Dramatically increase the amount of housing in urban areas so more people can move there and away from the places without any industry left.
What these people want isn't fully rational; it's highly emotional. They want their 1950s-style old way of life back. They want their jobs in their towns that they grew up in, that they have lived in or raised families in, where they have their church and their community. They want to live in their IL farm town and work at the local union plant and make a living to pay for pensions and healthcare. It is not realistic in a globalized economy and will be less so in a fully domesticated one, but the math is not what matters here.
Urban areas in these places already have plenty of housing that nobody is in. See Detroit for example.
Not saying that you are wrong, but it is a sad idea that we can't fix it. Maybe instead of giving out "gov't handouts" we just give out VR headsets and give pple a Matrix like existance who can no longer bare the thought of their current living conditions. Sad.
What these people are seeking in Trump's "make america great again" is a return to 1950s-1960s America, not as it was, but idyllic as it seems in movies and rosy retrospection.
What I see with the Trump win is that America is simply two Americas: the urban, cosmopolitan melting pot America that most of us here live in, where the wealth inequality problem is gentrification and housing supply is restricted. We are trying to get multitudes of races, religions, and socioeconomic backgrounds to be able to coexist in the cities. Many of us here are the "elites" even though none of us feel like it, and we take that for granted. That's the whole "white privilege" bit that we hear thrown about by SJWs, and to a large extent they are right in this regard. There is a marked lack of empathy for minorities and "poor" people in SF et al these days. People don't understand it, and it seems that when people go to "understand it" it's some type of socioeconomic tourism where you go hang out in Oakland with locked doors, or if you're in NYC you crawl up to Harlem for a chop cheese, because some rapper talked about it, and you wonder why the bodega has thick acrylic glass in front of the register.
Trump's America is semirural/exurban "American dream" idealism, where people want to "make America great again" by making it great for them in the way it used to be, when America felt white and Christian - that is, not so much talk of gays and minorities and political correctness - you got married, got a nice middle-class job nearby your house, oh, and owned a house and a car and the wife could stay at home. This is what they want; it is what they seem to believe they are promised. It is emotional and has absolutely nothing to do with the status quo; they're hoping by isolating the US from the rest of the world ("like it used to be") they will see this way of life restored.
What they don't understand is that the economics of this is not, and will never be, in their favor.
(Detroit is not a functioning city.)
I see lots of negative externalities to using preferential credit instruments in a debt-backed monetary system securing land as a store of wealth, especially for late-stage generations like the Millenials and later are experiencing first-hand. The process takes many generations to play out the stage we're at, so it builds up vested interests until some final set of bag holders gets the sucker punch. They (Millenials and later) are on the wrong side of an asset inflation to wage inflation ratio curve function that looks ugly and not resolvable without tremendous disruption to world asset markets.
In an agrarian or even industrial development era, it makes sense that land is a large direct contributor to output profits, and to ascribe wealth storage to it as the improvements that sit on top are enhanced. To my unsophisticated and untrained layman's sense, this reasoning starts to fall apart as industrialization is increasingly mechanized and automated, but there is still a tiny shred of reasoning. I can't find even a slim reasoning for continuing the practice when the land itself doesn't contribute directly to the economic output, which I sense is the case when cognitive effort is the majority input to economic output. Land value then in a commercial real estate context starts to reflect a proximity to supply chain networks where the supply chain is for physically-located talent (SV). That makes sense, though I'm interested to see the impact if VR/AR matures and virtual offices with startlingly-realistic telepresence become feasible (I predict the first 3-6 generations of that tech won't have an impact, and only the later generations will).
Where the reasoning really decouples for me however, is residential real estate. There, I would have expected pricing to essentially follow median wages. Effectively modeling median housing prices as a put option: term length the duration of the median mortgage, strike price the wage earner's expected career earnings over that duration lining up with the house price (or some appropriate fraction thereof). That didn't happen, so I'm misinterpreting something, or don't understand something about using real estate as a store of value, or the market is just staying irrational longer than I am expecting.
I dunno, just rambling here, please correct what is certainly my poor interpretation of what's going on here. I'm just a layman trying to figure out why residential real estate prices seem decoupled from median local income in so many geographies at the same time. I started wandering down these ponderings when I realized that as a remote worker in the US, only some pretty far out places had escaped the residential real estate inflation, whereas in the 70's driving only an hour out of town led to a drastic 75%+ drop in per acre prices. I ended up staying pretty close to an urban area, and paying off my property as quickly as possible, but I feel terrible for the younger generations getting completely screwed.
We can not get an `ought' from `is` statements alone. But we can derive a complex or interesting `ought' from a simple `ought' and a bunch of `is' statements.
I want a tax system that can finance a welfare state without burdening the real economy. I care about real gdp, low unemployment and to a small extent equality of after-tax income. I don't care about `storage of wealth': the private sector takes care of that just fine.
Given those `oughts' and a bunch of standard orthodox text book economics, you get a free market laissez faire economy and a state financed by land value tax as a good first order answer. Land value taxes do not disturb the ecomony, since land is a perfectly inelasticly supplied good. (See https://en.wikipedia.org/wiki/Tax_incidence for who actually ends up paying for taxes on goods and services, and for who can pass them on, and to what degree. It's all about elasticity.)
As a minor point, you want to add some sin taxes like eg carbon and alcohol tax, where you actually actively want the change to demand and supply that the tax causes: less carbon dioxide release, less alcohol consumed.
I don't see how agrarian or industrial development era makes a difference here. Eg Australia is an advanced economy, but relies on resource extraction and agriculture a lot, and a land value tax would make sense for them too. (They actually have one on the books, but it's mostly toothless with a small base and low rates.)
Ultimately, thermodynamics might be able to explain a lot about biology, society and economics. Alas, I don't think that science has advanced well enough for that grounding, yet; yet alone our laymen's understanding of it. Mostly, the thermodynamics that we have a good handle on is equilibrium thermodynamics, or at best near-equilibrium. Economies are thermodynamically very open systems with matter, energy and entropy flowing in and out. (Even in the confusingly similarly named `economic equilibrium'.)
And in any case, such a re-interpretation must `save the phenomena'. Ie just like the statistical mechanics explanation of thermodynamics makes the same predictions as the older macro-scale traditional thermodynamics.
> Where the reasoning really decouples for me however, is residential real estate. There, I would have expected pricing to essentially follow median wages.
I would expect land prices to follow basically average disposable income:
Basically, people use their income left over after taxes, groceries etc to bid up all available residential land for either paying rent or paying mortgages on. This sets the monthly cost of land, and a look at the prevailing interest rate on mortgages will tell you the value: monthly cost per square metre * 12 / yearly interest rate == capital value per square metre
(Where a eg 2% interest rate goes into the calculation as 0.02, ie a multiplicative factor of 50.)
Feel free to send me an email to continue the discussion. My address is in my profile.
Sure, the scale is way smaller than coastal cities. But if you adjust the prices to match the incomes, the unaffordability problem is roughly identical in terms of pain. A Michigan $300k urban condo is basically as unaffordable as a Seattle $600k condo, once you notice that Michigan incomes are roughly 50% lower than Seattle, on average.
Sprawl is cheap, that's absolutely true. But it's also sprawl -- with all the problems that entails. The only cities I know of with "huge housing surpluses", are cities that have majorly failed in some way (like Flint).
The big difference I see is most millennials want to move to a big city and work hard at creating a new and better future.
http://www.economist.com/blogs/freeexchange/2015/04/land-val...
You can stick fingers in your ears and shout it isn't so or a law of nature, but that's just being deliberately economically illiterate.
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I do semi-agree with you. I think remote work is the future but part of that equation is manufacturing jobs are gone. It doesn't matter if we shut down 100% of the jobs in China and Mexico and bring them here, manufacturing jobs are dying.
Anyone in manufacturing needs a way out. Either they need to find it or we need to help them but twiddling our thumbs and pretending like automation isn't coming is short-sighted.
What you want and what reality is don't have to match up.
http://science.time.com/2013/07/23/in-town-versus-country-it...