It seems like each generation is having more difficulty making ends meet (https://theirrelevantinvestor.com/2021/04/01/the-generationa...). Why hasn't this been improving? Is it because of regulatory capture by corporations?
one of the biggest drivers of wealth reduction is all the regulation that prevents more housing from being built, and how it's built. this leads to higher land costs, higher costs of labor, higher regulatory costs. Not to mention, we've kept adding more and more people to this country but haven't added more land or more material inputs. so of course living standards have to come down as everything gets split up per capita. to be sure, there's a ton of empty land out there, but no one's allowed to use it. and companies have moved jobs to areas where people can't live. meanwhile gov regulates the s** out of the housing dev market and yet let's job creators go nuts in an area that can't grow due to local NIMBYism.
[0]:https://fred.stlouisfed.org/graph/fredgraph.png?width=880&he...
https://www.theatlantic.com/ideas/archive/2020/12/life-simps...
The simple fact is that private ownership of land leads to the value of the land capturing the value of its inhabitants. It's an inevitable trend, housing prices will increase until people start moving out in a free market. There is no purely free market solution that doesn't simply delay this.
No regulation is not a viable solution unless we want a return to pea soup smog in LA and other areas, rivers that go on fire, and more lead poisoned children.
Getting the balance of regulations is hard but it would be a lot easier if companies didn’t have to be forced to do it. But it’s unrealistic to think it’s viable for them to behave responsibly due to adverse selection.
But in any serious discussion, one has to fully embrace the fact that regulations are good and necessary. If the debating parties don’t admit that then it’s not sincere. Equally it must be admitted that regulations and a burden and should be the minimal necessary to stop unacceptable abuse.
It is literally built into our tax code, with the mortgage interest deduction and California’s subsidy of the boomer Generation with the drastic reduction of real estate taxes.
It is ridiculously easy to solve the housing problem in SF, just tear down the single family homes and replace with high rise apartments at HK-level density. But the entrenched interests don’t want to do that.
A good chunk if not the majority of wealth creation for most US households has been the value of their house. Older people own houses and have captured the upside of price increases over the decade. The young people are having a harder and harder time buying the exact same houses going up in price. If you go to any sort of planning meeting for a new development you’ll always run into cranky homeowners complaining that it will ruin the price of their property.
However I do feel like we are transitioning from a society in which each generation was expected to make it mostly on their own (with at best a little bit of help from their parents), to one with a much greater emphasis on inherited wealth. I think as well as property bubbles, another factor is shrinking family sizes. When the average family had 5+ kids, the children couldn't expect to inherit that much. Families with only 1 or 2 kids, the child can inherit a lot more. And even prior to inheritance, it is much easier to extend financial support to your children (such as helping them to buy a home in their 20s) when you only have 1 or 2 instead of 4, 5, 6, 7...
The only hope, in my opinion, is a giant, propaganda-driven cultural movement away from money and towards societal stability.
Property developers are allowed to keep ownership of new developments (so-called "build-to-rent"), or sell the new development (on a single title) to an investment trust. But corporations buying pre-existing house stock, without plans to redevelop it, are at a tax disadvantage compared to individual owners.
I don't think corporations are quite as powerful as you think. Certainly not in Australia. At the end of the day, individuals vote, corporations can't. Governments win elections by appealing to voters, not appealing to corporations. Indeed, almost all of the negative aspects of Australia's housing policies have come about through appealing to individual voters–the older generations who own a lot of property, the "aspirational middle class" who want to own a lot of property too, the "Mum & Dad investors", the professional class (property investment is popular with doctors and lawyers and I believe even software engineers), the small business owner class, etc–rather than being driven by corporate interests.
For these reasons, a lot of us younger generation folks actually value a high-quality rental property more than buying exactly that same house. [Yes, sure, you buy the house and you'll eventually pay it off, but you'd be surprised how many people don't believe they will be able to afford to retire at all, much less accumulate any wealth whatsoever.]
It can change when (and if) you have kids.
Uprooting our kids to move somewhere else is going to be a burden on them. I experienced that burden as a child, I don’t want to visit it on my own children unless it is (in other ways) a really compelling proposition. Especially as parent of a child with a neurodevelopmental disorder, who I know would find the disruption harder than the average child would
By being tied up in property the timing of this is hardly ideal though. The costs in housing was paid when I was young, the transfer back will be after my mortgage is paid off and my main use of this transfer will be to fund my retirement. In turn I'll be relying on these investments to fund retirement and if I live long enough the next generation won't get any of my wealth until they're older and don't need it so much.
What would be a better way (other than cash) to transfer some of this wealth when the next generation is younger and need it more?
Some parents give guarantees to their children's mortgages, or buy property jointly with their children. I think it comes down to a couple of factors (1) the wealthier you are, and the fewer children you have, the more sustainable this is; (2) cultural attitudes differ between different families (and between cultural/ethnic groups) in terms of whether parents ought to do this, or instead leave their adult children to fend for themselves.
But those who are needed, i.e., tech workers, meet their needs and more.