Across the rich world, an extraordinary jobs boom is under way
economist.com
economist.com
In other ways, people are taking bad underpaid jobs they would never take otherwise to avoid starving. That’s not really something to be proud of as a society.
Anything you read about people that enjoy the "flexibility" of zero hours? Absolute fucking shit. It's flexible if you are a consultant that is paid £700 a day. If you're on minimum wage then it's people fighting to the death just be able to work enough to move out of their parents houses or pay rent.
Utterly exploitative and dishonest society.
And yes, you may not be able to afford a house in the city in the beginning, when a house is priced at 100x rent. But not all cities have housing shortages, move to those cities that don’t. Or move to the countryside once you can afford it. No one ‘deserves’ to live in the countryside
- Sir Humphrey, Yes, Minister
Who has ever said that people increasingly switch between jobs in less than a year? Off the bat, I can't find an exact statistic, but what the author is saying here seems like a gross exaggeration of the actual narrative.
My understanding of the narrative is that people used to stay at companies for years or even decades. I know many of my parents generation whom have worked at the same company for at least a decade. Most of my friends in my generation are well educated(and not engineers), but have been changing jobs every 1 to 2 years. Generally, that seems to be the expectation of today. Changing companies in less than a year is not the new normal, and I haven't heard anyone suggest otherwise.
I don't see how what the author is saying here demonstrates that the "belief that people increasingly flit from job to job is also not borne out by fact."
I'm not sure it's the expectation in most places. A decade or more in one place certainly seems (much) rarer than it used to be. But resumes that show routine hopping from job to job every year or two is still going to raise eyebrows at a lot of companies. Perhaps less so in Silicon Valley.
And, as you say, less than a year usually indicates either a company that shut down/shrank or some serious expectations mismatch on the part of either the company or the employee.
I've been contracting for the past decade and nearly tripled my income. If a client decides to end my contract, I can find another one in about a week (my record was 3 days). I really have no more loyalty to any company and because I'm contracting, nobody is surprised that I have new clients every year or two.
The jobs economy feels a lot like the late 80s to me. I graduated college then, and entered into a roaring jobs market. Under leadership from right and left (Reagan and Clinton), the American economy provided a great opportunity to establish a baseline income and start saving for the future.
I feel this gave people of my generation a huge step up. I think that people who graduated at other times (i.e. 2009) had a much rougher start. It's just the luck of the game.
It feels about the same to me now. I hope so, for today's grads sake.
https://news.ycombinator.com/newsfaq.html
It says it's okay to help other users to read an article and even to ask for links (under the point "Are paywalls ok?")
I don't see why it should be any different with discussions on a link sharing site like HN. Unlike with the GoT discussion at the party, I've found that the HN discussion of articles that I do not have easy access to (such as at The Economist or the Wall Street Journal) are usually interesting and informative even without having read the article. All that not reading the article usually means is that more caution is needed when commenting.
If there is some topic I'm interested in, but find that I frequently can't enjoy the discussion here on that topic because of frequent posts of articles behind a particular paywall--then that's a pretty good sign that I should actually subscribe to that publication.
That said, I'm glad HN-rules support non-paywall links. To use your logic: If you don't support them, don't use them.
To put an example, in London median house price hovers around half a million, while median London salary is about 30k. Sure, your washing machine is cheaper than 40 years ago, but the basic element in any economy -housing- has become more expensive. Cities are saturated in every sense.
Except maybe the idea The Economist wants to push is somehow that we need millions and millions more ex-EU immigrants? Because they have seen a spike in underpaid IT vacancies.
Are smaller towns in UK shrinking? Are there stats I can look at on internal migration in the UK? Is this trend true for other western EU countries as well?
The percentage of Americans living in rural counties has been shrinking. Gains are mostly in the suburbs:
https://www.pewsocialtrends.org/2018/05/22/demographic-and-e...
I live near a small town on the Fife coast directly across from Edinburgh and all of the neighbouring coastal towns seem to be doing well - the ex-mining towns 10km away not so much. Main constraint on development being local planning authorities rather than demand.
This article mentions the growth of Aviemore (very much a centre for outdoor activities) but also the decline of some other more out of the way towns:
https://www.strathspey-herald.co.uk/news/aviemore-hailed-as-...
If I had the choice between living on the coast, and living in an ex-mining town, I'm probably going to pick the coast (other things being approximately equal). The coast is scenic; ex-mining areas are usually not scenic. That is, I think that demand is exactly what's making the coast do better. The local planning authorities may be an effect rather than a cause - the ex-mining areas may know that they don't have as much to work with, and therefore may have less that they can realistically do.
However, agriculture became increasingly mechanized with widespread use of the tractor, other heavy equipment, and superior techniques disseminated through County Agents, who were employed by state agricultural colleges and funded by the Federal government. The early 1920s saw a rapid expansion in the American agricultural economy largely due to new technologies and especially mechanization. Competition from Europe and Russia had disappeared due to the war and American agricultural goods were being shipped around the world.[47]
The new technologies, such as the combine harvester, meant that the most efficient farms were larger in size and, gradually, the small family farm that had long been the model were replaced by larger and more business-oriented firms. Despite this increase in farm size and capital intensity, the great majority of agricultural production continued to be undertaken by family-owned enterprises.
World War I had created an atmosphere of high prices for agricultural products as European nations demand for exports surged. Farmers had enjoyed a period of prosperity as U.S. farm production expanded rapidly to fill the gap left as European belligerents found themselves unable to produce enough food. When the war ended, supply increased rapidly as Europe's agricultural market rebounded. Overproduction led to plummeting prices which led to stagnant market conditions and living standards for farmers in the 1920s. Worse, hundreds of thousands of farmers had taken out mortgages and loans to buy out their neighbors' property, and now are unable to meet the financial burden. The cause was the collapse of land prices after the wartime bubble when farmers used high prices to buy up neighboring farms at high prices, saddling them with heavy debts. Farmers, however, blamed the decline of foreign markets, and the effects of the protective tariff.[48]
Farmers demanded relief as the agricultural depression grew steadily worse in the middle 1920s, while the rest of the economy flourished. Farmers had a powerful voice in Congress, and demanded federal subsidies, most notably the McNary–Haugen Farm Relief Bill. It was passed but vetoed by President Coolidge.[49] Coolidge instead supported the alternative program of Commerce Secretary Herbert Hoover and Agriculture Secretary William M. Jardine to modernize farming, by bringing in more electricity, more efficient equipment, better seeds and breeds, more rural education, and better business practices.
https://en.wikipedia.org/wiki/History_of_agriculture_in_the_...
The rapid mechanization of farm equipment, especially small gasoline tractors, and widespread use of the combine harvester contributed to farmers' decisions to convert arid grassland (much of which received no more than 10 inches (~250 mm) of precipitation per year) to cultivated cropland.[4]
During the drought of the 1930s, the unanchored soil turned to dust, which the prevailing winds blew away in huge clouds that sometimes blackened the sky.
https://amp.theguardian.com/environment/2015/dec/02/arable-l...
Why would they do that, if not to improve their living standards?
You are complaining that house prices are high, yet simultaneously saying people are moving into the city? Which is it? If the prices were high, people wouldn't move, but since they are moving, clearly there's a reason for it.
Are you trying to say you don't want people to move? You want to keep them in rural locations? But wouldn't the only way to do that, would be to make sure they don't have enough income to live in the city?
The former stems from the later, and from the lags inherent to markets.
Wage adjustments lag behind employment numbers. Right now while the employment numbers are increasing, there is still quite a bit of 'slack' (unemployed and underemployed people) that can be, and indeed is getting, picked up. Thus we still don't have significant wage increases.
Living standard change lag behind wages changes. Once the wages start significantly increasing, people will go ahead and spend on that one or three things they always wanted to, but couldn't previously afford. And the list is way longer than just the usual consumer goods: investment, savings, healthcare, vacations&leisure, shopping around for better job. Housing market is a great example: there's major imbalance between supply and demand, and it will take a few decades to significantly improve[1], due to both changing populations and building out. The prices will go up even higher before the correction comes.
[1] it will significantly improve in a few decades, barring some heavy-handed governmental interventions.
- Youth Makes money in city
- Grows tired of city and wants space, moves out of city
- Starts family
- Needs supporting culture/services outside of city
- Small town grows
- Small town can't grow bigger due to geo/resources/politics
- Economic opportunity in town shrinks
- Child seeks city to make money
If you seriously intend to disagree, cite sources. If you're just saying no to something that is a demonstrably true, objective fact... maybe ask yourself why that is.
Looking into this more, I got some UN statistics on historic and projected crude birth rates. In 1950, it was 37.2. Today, it's 18.2. They project 13.4 by 2050. Population growth drop lags birth rate drops, due to increased lifespans worldwide. As the last generations of high birth rate get past childrearing years, it'll just go down more.
So yes, the birthrate still outstrips the death rate - but at some point in the 21st century, those numbers will flip, and they've been converging for over 50 years now.
This is not a Western or first world problem, because we see it spreading as countries become more developed. In many ways, I would argue that this is an exponentially bigger problem than climate change, although I am sure there is some overlap since there mere psychological pessimism from how the media/pre-university education handles climate change is enough to get people to not want to reproduce.
We're at around 2.5 according to:
https://en.wikipedia.org/wiki/Total_fertility_rate
And there are lots of countries in Africa that have high rates:
https://en.wikipedia.org/wiki/List_of_sovereign_states_and_d...
Take Egypt, for example. Its birth rate is currently 3.26, which is "high". but That's down from 6.72 in 1960 and 5.60 in 1980. Over the same period, life expectancy has risen from 48 to 71. This means population growth hasn't changed that much, from 2.8% to 1.9% - but as birth rate continues to fall and life expectancy levels out, it'll go negative, just like it did in the US and Europe, which would have negative growth, were it not for immigration.
Think this nations are just doomed and can't get any better? In the mid-19th century, places like Sweden and England had birthrates above 6, and 90% illiteracy rates. They got better. The "third world" is dropping its birth rates and increasing its economic standing far, far faster than Europe did.
edit: Over the same-ish 1965-present period, Egypt's per capita GDP grew from $165 to a recent peak of $3548, about a 20x improvement (this is constant dollars). So wealth goes up, life expectancy goes up, birth rate goes down. These things are linked in virtually every nation.
I'm not sure if that question was directed at me or to all readers, but if directed to me, no, I certainly don't think that.
> So wealth goes up, life expectancy goes up, birth rate goes down.
Indeed, there is a strong and important link there.
It was made possible (sort of) by cars and freeways which made living 25 miles away from your job a thing that was practical (sort of).
That’s only true in a few places, there were plenty of places (like Seattle) that didn’t have many black people at all yet people still moved to the suburbs.
The suburbs were mostly an invention of a post World War 2 housing and baby boom.
https://www.tandfonline.com/doi/abs/10.1080/713999949
"Though suburbanization in the United States during the 1950s is a well known story, scholars still consider postwar prosperity and basic desire on the part of the American people to move further away from problems of the inner city as its primary causes. While it is true that various factors contributed to phenomenal growth of the suburbs between 1945 and 1960, historians have thus far paid little attention to policymakers' fears of atomic attack as a significant factor in population dispersal. This article examines how sociologists, scientists, and other experts considered the reduction of urban vulnerability a Cold War priority, and worked to encourage dispersion of people and factories as a civil defence measure."
We keep expecting the internet to change this, and it keeps not happening. Why doesn't it? Why haven't remote workers or remote teams spread into the smaller towns and countryside?
That's the reason.
Also, many techies in the USA aren’t even Americans, they are even less likely to be craving for the countryside lifestyle.
There's a pretty broad continuum between living/working in a city where you can walk to everything and living somewhere that's hours from "civilization."
But that's a lot different from people arguing that tech people like big cities specifically, as that tends to suggest that they can walk to coffee shops, take public transit to work, etc. which does not describe the bulk of the space in greater metro areas.
> It depends on what you like to do. Countryside living is appealing to many people.
My reply:
> Technologists are probably not typically the ones that find it appealing.
Your reply to that:
> What do you think is so special about technologists that they uniquely prefer urban (or suburban) living? reply
Putting your last reply in the context of the entire reply chain, I'm confused about what you think we are arguing about?
I often notice that this sizable community is brushed to the wayside because they aren't the in-crowd of city-based IT enthusiasts, with their regions being considered "flyover" and their opinions devalued. Yet still, in small towns, we do have Slack and hackerspaces and lots of professional development, just like the cities.
More income savings to spend on new gadgets, space to build things (plus No HOAs to say you can't run a business or put up a big antenna on your property), and relative peace and quiet in your environment are quite appealing. I know some brilliant technologists who work remote and wouldn't trade their life-style for any salary in a big city. I'm a city-lover myself, but easily understand the appeal of working in tech while living in the country.
Edit: to add some more specific flavor my wife liked to ride horses, play her guitar, swim, and watch TV. Her parents were pretty busy but they would hang out with friends and liked to cook and play in what was essentially an Irish folk band in the area.
NB Personally I garden, walk and look at mysterious old stuff. But plenty of people doing the others.
Edit: Until 2 years ago I lived in the very centre of Edinburgh - which is quite a nice place to live. So far I've never regretted moving out of town to the country.
Let me assure you, there is plenty to do if you're into this lifestyle. Don't knock it just cause it's not something you're into.
I think as more people get good remote jobs that many of them will realize that living in nice small towns is really desirable.
Edit: Ah, I'd have to move to Canada. Not a deal killer :)
I wonder if there are fewer people that like the outdoors lifestyle now. New generation prefers xbox and eating at restaurants and doesn't like yard work or hiking.
I'd love to move somewhere quieter but my wife would kill me.
Living in small towns is incredibly stifling for people that prefer to use their feet to get around, at least in America. It always seemed fittingly ironic that people move to small towns so they can drive out to their outdoorsy hobbies.
Small towns and nature have no end of things to do. But it has way fewer people. I think modern society has a bigger problem with loneliness than with not having enough entertaining activities.
Go fishing, go hunting, go hiking, do some trailriding on an ATV or a snowmobile or a horse. Plant a garden or an orchard and tend to that. Have a barbecue with the neighbors. Get involved with the community. Work up your firewood. You can read books, or watch TV or engage with the internet just as easily as anywhere else, and you can get anything in the world delivered to you with two-day delivery from Amazon. You can look up at night and see the stars, rather than just washed out orange halogen haze.
I have a active loop for HF RX, which does a good job of rejecting local noise, but would still be better in rural area.
I think resort communities might do better, like Bali, Jackson Hole, Bend, Gulf Shores, but not Hawaii, COL is just too high. Also, decent schooling for kids is still a problem in those areas.
I can see it as a huge problem if one lives in Chicago, I guess. The Midwest isn’t a great place for that kind of thing.
[1] https://www.usnews.com/news/best-states/rankings/education/p...
From "Census data shows that Hawaii has the highest median home value in the entire US, at $617,400. CNBC also ranked Hawaii as the state with the highest cost of living in 2018, with the cost of a half-gallon of milk coming in at $3.64."
Citation: https://www.insider.com/the-top-10-states-people-are-moving-...
Oh and there's a lot of housing regulation.
Because when you live in an area you become entrenched. I would love to move out of the Bay Area for cheaper everything, but all my friends and family are here.
This is the element that people forget about in these discussions.
Ah. That explains quite a bit, actually.
But it doesn't explain everything. It explains why people who are there stay there. It doesn't explain why people have to move there to make decent money.
A few long-term trends I see driving the move to big cities are:
1. Jobs are becoming more specialized, and so it's more difficult to find every specialty you need for many businesses in a smaller town.
2. There are many more two earner households. In the past, many people would conduct a job search over a wide area and move the family for the man's new job. If the woman already has a job she likes, especially one that would be hard to replace in another town, the couple is much less likely to move for a job opportunity.
3. Businesses know this and have noticed that it has become harder to recruit people to move to a smaller "company town" for an opportunity. They therefore have tended to locate new operations in bigger cities.
Most people who earn $100+k aspire to more than a lower-middle class lifestyle, which makes most rural towns unattractive. Small semi-rural towns composed primarily of high-income people exist but they are the exception rather than the rule, and the lifestyle in these places often suffers from a high percentage of part-time residents.
I also highly value being able to watch non-mainstream movies in a real cinema and I also very much like being able to physically touch and purchase books from a real bookstore. All of these things are impossible for me to do were I to move to a small town.
When both parents work a high end job, chances are the car gets dropped off at a mechanic to change the oil or for a tuneup. And many meals are carry out or in restaurants.
Good schools.
Many HN readers don't have kids so they don't realize what a profoundly important factor this is when choosing where to live for many people. Once you have kids, their well-being and opportunity in life typically becomes the dominant attribute you're trying to maximize.
Parents would live in an active lava field where it rained urine every afternoon if the schools in the area were top notch.
Schooling is generally expensive. Nothing compares to one-on-one attention from a skilled, experience teacher and that doesn't scale, so to have a better school, you really need to simply have more money to put into hiring more and better teachers. In the US, a lot of school funding comes from local taxes, which means the amount of money schools have varies widely [0].
You could argue that this shouldn't be the case and that schools should be funded more equally out of larger pools. But if you are a parent with some money, it is your logical incentive to want to use that to improve your own child's schooling, so money naturally tends to flow towards schools that have more wealth children.
Many of those local taxes are local property taxes, so often the places that are affordable to live are by the very same process places that don't have great schools.
There's a nasty feedback loop here. You want your kids to go to good schools. The best schools have lots of rich parents. Those parents can afford expensive housing. Thus, most of the places with good schools have expensive housing.
Good government can and does push against this instinct, but it is a difficult, uphill battle.
[0]: https://www.npr.org/2016/04/18/474256366/why-americas-school...
Teaching is important, but I would argue that even more important are the goals and resources of the other students, which correlate nicely with wealth/income of their parents, and hence the neighborhood, and hence the school they all attend.
This is all barely noticeable when everyone is not so far apart on the wealth/income ladder, but over the past few decades, as that gets wider and wider, the data gets clearer and clearer about the consequences.
It certainly doesn't seem to here in the UK, where quite a few of the top schools are old fashioned 'public schools' located in rural/semi rural areas.
I lived a significant percentage of my life in rural towns across the US. While I really enjoy spending time in rural American towns because it is very comfortable and familiar for me, I am under no delusions about what actually living there entails. The lack of access to goods and services even for those that fit within the economic class of the town (which I did last time I lived in one) is inadequate enough that it is considered normal to drive 50-100 miles each way once or twice per week to get to a "real" city for various errands. You spend a lot of time in vehicles; instead of spending hours each day stuck in traffic, you spend hours covering distance at speed.
By the way, a 250k population city (i.e. larger than e.g. Geneva, Switzerland) is a very different animal than your average rural town, which is more commonly thousands to tens of thousands of population. I find cities in this range (also lived in these) to be the worst of both worlds, being neither as rural or intimate as a small town while also having few of the benefits of a real urban city. Of course, this is a personal preference.
Fort Collins is also a college town, and has a fairly educated population.
And if Fort Collins is too big for your taste, there are a ring of smaller towns (Loveland, Ault, Windsor or Westminster or something to the north) maybe 10 miles away.
Note well: It is my impression that this is my ideal. I've never lived there.
I live about an hour west of Boston which is certainly close enough to go in for a tech event or theatre/dinner for the evening. But my house is a lot cheaper than it would be in the city or a more expensive near-in suburb and you simply wouldn't be able to get the land I have near-in.
I get a lot of the advantages of a semi-rural lifestyle while still living close to decent supermarkets and having access to pretty much anything I would want within an hour.
Because the Internet has enabled clusters like Silicon Valley or Hollywood to be even more prominent. Before the Internet, if you wanted to do something in tech, you probably would have only looked for local opportunities, but now because of the Internet, you have the impression that SV is almost the only place where you can do something notable in tech.
Big names have gotten bigger and global, a lot of them becoming de facto monopolies.
The Internet makes access to information easier, but at the same time it narrows information sources enormously because it puts all of them on the same playing field, leaving only very few winners.
For example, pre-internet you might have read your local paper to be up to date with the news, now instead you probably read the news at the website of a global news company. It's almost impossible for the local paper to compete with the global company.
Basically the Internet has created a global winner-takes-all market where everyone is competing for attention, and mostly only the big players win, or at least that's what the Internet makes us believe.
Numbers such as market cap, net income per employee, and median average salary clearly indicate this is true.
And bigger cities in general. But I also think people tend to underestimate changes. Small and medium sized cities have been hit hard by the recession and rising housing markets. There are increasingly no good deals to be had anymore. Unless you go to Chiang Mai or something.
Because there are benefits to living in the city even if your job can be done in arbitrary locations. It's easier to deliver goods and services (on a per capita basis) in dense population centers. It also means that people have much more options for entertainment, dining, socialization, dating, and plenty of other advantages. Really, the only disadvantage is space but that's mitigated by skyscrapers (effectively multiplying the surface area of a city). Urbanization is directly correlated to educational attainment, income, and other quality of life metrics. Urbanization is also nothing new. Humanity as a whole has been on an continuous overall trend towards urbanization since the industrial revolution. Really, the only reason why we weren't urbanized until now is because postindustrial societies couldn't function without >70% of their population working in agriculture.
In theory, supply is infinite because you just build somewhere else. But people don't want to live somewhere else. They don't want to commute an hour and a half each way because that's where the cheap land was. The price I pay for my 1800sf 1/10 acre in south Minneapolis would buy me three times that in the burbs, but I don't wanna live in the burbs. I want to live in Minneapolis.
That's exactly what needs to change in "make it easier for houses to be built". Make it easier means don't let NIMBYs block housing.
I live in a city that is taking active steps to increase its density and affordability (https://minneapolis2040.com/). This directly affects my neighborhood. There are two kinds of construction going on around us. First is higher-density apartments/condos in the 3-5 story range, often with first level retail. These aren't replacing homes, though - they're replacing light industrial like warehouses.
Second, and this is an interesting rebuttal - some of the 100 year old houses are being torn down and replaced with new, larger (and much more expensive) houses on the same lots. So a worn-out 1200sf bungalow on 1/10 acre gets turned into a 3200sf quasi-mcmansion on the same lot. These new houses cost 50-100% more than the old houses in the neighborhood do (more like 100% for the run-down homes they replace). But they are contributing zero to the overall density - they're still single-family dwellings. Even the old two-flats in the neighborhood contribute more density.
So rather than increasing density, they're increasing cost of living. That is your #invisiblehand in play, without NIMBYism stopping anything.
I don't think it's just zoning here. There have been some small multi-family units built. But they don't sell all that well or seem economically attractive to builders.
And back to my point... I think there's a lot of sort of theoretical macroeconomic handwaving going on when it comes to housing density that flatly rejects engaging with real world conditions in any way. It sounds smart, but it's dumb.
Of course it's a scarce resource, but regulations don't make it any less scarce. The city where I grew up can't build any apartments past 5 stories because the local government feels like it's an eye sore. The result is housing/apartment prices that are 3X the price of other surrounding cities.
San Francisco is a good example of this. It can take a builder 10 years to actually get the permits to build a new house, because of regulations.
"The price I pay for my 1800sf 1/10 acre in south Minneapolis would buy me three times that in the burbs, but I don't wanna live in the burbs. I want to live in Minneapolis."
When you put it this way, I don't really feel bad for the high housing costs, because it seems like it's mostly about being inconvenienced.
The claim I'm disputing is that regulation is to blame for recent housing price increases.
For contrast, Seattle's median home price was already expensive at ~$400K in 2009, dropped to ~$350K in 2012, and has doubled to ~$700K since then. In the short term, it's more due to the crazy hiring growth by tech companies here. But even though Seattle is building much more than San Francisco, the majority of the land is zoned for single family homes, so there's no way for building to catch up.
The rural home in SC sounds much more healthy and like what people want - steady increases in price, a few points above inflation.
Since I was curious about the numbers, I went back and looked it up. Since June of 2009 (ie, the same time period) median housing price in Seattle has gone from $365,000 to $655,000. Numerically that's huge, but it's actually only about 7% faster growth than my parents' property-- a growth rate that most people here, including yourself, seem to view as unexceptional. This in a city that by all accounts is exploding in population and in the midst of a dire housing crunch which demands deregulation.
Don't get me wrong-- 7% is a lot of money. But it's an effect size that could easily be explained by simple profiteering, FOMO, construction cost increases, or any number of other local factors that have little to do with the regulatory environment. Paradoxically, it could even be caused by new construction, since new homes and condos typically cost more than the homes they're replacing.
None of this is to say that I'm 100% certain regulation doesn't play a role in Seattle's housing woes. But the difference in how these two situations are perceived should, I think, represent a warning about conventional wisdom in both places.
Seattle is actually doing fairly well, considering how fast people are moving here. Washington had more people move there than Texas (at 4x the population) and a higher % of the population than Florida. There's no way to build housing fast enough to accommodate that without tons of greenfield, but we'll see how the next 10 years go.
https://www.insider.com/us-states-people-are-moving-to-2019-...
To make it clearer what I'm saying, my parents bought their house in South Carolina in June of 2009 for about $130,000. Last month it went at just north of $195,000. If you had done exactly the same thing in Seattle and were subject to the median growth in housing prices that home would have sold last month for $205,000.
It's not chump change, but it isn't a night-and-day difference either. What I think it underscores is the difference between the actual problem we face (homes here are expensive) and the symptom we expect to see from theory (demand has skyrocketed -> home prices are skyrocketing). Because we don't see the symptom predicted by theory, I have to question whether the remedy the theory calls for is appropriate.
That's only slightly ahead of the general inflation rate and might simply match the price increase in construction.
1/ inflation over ten years is roughly 19%. So 50% is not "slightly ahead" by any means.
2/ Residential construction cost per square foot seems like a stronger candidate, with a roughly 35% jump nationwide over that time period (remembering that this does not account for inflation). Accounting for inflation that's essentially half the price increase.
3/ Neither of these factors, if they fully explained the value increase, would support the claim that regulation is to blame.
The point is that the 50% increase is the baseline appreciation or in other words the increase due to everything but regulation. Things like natural inflation, construction costs, etc. A rate above that is likely due to supply being constrained by regulation (or at least that's what the GP argues).
In the US, this partially means cracking down and reforming the federal guaranteed mortgage purchase programs. Make federal purchases only for one owner-occupied, primary residence, linked to a 1040 filing. Carve out an exception for married couples filing jointly to be able to run two primary residences through federal programs. Enforce through link of federal loan guarantee programs into the IRS datasets holding the declared primary residence.
There are a lot of people who could never qualify for privately-held and privately-administered mortgage loans taking full advantage of the backstop provided by the taxpayers in the federally-guaranteed programs, and renting out the units. They're welcome to work as real estate investors, just not on the back of taxpayers' liability. Many of these people are in the NAR, and they will scream very loudly and donate very generously if this ox is in danger of goring.
But deflating the asset inflation of real estate is a necessary evil to counter the now-obvious impacts of inflating these with over-generous credit and credit terms. Real estate is not an ailing industry with national security interest that needs any form of propping up.
Do away with the expensive marketing subsidy to the mortgage loan industry, and eliminate the mortgage interest deduction. It only kicks in if you itemize (and even then, you have to qualify under the new personal+standard higher deduction rule, so only an estimated 5% of filers will take advantage of it), and it is only a big benefit in the first few years of the amortization schedule.
But in any case: Although house prices are a problem - and one UK politics feels uncomfortable addressing. You imply impure motives on the economists's side in that they're what exactly? In any case, it was the economist that suggested an annual tax based on property value, which would be a step towards a solution of that problem. But this is primarily a political problem. Extra taxes, particularly on something that is near to voters hearts and will hurt their investments, albeit in a bubble - those aren't an easy sell.
Still, while you're right that house prices are problematic, it's not reasonable to compare rising house prices to stagnant median incomes, and thus imply that housing is less affordable than previously: interest rates are extremely low, so the cost of housing is low too. The high price merely means the risk and reward of ownership is high; but low interest rate means that the amount of income you need to support a given price of housing is much lower than before. I'm not saying this is good or healthy or anything; it's just not so simple as that previously housing was affordable and now it's not.
Nor is the political problem of housing - which voters really have themselves to blame for, nobody else - any reason to ignore the employment boom. Not everything in the world is going great; what else is new? But we can still appreciate what is going well while acknowledging that other - distinct - problems exist.
Cheap repayments don't really influence affordability of ownership, because banks won't lend more than 3.5x income. If you're earning £30k and a house in your area costs £150k, you're stuck renting unless you can somehow save a £45k deposit.
Rents have been increasing faster than inflation for many years, which is a major problem if your income is barely keeping up with inflation.
Is this what you're referring to https://www.economist.com/leaders/2018/08/09/overhaul-tax-fo... ?
Very interesting idea, especially if implemented as a progressive tax. I wonder how that would work for corporations (e.g. landlord who owns the hundreds of apartments managed through a real estate corporation). Also why only property? Why should other assets like stock holdings be excluded?
But I won't dispute that the idea seems applicable more broadly, especially since it's so much simpler and less fraud-sensitive than capital gains taxes. And while it's politically tricky, if implemented with a slow ramp up (i.e., don't do what Thatcher did) it probably won't hurt critical constituencies too bad. You could think of something like an X% tax of value above threshhold Y, and start with X low and Y high, and creep from there; e.g. X 1% and Y 500k pounds, conveniently hurting the rich not too much, and the bottom 50% of households even in london not at all. Even just the message that there's political will to do something about this would likely deflate the bubble a little.
These aren't attributes shared by stocks or other financial assets. For example it's not straightforward to charge a rent on stocks, and they're not fungible to different economic uses in the same way land is.
That isn't true. Living standards have improved for some large demographics and not for others. You're entirely discounting the massive improvement the eg poor in the US have seen in the last 40 to 50 years. It was horrific to be in the bottom 1/4 in the US just as recently as 1980 and prior, far worse than it is now.
Just look at welfare state related spending as a share of GDP in the US in 1960 or 1970, versus today (hint: it barely existed at all in the 1960s). Over 40 years, spending on low-income programs increased by 10 fold. Look at homelessness just as recently as the 1980s vs today, it has been cut in half. Look at the poverty rate in the 1960s vs today (23% down to ~12.x% today, near a record low). Look at violent crime and murder in the 1970s and 1980s vs today, both rates have plunged (the poor are far more likely to be victims of both).
There was no widespread free healthcare for the bottom 25% in 1970, for another example. That socialized healthcare costs the US an enormous amount of money to fund. That's a dramatic quality of life improvement for poor people who a generation prior would have had no consistent access to healthcare.
According to the official statistics, anyone working for at least one hour a week is counted as employed. If your objective is to reduce the unemployment figures, that's a loophole big enough to drive a bus through. We've got a million people in part-time work who want a full-time job but can't find one. We've got two million self-employed people earning less than the minimum wage. More people are working, but they aren't enjoying most of the rewards we associate with work.
That's before we consider the statistical black hole that is "economic inactivity" - about eight million people who aren't in the labour market and aren't seeking work. Maybe they're contented housewives and househusbands, maybe they've won the lottery, maybe they've been unemployed for so long that they've given up looking. We don't know and we don't care to ask.
https://www.businessinsider.com/ons-underemployment-double-u...
https://www.tuc.org.uk/news/two-million-self-employed-adults...
https://en.wikipedia.org/wiki/Law_of_rent
When it comes to what's squeezing the middle class and imposing a glass ceiling, housing prices are the #1 problem. Student loans and healthcare costs might tie for #2. I think we're getting to the point that we need a "war on housing prices" in the developed world. That's going to mean going to war politically against NIMBYs, property speculators, and others who profit from restricting supply.
Here's a few of the major things we need:
* Huge (to the level of punitive) taxes on excessive property speculation especially when the speculators are from elsewhere. I was chatting with a friend about it a while back and coined the term "financial pollution" for when foreign capital does socially destructive things to communities like hyper-inflate house prices. In California a start would be to abolish proposition 13 for properties that are not owner-occupied. Housing can't simultaneously be affordable and a good investment. It exists to be lived in, not to act as a financial instrument.
* Apply full KYC/AML and other anti-dirty-money regulations to all real estate transactions to chase the money launderers and flight capital away from real estate. This one is rarely brought up but it would go a long way toward limiting runaway property speculation in certain "hot" markets. A lot of this money buying houses sight-unseen is dirty money.
* Restrict the power of NIMBYs to limit density by enacting laws at the city, county, or state level. Go as high as necessary.
* Greatly expand transit to enable cities to physically expand. This includes light rail, commuter rail, highways, EV infrastructure, etc.
A lot of this boils down to fighting NIMBYs since existing property owners have a financial vested interest in opposing all of the above.
Retirees pay for goods and services in one of two ways - they either receive tax receipts through government programs, or sell off assets they have accumulated in their working career. Every asset seller has a matching buyer, so this implies that workers provide for retirees through a combination of taxes and buying assets with their savings.
Housing and mortgage debt is an absolutely enormous pool of assets, and one that large numbers of retirees naturally accumulate over their working career.
If a few quarters of rising wages is supposed to make us happy after decades of stagnation, things are pretty sad.
2. Minimum wage hikes in some areas are a great start, but when big players like Lyft, Uber, and restaurant industry get away with relying on tips and chance to meet minimum wage, we still are left with many low-quality, low-skill jobs that seem rife for further automation.
3. Where is the long-term focus on what to do about automation? Is any large population in the rich world going to try UBI or another mechanism?
I don't think UBI is a long-term solution, but maybe it's a short-term solution. In the long term, I think we need to find other ways of valuing people besides their economic productivity.
https://www.politico.com/magazine/story/2017/05/30/rick-wart...
> A study by University of Chicago economist Yale Brozen would find that while 13 million jobs had been destroyed during the 1950s, the adoption of new technology was among the ingredients that led to the creation of more than 20 million other positions. “Instead of being alarmed about growing automation, we ought to be cheering it on,” he wrote. “The catastrophe that doom criers constantly threaten us with has retreated into such a dim future that we simply cannot take their pronouncements seriously.”
> Economists started to explore the issue in the early 1800s, during the Industrial Revolution. Most classical theorists of the time—including J. B. Say, David Ricardo and John Ramsey McCulloch—held that introducing new machines would, save perhaps for a brief period of adjustment, produce more jobs than they’d destroy. By the end of the century, concern had faded nearly altogether. “Because the general upward trends in investment, production, employment and living standards were supported by evidence that could not be denied,” the economic historian Gregory Woirol has written, “technological change ceased to be seen as a relevant problem.”
We go through this "fear" pretty regularly and it's unfounded.
Also from the article:
> General Motors, for example, added more than 287,000 people to its payroll between 1940 and the mid-1950s. “There is widespread fear that technological progress … is a Grim Reaper of jobs,” GM vice president Louis Seaton told lawmakers. “Our experience and record completely refutes this view.”
If the jobs are good, then it only takes one income to support a family and people can retire early. Both single-income families and retired people pull down the labor force participation rate.