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Comment by makomk | Hacker News Reader

The whole "wealth gap" framing is a bit dubious. A big chunk of the UK's wealth is high house prices, and this has substantial downsides - obviously people don't get much direct benefit from the fact that their own home is worth more on paper, and it makes it harder for people to buy homes and increases people's cost of living. This article (arguably correctly) frames the fact that the housing affordability advantage of Sheffield is narrowing as them falling behind, but of course by the janky logic of the British mainstream media less affordable housing is actually an increase in wealth.

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I suspect that if you remove borrowing (by which I mean mortgages, bank loans, credit card debt, and hire-purchase/lease hire agreements), there is very little post WW2 prosperity in the UK. I suspect that most of what most people think of as wealth is merely borrowed money. Either personal debt or government debt or one of the more creative shell-games that are now played with regard to funding (for example) infrastructure like hospitals, schools, or rail.

You must be kidding. Not one bit of real growth since 1945? Just because there is too much debt in your opinion?

It’s a really weird take you see on occasion. Like, over a third of households in England own their house (or flat) outright, and millions of people are on very generous final salary pensions (closed to new entries of course).

How long did it take to pay back its War Debts?

What would that indicate? The government hadn't paid off the payments from the 1837 Abolition of Slavery Act until 2015, but that was based on the way they structured repayments. To say that from 1837 to 1946 that Britain wasn't a superpower, that would seem a tad absurd to me.

The amount of food and housing (by area, housing got smaller) the average person can afford has gone down in that time.

When people usually talk about wealth, they mean net worth. If you have a £2 million home in London and a £2 million mortgage to go along with it, your net worth is 0 (ignoring all other potential assets and liabilities). On the other hand, if you've paid it off then you have a net worth of £2 million. So when they talk about the wealth gap increasing, they mean real wealth as in net worth. Some people have ballooning net worth, others don't. Taking mortgages out of the equation doesn't change that.

Unless you're talking about going back in time and arranging things so that no one can ever borrow money from anyone. Sure, without access to credit people would have a hard time buying homes. But that's such a radically different society, from a finance perspective, that it's pretty much meaningless to contemplate. I'm sure people would find other ways to access capital in the absence of credit.

Given how house prices and access to cheap credit are so well correlated, this may not be a bad thing. Before the financialisation boom, housing closely tracked inflation.

> I'm sure people would find other ways to access capital in the absence of credit.

cf the Chinese shadow banking system

I don't know about most people, but when economists measure wealth they work out net worth accounting for debts.

They do a mark to market sure but the ops point is that all of it is a debt bubble and if the debt is called back it collapses. So there is an implicit agreement between all the "developed" countries to keep the sham going as long as possible. When it hits... your house will be worth billions.

I remember people saying this back when I was a student in the 80s. Sure we've had booms and busts, and over leveraging is a thing, but I see "the 95% collapse is already happening" videos on youtube occasionally and, yeah, no, it's been already happening for like 10 years now.

These things play out over multiple lifetimes not just one.

I'm sure it's coming any second.

The mistake this sort of analysis makes is assuming nobody will do anything to stop things getting worse, and underestimating the extent to which other things in the economy and society are going well. The same is true in booms, most analysts under value the risks building up in the system. It's the old extrapolating the down trend to infinity in a bust, and extrapolating the upswing to infinity in a boom.

This is why Ukraine didn't collapse under bombing, Russia didn't collapse under sanctions, the Chinese property market is now rallying. It's why the Fed made a profit out of TARP. When things go to crap, the people who can do something don't throw their hands in the air and give up. They get to work.

There are decades where nothing happens and there are weeks where decades happen.

That's the idea. When bad happens, it is uncontrolled. Eventually, bad will happen and no attempt to control it will succeed. But sure, until then, you are right. And there is nothing anyone can really do to prepare except have a "go bag" and have assets and residence in multiple countries.

When I consider how well I'm doing (or not) I drily consider my net worth as one would on a balance sheet. But I don't think this is quite what the average member of the public thinks when they think about wealth and prosperity. By which I mean the visible portion of wealth (not net wealth). I think there is a perception in the UK that we are a far more wealthy country than we really are, both in terms of visible wealth among individuals and the finances of the country. I think many would be surprised at the median level of true wealth (net wealth) in the UK. Interesting figures here:

https://www.nimblefins.co.uk/savings-accounts/average-househ...

Edited for typo.

So the median wealth going into retirement in the UK, that is the wealth for someone bang slap in the middle where half of households are more wealthy than them and half are less wealthy, is about £600,000 pounds. That's actually a lot higher than I was expecting. I would have guessed it would be well under half a mill.

You're partially correct, but if your home becomes more expensive, you can:

- Use it as collateral to get bigger loans at better interest rates

- Rent it out at higher rates (a 5% rental yield for a $1M house looks very different from the same for a $500k house)

- Give yourself (and your dependants) the ability to invest more or take on riskier ventures since there's the "insurance" of an expensive piece of property to fall back on.

Unfortunately, your dependants are likely going to be paying some of those higher rents and will have a very difficult time trying to buy their own house as wages are not keeping pace with the increase in property prices. I would consider that higher property prices means that people are far more likely to be stuck in jobs and unable to take risks as otherwise they have no way to pay their rent.

A little off topic but I don't see how it makes any financial sense to have children. In fact, I'd say it ought to be recognized as downright criminal to have too many children (I'd say more than two biological children over a lifetime is too many for anyone born in the late eighties or later) for people like me who are t worth millions of dollars.

Boomers will say oh children don't cost a lot of money. They just need your love. They think I don't want children. Nothing could be farther from the truth and yet it makes no sense to have children for the vast majority of millennials and beyond.

Having children has always an expression of optimistic faith. People had kids during War time, during cold war, during various periods of prosecution, post 9-11, etc. I had my kids during COVID (2020, 2023) and I would love to have more.

You can always point to something as a cause for "no, people shouldn't have kids" and that has always been true but the world belongs to people whose parents didn't think that way :)

The financial thing is a ridiculous premise anyway. There are plenty of people for example in the religious communities who have 5+ or even 10+ kids and those kids are raised healthy, good and educated - all on modest incomes.

> The financial thing is a ridiculous premise anyway. There are plenty of people for example in the religious communities who have 5+ or even 10+ kids and those kids are raised healthy, good and educated - all on modest incomes.

Some people have to have children. I'm not opposed to other people having some children. What I am saying is there is not enough community support for everyone to have children. It is unhealthy for our society that some people have ten plus children and some have none. There should be an upper bound to how many biological children someone can have (my suggestion is two, maybe three but no more). There should be more support for all parents and children (no income/wealth cap or risk eligibility). You can still choose to not have children or have fewer than the upper bound.

// What I am saying is there is not enough community support for everyone to have children. It is unhealthy for our society that some people have ten plus children and some have none.

This is crazy. If you want to have more kids, have more kids. I support you. If you don't have the community, invest in community. I support you.

What is ridiculous is to limit others who have arranged their life for family based on limitations of those who haven't.

The financial cost only seems higher because people are having fewer kids, and thus, treat the ones they have with a lot more care.

There’s nothing fundamentally expensive about raising kids.

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