselves immensely for some time. But soon they might begin to feel that every place is alike most other places. What’s worse, the locals in a given place might start resenting the ”new hordes” that came to their cities and countries uninvited and turned them into something they hadn’t been. We’ve already seen forms of this in the way asylum seekers have been met in recent months and years. That’s not desirable.
Sometimes these things may have happened in real terms in history. Our memories don’t stretch very far. In other words, the world has already been there and done that, i.e. come to the conclusion that it’s better to stash away one’s money in the form of buildings, real estate, edifices and things with a roof than try to use money through consumption or retain its value using some other method. That way is not perfect in itself but it’s better than the other ones, or the best out of bad options.
Mankind may be able to come up with a way to store its wealth other than in real estate, but until then that maligned option still seems to be the default way (for a layman, or a given person) to try to retain value in something.
Puheen kesto: 6 min 20 sek [7 min 50 sek]
Arvio: * * * ½. Tein puheeseen yhden turhan luettelon, joka on [[ ]]-sulkeissa oleva pätkä. Luettuani puheen kahteen kertaan, lisää rönsyillen ja sillä varustettuna ja nopeammin ilman sitä, päädyin toisaalta aivan liian pitkään ja yhtäältä sopivan pituiseen puheeseen. Tämä luokkaluonnehdinta ei silti ole välttämättä kokonaan turha; sen paikka ei vain ole tässä puheessa vaan jossakin luokkia tarkoituksenmukaisemmin käsittelevässä puheessa. Sen takia en poista sitä kokonaan vaan laitan sen sulkeisiin. Itse puhe on suhteellisen jäntevä, asiallinen ja eteenpäin menevä.
Puheita on nyt arkistossa tasan 50 % – 50 %, mitä tulee hallituksessa ja oppositiossa toimimiseen. Rooleja ei ole kuitenkaan tasattu päikseen, vaan ne jakautuvat epätasaisesti miten sattuu. Kaikkia puheita ei ole kuitenkaan vielä julkaistu, vaan ne tulevat tulemaan tänne syksyn mittaan ja siitä eteenpäin.