America's Growth Ponzi Scheme
strongtowns.org
strongtowns.org
This is absurd. There is plenty of money, we could tax something like 5% of stock buybacks and completely rebuild our entire society from the ground up.
Instead our leaders just keep telling us to toughen up and get stronger while flying jets overhead in meaningless salutes. They seem to be very bad at their jobs.
On the contrary, I'd argue they are mostly good at their jobs.
Their job isn't to help the average American. Their job is to serve Capital. They get paid by the rich, not by average Americans.
They are doing a good job at that. Look at the stock market, it goes up while Main Street is in turmoil.
It's not often you see an image and immediately think "yep, that'll be in some history book in short order". Just utterly divorced and a sign of a _very_ healthy society...
If you can't see it: An image with "Dow's Best Week Since 1938" on a graphic while breaking news declares "More than 16 M Americans have lost jobs in 3 weeks"
For those that want a higher quality screenshot, I just took one: https://i.imgur.com/FzkO6W5.png
It's Jim Cramer's Mad Money on April 9th 2:00 in. (I do not recommend watching Cramer.)
Instead neo-liberalism serves us this distopian neo-feudal regime that requires all to 'work more/work longer' just to slow our decline into near poverty while a select few 'rulers' horde all the fruits of progress.
I've been struggling with working life, especially in the midst of wfh during this pandemic and the common question I keep arriving at is: "what's the point in all this?" I don't claim to have it hard (I am so fortunate to have a steady job that allows me to work from home) but there's just a level of mental exhaustion and constant low level burnout that everyone is experiencing (especially amongst my cohorts/generation/friend group since that's my sample size) and it's just like... okay we have another what 40+ years of this? all for what?
and that doesn't even apply to the people working those app jobs and doing physical labor, who no doubt have it worse than anyone else I know.
This, x1000. It's maddening. I work in a an understaffed military HQ that tries to do too many things, while suffering through 30-50% personnel turnover every summer. We plan exercises talking about "readiness" but it's like groundhog day...EVERY.DAMN.TIME. Nothing really changes, the organization is no better prepared to fight today than it was 3 years ago, and all it's doing is burning out the mid-career professionals we'll need to carry the force when the war eventually kicks off for real.
Across industries, across geographies...we are living in an oppressive cyberpunk dystopia.
Second, a great day means nothing if you look at how volatile the market has been lately. We are seeing large swings up and down on a regular basis.
Third, there is no indication that tens of millions unemployed (which we are still figuring out how much of that is actually temporary vs. permanent) would necessarily immediately affect the large cap stocks in the Dow. These are companies like 3M, Apple, Caterpillar, etc...
Lastly, just because the Dow is up significantly on a single day does not mean all the stocks in the Dow are doing great. We've been seeing handfuls of stocks carry indices upwards even though they also contain poor performers.
There are good sides and bad sides to this. Currently US politics is in a deadlock between fractured local interests (NIMBY/gentrification, preservation, but also we need low-income housing too; let's build a wall, but also allow cheap farm labor) and federal concerns (tariffs, fuck Obamacare, and everyone in general, but also let's help the economy, etc).
This kind of polarized chaos only helps those who are entrenched and are already playing dirty.
If not, who are these incumbent power brokers? And how does it benefit them to ban drugs, not build new housing, limit immigration, etc?
Sure, money is always involved, "political capital" is real, but accumulating more of it doesn't increase the capacity of global political system (as economic capital grows the economic capacity), it just consolidates and polarizes it. So fucks it up basically. And in that regard it's more like a market failure of politics. Too little political competition, too much outside influences and forcing factors. (Eg too much ideology. Or a kind of cross-financing props up one side - basically somewhere in the decision making hierarchy that small sector was conceded, sacrificed, so Intuit continues to make big profits, but something else happened instead, let's say some state got some subsidy.)
All in all, first-past-the-post voting entrenches the big power brokers. (Who might not be the elected officials, but quite usually of course are.) Then the emergent two-party system leads to polarization of other issues. Local issues also became party issues. This brings some uniformity and consistency, but obviously does cause a lot of inefficiencies too.
So, how does it benefit them to do X? Probably it makes them good party members. And that consistency makes the party viable long term. Thus even local changes can only happen if the whole country zeitgeist changes.
"All communities divide themselves into the few and the many. The first are the rich and well born, the other the mass of the people. The voice of the people has been said to be the voice of God; and however generally this maxim has been quoted and believed, it is not true in fact. The people are turbulent and changing; they seldom judge or determine right. Give therefore to the first class a distinct, permanent share in the government. They will check the unsteadiness of the second, and as they cannot receive any advantage by a change, they therefore will ever maintain good government. Can a democratic assembly, who annually revolve in the mass of the people, be supposed steadily to pursue the public good?"
-Alexander Hamilton, Farrand's Records of the Federal Convention, v. 1, p. 299. (June 19, 1787)
I'd argue a true democratic republic isn't possible alongside capitalism. The rich will always have disproportionate power over elected officials. Whether it's through direct payments, or the ability to influence voters by manufacturing consent (https://en.wikipedia.org/wiki/Manufacturing_Consent).
We could spend less money.
In Education we spend far more than the 80's and have less to show for it.
In healthcare we have astronomical costs that have not bought us more vitality, but an extended morbidity. Gone are the days of grandmothers with sinewy arms maintaining huge gardens. Obesity in the early 2000's was at "crisis" levels and it's gotten so much worse that we just stopped talking about it. But we can keep the numbers up a bit here and there.
In infrastructure we let car-first build-out destroy everything Jane Jacobs said we were going to lose. Valuable things that cost no money at all, but are too intangible for top-down planning to notice.
The failure of imagination isn't finding new people to juice. It's finding ways to be effective. I agree they are very bad at their jobs, but I don't think finding a new way to tax the rich is any more creative or sustainable. I think it's the same failure of imagination that you fear.
We could spend less money on healthcare by adopting Medicare4All or similar.
We could cut the military budget _dramatically_ without impacting our national security.
And yet both parties have done little but increase the extent to which our countries is beholden to banks.
If you think you can replicate the healthcare success of [pick your model country] without also replicating their obesity rates, doctors salaries, amount of testing and prescriptions, etc, you will find that who pays for it all is the least of your concerns. As Americans consider it, we probably have too much "healthcare", not too little.
Others have spent far more time than me on this if you're interested: https://randomcriticalanalysis.com/2020/01/31/i-created-a-pr...
The stuff about pharmacy benefits and doctor salaries are artifacts of our weird way of paying for things. I'm not sure why you're portraying them as separate, isolated issues.
We just need to fix billing, end price fixing, and massively deregulate - certificates of need, bans on telemedicine, pay for procedure etc. This will actually fix it. Medicare and Medicaid are incredibly expensive and inefficient.
This appears to be, at the very least, debatable:
https://www.healthaffairs.org/do/10.1377/hblog20110920.01339...
Even funnier is we can blame our covid 19 failures on being unhealthy: https://www.cnn.com/2020/05/17/politics/us-health-conditions...
Obviously this a bit of shift the blame (played by both parties), but we can see that reaching for this argument means we really have failed on the healthcare and preventative medicine side - covid19 just calls this out.
Let's see a source or even back-of-the napkin calculation on this
It’s a lot of money, but not enough for fundamental change. It would of been enough collectively to pay for the stimulus we are doing now though.
0 - https://www.marketwatch.com/story/sp-500-companies-spent-7-t...
I'm not sure why you'd need additional taxes at all, when it seems that deflationary pressure is so great that you can summon up trillions with little inflationary consequence. $35 billion/year seems like nothing compared to this.
A fiscal stimulus of that size would almost certainly drive demand (during a pandemic that has caused a negative supply shock) and therefore increase inflation.
If you want to tax profits, then tax profits. If you want to have cheesy loophole tax avoidance, stock buy-backs might be more your style.
What you want to do is create an artificial incentive for not returning the capital, which will lead to its suboptimal allocation. Companies will either sit on their cash, or they will be putting it into projects they would otherwise not be doing.
That’s called a “dividend”. A dividend is taxed, however. I’ll leave the rest as an exercise for the reader.
What you want to do is create an artificial incentive for not returning the capital, which will lead to its suboptimal allocation.
I truly don’t know what to make of this comment. On the one hand, we are all being mansplained on how stock buy-backs works, yet not one mention of the word “dividend”.
You know what else is taxed? When a company buys back stock, reducing the number of shares outstanding so that each share represents more of the ongoing business, thus sending its stock price higher. The tax on this is called a "capital gains tax," perhaps you've heard of it?
I mean, I can understand why rich people would be against this idea. The whole thing about being rich is that you can take a few dollars from everybody and get rich. But the reverse could be quite painful. Take a whole whack of dollars and give a few dollars to everybody. It appears to break the "get rich" thing... Until you realise that poor people will spend that money (i.e. give it back to the rich people). Ford hired private investigators to make sure the people he was paying minimum wage to were going to spend it. Ford was a smart guy (Nice guy?? No idea, but definitely smart).
I really think that if you want fly the idea of rich people funding the improvement of society, you need to link it back to them getting richer. Otherwise, without a revolution, I don't think you're going to get anywhere. They can spend quite a few dollars lobbying government before they get anywhere close to spending what they would need to spend to improve society.
What the article says is that upper middle class feel that their potential income earned is stagnating RELATIVE to the super rich whose income is still increasing.
The middle and poor classes are already beaten into a silence that their standard of living will always remain stagnant and they will not enjoy the advances in the economy (since around 40 years ago).
It corroborates your point about why rich (in my definition, upper middle class) people would be against the idea of UBI. A lawyer making around 200-300k/yr has had his wages increasing around 5 times slower than a CEO / ibanker making around $2m a year. Instead of thinking, "hey I have a ton of money that poorer people could really use right now", they are instead thinking, "hey, how come THOSE rich people are growing their money soo much faster and I still have to slave away for 20 years before I can pay off my house?"
The term "rich" isn't good enough as a classification nowadays because there's a huge difference between the top 400 individuals in the US, the top 1%, and the top 25%, and they're all considered rich by the old definition.
I'll submit the opposite: they are very good at their jobs, it's just you just aren't who they work for. Lots of wealthy people are doing juuuussst fine.
They don't pay taxes. So, fine, issue stock to the government. The government can hold or sell the stock when it makes sense.
There isn't plenty of money in fact. Your 5% tax would get you $30 to $50 billion depending on the year. You're not rebuilding much with that. You can build a few miles of NYC subway with that, and maybe a quarter of a high-speed rail line in part of California.
You need to fill in the trillion dollar budget deficit first of all, which overwhelmingly consists of rapidly expanding entitlement spending deficits where we're not bringing in enough tax revenue. There is only one way to mathematically accomplish that in reality: raise income taxes dramatically on the top 1/3.
That only gets you back to break-even. It doesn't pay down the federal debt ($600b per year in interest) and it doesn't provide any expansion for spending programs new or old.
The US is already spending as much on its total government system (Federal + State + Local) as what advanced welfare states in Western Europe spend in total on their government systems. And we're getting a horrible return on that money almost across the board. The first thing we should do is improve the effectiveness of the money we're already spending while we attempt to bring down the deficits. For what we're already spending, the whole of the US should look like Denmark or Sweden. Why doesn't it?
Everyone likes to say one thing first in response: military spending. Ok, slash $150 billion off of that to bring it down to 2.5-3% of GDP type levels (and freeze it for a decade). Next you need another $850b to $1.2t minimum each year in new tax revenue just to balance the budget this decade. It will require immense income taxation increases. There are no other sources that can come close to filling that epic hole.
I live in a high-tax city in a high-tax state and don't do anything aggressive to reduce my tax burden. But if my landlord screws me, I can move. Universities charge an arm and a leg, but there are alternatives, from community colleges to state and foreign schools. Taxes are unavoidable.
It's not that you magically can find some other landlord that's doesn't offer something with 3x rent compared to western-Europe.
You're asking to understand a different perspective. I'm trying to offer that perspective.
> most people can't "just move" and just "pick another uni"
No, but they can weigh the cost of living in e.g. Manhattan versus Queens versus upstate. And they can weigh the cost ex ante of a private university versus community college.
Housing and education have high lock-in. But there is a degree of competition and choice with respect to incurring their costs. That doesn't exist with taxes, which makes some people more cautious about them.
In 2018, there were a total of $800 billion of stock buybacks, and this was an utterly exceptional moment when corporations were essentially forced to make them due to tax advantage. So even if your theoretical tax didn't impact buyback behavior at all (it would) and buyback rates returned to 2018 levels (they won't), you would raise $40 billion per year. It would raise federal tax revenue around 1%. How do you envision spending that to completely rebuild society?
If these buyback didn't create extremely overvalued/frothy markets, would the bailouts need to be as big?
I think over leveraging is as toxic for markets as many intuitively expect.
Can someone explain to me the obsession with buybacks and not dividends?
Buybacks confer additional advantages as well. The gains can be deferred, which can be advantageous when saving for retirement because your marginal tax rate when retired will likely be lower (because less income). For foreign investors, buybacks aren't subject to withholding tax. For the executives, buybacks also benefit them because their compensation tend to be tied to shared price.
Even with a 5% tax, buybacks would still be better than dividends. The bigger problem is that dividends and buybacks are functionally the same (return money to shareholders), but they receive different tax treatments. Instead of trying to patch the differences with more taxes, we should make both have the same treatment when it comes to taxes.
Development fees are a one-off revenue stream, and could fit the Ponzi scheme assertion. But property taxes? These are recurring, and could be turned to sustainably fund a community's costs.
> we could tax something like 5% of stock buybacks
Within the scope of the author's argument, this would be worse than property taxes. It's an unpredictable revenue stream. And it's unrelated to the liability side of the equation.
I'm not suggesting violence, but that our forces responsible from protecting us against domestic threats do their job here, I think the idea that the optics of arresting a sitting president and members of congress is less worse than restoring a functioning legislative and executive branches.
What they failed to realize was how popular he was with the lower and middle classes. His reign had drastically improved their quality of life. His murder led to a string of civil wars and instability.
Think hard before disbanding populist figures.
[0] https://projects.fivethirtyeight.com/trump-approval-ratings/
There needs to be a multifaceted implementation of new policy.
Term limits in a vacuum are useless, but if we didn't have a government that was pretty much a proxy for large corporations we could do neat things that would make anyone engaging in that type of arrangement's life a lot harder.
I would also go so far as to say that members of congress should not be allowed to be active in the markets for some years (8?) after they leave office and their should also be limits on jobs they are allowed to take for some time after they leave office as well. I.e. they can't go sit on a board and get paid 7-figures right after giving up their seat.
I agree with that. I just don’t think term limits will make a difference in this effort.
[0]https://books.google.com/books?id=xK1NuzpAcH8C&pg=PA235#v=on...
It is still enough people that I wouldn’t want to see the corresponding headline.
I'm afraid it's wishful thinking to think most Americans are sick of Trump. Some are, for sure, but the data you posted isn't showing anything significant happened.
He will likely win again from what I'm seeing.
Color me skeptical.
Any examples of this in practice?
>What, then, is the missing piece? A major factor that has not received sufficient attention is the role of public policy. Throughout most of the country’s history, American government at all levels has pursued policies designed to preserve local control of businesses and to check the tendency of a few dominant cities to monopolize power over the rest of the country. These efforts moved to the federal level beginning in the late nineteenth century and reached a climax of enforcement in the 1960s and ’70s. Yet starting shortly thereafter, each of these policy levers were flipped, one after the other, in the opposite direction, usually in the guise of “deregulation.” Understanding this history, largely forgotten in our own time, is essential to turning the problem of inequality around.
...
>Sometimes referred to by its supporters as “the Magna Carta of Small Business,” Robinson-Patman prevented the formation of chain stores even remotely approaching the scale and power of today’s Walmart or Amazon by cracking down on such practices as selling items below cost (a practice known as “loss leading”). The legislation also prohibited the chains from using their market power to extract price concessions from their suppliers, Similarly, the Miller-Tydings Act, enacted by Congress in 1937, put a floor on retail discounting, thereby ensuring that large chains headquartered in distant cities didn’t come to dominate the economies of local communities. This did not prevent innovation in retailing, such as the emergence of brand-spanking-new supermarkets to replace small-scale butcher shops and green grocers. But into the 1960s, these and similar laws would ensure that no supermarket chain would control more than about 7 percent of any local market.
It's not only him, look at the entire GOP, and what forces are at play to keep these people in place.
The people currently in charge are there to protect historic interests/positions and they know they will lose them forever in a fair election. Because most of the country has moved on culturally.
The only thing that's changed is that people are pretending that it's new and unprecedented, as a way to garner more outrage.
Many of you live in San Francisco. Your House rep, Nancy Pelosi, with whom I am sure you are familiar, has a serious challenger in Shahid Buttar. He is pushing to debate her, which should be the bare minimum for electoral rivals, yet AFAIK no date has been set. No one in the media or in the political establishment is holding her feet to the fire.
We could start there.
What is "appropriate" for "traitors"? Execution? Prison? Being stripped of their rights, including the right to participate in the democratic process?
You see, the irony is that alleging vague subversive activity from your political enemies and then dealing with the "traitors" like this subverts the republic, turning it into a new oligarchy. It's a very banana-republic suggestion.
It's almost like our Constitution spells out how "Treason against the United States, shall consist only in levying war against them, or in adhering to their enemies, giving them aid and comfort." https://www.law.cornell.edu/constitution/articleiii
It's almost like James Madison knew from experience there'd be someone who would float this type of proposal, and so codified a rebuke into the supreme law of the land, some 200 years in advance.
(Postscript. The obvious next step is for you to change your mind and stop saying these random members are committing oligarchycrimes and say instead that Trump himself is giving "aid and comfort" to our enemies in Russia. I'm sure there's some lovely jurisprudence to be had getting that laughed out of the courts and wish you the best of luck.)
However, it does seem likely to me that random citizens would be less capable of governing effectively in areas where actual knowledge of law, politics or some degree of domain knowledge is required.
https://www.urban.org/policy-centers/cross-center-initiative...
At the state and federal level the ASCE reports on this every four years: https://www.infrastructurereportcard.org/
They claim that actual funding, just for roads, is 981 Billion while the need is 2 trillion.
Again that’s just for roads.
Usually there’s one comment like this on each Strong Towns thing that gets on hacker news, and I get it, this crowd wants to dig into the numbers. The challenge is that StrongTowns is a blog which posts bite sized bits of content every day, And their audience is a very broad national readership of “regular folks” whose eyes tend to glaze over when you show them a spreadsheet. So a lot of the Strong Towns daily posts are narrative centric like this without being focused on the data.
EDIT: I had to dig a bit, but this series is more spreadsheet-y, and probably of more interest to the HN crowd: https://www.strongtowns.org/journal/2019/12/17/best-of-2019-...
Also these articles are pretty good intro pieces:
- https://www.strongtowns.org/journal/2017/1/29/the-cost-of-au...
- https://www.strongtowns.org/journal/2015/9/14/lafayette-pipe...
So we need to double spending to 12% of state/local expenditures? Even if we accept that number it's just not anywhere near the level of bankrupting cities.
I believe ST's point is that this is only true because cities and towns use cash accounting, and so the depreciation costs of roads and other infrastructure are hidden. Once these wear out and have to be replaced, these cities will find themselves in a very deep hole.
Note that cash accounting is so misleading that it's literally illegal for most companies to use it; municipalities get to be an exception because it helps tax cuts seem more viable than they really are, and voters want to be lied to in this way.
In reality the "continuous maintenance" you tout is continually deferred, kicking the can down the road (no pun intended). The Volcker Alliance estimated that we have a total of over $1 trillion in deferred maintenance as of last November [1]. The Department of Interior alone quoted $16.4 billion in deferred maintenance on their infrastructure at the end of 2018 [2], which is about 80% of their annual budget [3]. The infrastructure of cities, states, and other federal departments dwarfs that of DoI.
[1] https://www.volckeralliance.org/sites/default/files/attachme...
[2] https://www.doi.gov/ocl/deferred-maintenance-backlog
[3] https://www.doi.gov/sites/doi.gov/files/uploads/fy2020_bib_a...
The accounting practices around infrastructure are quite surprisingly bad.
Entire site seems to exist to sell me a book or for me to donate money so I can become a "member."
Just what the hell is this doing at the top of Hacker News? Anti-American title so people upvote it straight to the top without even reading it? This is garbage content that isn't even remotely related to tech news.
> Anti-American title so people upvote it straight to the top without even reading it?
What kind of reflexive jingoism is this? Just because something critiques one aspect of the US doesn't instantly make it "anti-American".
Also, is going into debt to finance infrastructure really a problem if total debt stays at ~100% of GDP?
Overall, the article seems very alarmist ("Something is broken and we all know it.") without any data to back it up.
The arguments made in this article are not specific to US cities or towns. Go to virtually any country in the world and it is the same.
I can't think of any other reason for this article to have made it to the absolute top of Hacker News. It certainly didn't make it based on the content of the article.
[1] https://www.strongtowns.org/journal/2017/11/1/take-the-stron...
https://www.strongtowns.org/journal/2011/6/14/the-growth-pon...
1. That itself is not great. There's no compelling reason for the government to subsidize things that way. Why deliberately push a form of development that's horrible for the city finances? Modern zoning rules usually force that kind of thing to exist, for no good reason. This is one of the things strongtowns talks about.
2. Some cities don't have a dense core with enough activity to subsidize the sprawly areas.
You wouldn't even be blocking sprawly development if that's really what the market wanted. You would only be allowing more dense development. Which would only happen if the market preferred it.
That's 10-20% of a typical property tax bill. They're fudging the numbers somewhere.
https://www.strongtowns.org/journal/2018/2/1/the-surprising-...
It's worth watching one of his presentations, they're very well done, and very data-oriented. Here's a recent one:
Housing prices have increased.
People are marrying later and renting longer.
It seems like there needs to be a new solution between the mortgage and being a tenant that allows for freer movement and yet the building of ownership / investment in a place over time.
Here’s what we’re working on towards that end.
Looking for partners to solve this very important and difficult problem.
Living neighborhoods: https://www.livingneighborhoods.org/ht-0/bln-exp.htm
And integrate regenerative food forests. See Village Homes in Davis, model eco-suburb ( https://en.wikipedia.org/wiki/Village_Homes )
Add carbon-neutral small-scale integrated alcohol fuel production ( http://alcoholcanbeagas.com )
- - - -
My mom lives in a neighborhood that was all built together at the same time, it's owned and operated by a corporation. There are a few downsides but the upsides are enormous:
- No wires. All that was run underground. It's so worth it. You can't understand how ugly and nasty the wires are until you've lived without them.
- Central laundry on each block. High efficiency machines. Regular maintenance (although by a contractor, and they are sometimes slow to respond.)
- Infinite hot water. The hot water heater is industrial, huge, it never runs out!
- On call professional maintenance staff! Plugged sink or toilet? One call to the office and the guy will be there later that day. Included in the rent.
- Parking space included in the small parking lots & garages.
- Outdoor maintenance, landscaping, yardwork, repainting, repairing the roofs, etc. All of that is taken care of.
A good management company is IMO a better bet than going it alone.
That's actually where we've started as we figure out the rest of this. We manage 33 tenants / units currently.
That's outstanding!
konarahomes, yeah? Will do. I signed up for your newsletter already this morning.
I'm not a domain expert in real estate, urban design, or regenerative agriculture (I took a Permaculture certification class from "Farmer Dave" Bloom, the "Alcohol can be a Gas" guy, but that's about it) but I'm really passionate about the subject.
If I had the capital I would buy some raw land (preferably damaged-but-not-a-superfund-site rather than pristine wilderness) and create something like Village Homes, sell or lease the units, and repeat.
I'm sure demand would be high. Village Homes sold every unit before they finished building, and there's a wait list.
Not getting scammed - you may want to hire a lawyer to review any long term contract but the ownership right now is structured like a stock ownership with a vesting schedule - the ownership being tied as shadow equity in the property itself while you live there and then as you move into other properties being tied to the value of the whole portfolio.
It gets tricky in assigning ownership in a durable way. That's a key problem we're trying to solve.
Who decides when properties should be sold? Seems like there might be contention around that.
In traditional real estate, I own my property equity without having to pay marketing costs, executive salaries, payroll/wage taxes, employment benefits, ongoing legal and accounting fees, and everything else required to run a business.
How can you cover such costs without significantly diluting the equity I earn as I rent? I’m not saying you can’t, I’m genuinely curious.
As you have bought in over decades the cash generated from properties you previously lived/invested in, return on investment of the portfolio will end up lowering your monthly costs similar to how paying off a house would.
In traditional real estate, you own your property equity after paying realtor fees, marketing costs for mortgage companies, bank executive salaries, payroll/wages for realtors, banks, property management or the equivalent cost of fixing your own home.
We can cut out a lot of the costs of agents, a lot of the time and costs related to mortgages and find a price point that sits between rent and mortgages without a down payment. We also have far less marketing costs in the long run as our tenants have a built in incentive to stay in our network / buy houses through us apartments won't have.
If we can beat renting and people can build investment in our system when they're in the rental phase of their life they'll have built up an un-vested equity portion worth a significant amount of money. Imagine living in this system for your college years and a few years after - 7-8 years - across a few different properties. You'd have probably over $10k equity built up - depending on a few factors.
If they leave our system or don't continue financing through us they'll lose that and have to choose between a large downpayment and high realtor costs OR renting without building equity.
There's a sweet spot there. Apartment complexes make lots of money, mortgage companies make lots of money, banks make lots of money, realtors make lots of money. A company that streamlines these will make enough money and provide a better, more flexible experience.
Their margin is our opportunity :)
We could also use the solution that's worked before and works now in certain places, build enough housing that housing costs are not artificially and immorally inflated so everyone can afford a modest house, even on low wages.
And there are much larger unfunded liabilities in medicare and medicaid, which is a much bigger "ponzi scheme".
If something is in fact a pyramid scheme it doesn't much matter if the people in charge are smart enough to do it intentionally or are just really bad at math. Either way eventually the party ends.
Sure, suburban development was facilitated and accelerated by the portfolio of government initiatives (highways and home loan programs), but at the core is that people were dying to get out of cities, buy a car, and have their own serene little castle with a lawn and driveway and no shared wall.
And this appetite continues to be the dominant one. While Americans seem to be rediscovering the value of human oriented streets that Marohn champions, they aren't willing to turn away from the suburbs, the way they did cities 80 years ago.
Perhaps Marohn's predictions regarding government financial collapse will come true soon, or perhaps traffic congestion reaches a breaking point that forces a change. But until then, and as long as they can afford them, Americans still want spaced out single family houses that spread out across the fruited plain.
The middle class can have suburbs, if they want, but they have to pay for them. Marohn's whole point is that cash accounting, federal grants, and other tricks are hiding the true costs of suburbs and keeping the price artificially (and unsustainably) low. And when prices are kept artificially low, of course there's lots of demand; that's a basic principle of economics.
But would the middle class still demand suburbs if they had to stomach the higher taxes to honestly pay for them? That is the open question.
A huge challenge here is that no one ever has to actually face that, because they can just move to the next growing town/city/state. Depending on the area, you can either create another ring surrounding the metro, or leave the state entirely and move to the sunbelt.
In either case, the legacy cities or inner ring towns are left with the bill, and no one left to pay it. To Marohn's point, we've already seen this happen all over (particularly the rustbelt).
But my point is there's nothing to stop that pattern from continuing, as long as there's another town in the rockies or south or wherever with low taxes and plenty of land. There's just not really an impediment short of people's preferences dramatically changing, and the evidence shows that suburbs are growing.
the more pertinent question is, do suburbanites like suburbs enough to pay the lion's ahare of their cost rather than being subsidized?
the answer is no, as implied in the cumulative critique.
That's not what I said.
It's got some bits I disagree with, but is a great way to look at things from a different point of view and contains a lot of insight.
If I may add a chart, the red line is for me the actual value of the US economy (DJIA)
https://www.tradingview.com/x/fvtBtRx6/
Top line is promised profits/accident waiting to happen. Bottom line is actual value.
Another thing that pisses me off was depicted in the movie "The Big Short". There is not enough actual money/products/things to go around, so we do derivatives. I remember derivatives from my Uni years. We don't have enough/good numbers? Drop a derivative of something, inflate it, mask it, and sit back and wait. And then the balloon gets too much air, it will deflat, people (retail) will lose their money, and here we go again.
It's not growth (in the USA) unless there is a 10-year-looping wealth redistribution.
Part of America's problem with obesity is diet of course, and the other is lack of exercise -- with the lack of support for active transportation being an obvious and major component of that. People in many, if not most of our developed peers walk and bike far more than we do.
Municipal debt was almost $4 trillion in 2016. That's insane. Eventually it's the Fed that will monetize municipal debt. It's just part of the larger public debt problem.
critique the debt in light of the financial case behind it, not in isolation. good bills/measures should absolutely be backed with debt if they are at least revenue-neutral and provide broad and outsized positive social dividends. anything that's revenue-negative should be funded by taxes, or not funded at all.
I'm sorry but this doesn't make very much sense. ELI5?
So we are constantly building things we cannot maintain with current tax rates.
Also, roads don't generate enough economic activity to offset their costs.
The author is a civil engineer that got involved with trying to make the budgetary ends meet in his town.
He concludes that the suburban development is easy and cheap to build, but it's too difficult to find the maintenance, which is why we have a huge amount of infrastructure that is falling apart.
He advocates for more sustainable development styles, that depend on less infrastructure, such as neighborhoods that are designed to be walkable for everyday needs.
I agree with him on aesthetic grounds, to me there is nothing worse than the suburban development style where there is nothing to do at your house except drive to big box stores. I want walk ability to my everyday needs, without having to drive. So I don't know about his economic arguments (but trust that he's done his homework), and really I just want more walkable neighborhoods for health and humanity.
the city block I live on has about 30 rowhouses, each of them worth about $300k. a similar stretch of road out in the suburbs might have ten larger detached homes that are each worth about the same amount of money. if the property tax rate is the same in the suburb, the government is drawing on only a third of the tax receipts to maintain that same length of road.
This answers it. thanks.
> I guess in the grand scheme of things it doesn't really matter if some nonviable communities die while others grow/start, but you probably wouldn't want that to happen to your community.
This is the exact moral sentiment I was considering as well.
- https://www.zillow.com/homedetails/4219-Wickford-Rd-Baltimor... $489K, 2,200sqft - https://www.zillow.com/homedetails/1040-N-Calvert-St-Baltimo... $494K, 3,900sqft
ISTM, you pay more to detach your house, but most of the price goes into location+square footage.