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Absolutely, it is also Democrats who are in favor of "smart growth" regulations and anti-sprawl boundaries that ALWAYS make housing unaffordable. Look at the cost of relatively decent rental accommodation in cities in the South where you can build just about anything you like anywhere.
In response to:

College Isn't For Everyone

Phil from NZ Wrote: Apr 06, 2014 2:02 PM
Another suggestion: young people get a few years real life experience before going to College and get a bit more mature before they choose degree courses. One incentive to this end, would be "higher education savings accounts" with government subsidy to top up what the young person can put into it themselves towards their own education. If a young person can't work and save and hence can't reach the required lump sum in a few years, they probably are someone who shouldn't borrow money to try and go to college either.
All this constant talk about "The US Housing Market" in aggregate makes about as much sense as talking about "The EU Housing Market" and never bothering to look at why Ireland and Spain behaved differently to Germany. California behaved differently to Texas and there are very important reasons why. Mortgage interest rates only cause price volatility in cities with inelastic supply of housing and this is always determined by the presence or absence of restrictions on the conversion of superabundant quantities of rural land, to urban use. It is taking a long time, but academic analyses are finally making use of the data sets that cover adequate time periods. Please refer to: “Distortions Resulting from Residential Land Use Controls in Metropolitan Areas” Brian N. Jansen & Edwin S. Mills (2011) “Supply Restrictions, Subprime Lending and Regional U.S. Housing Prices” Andre Kallålk Anundsen and Christian Heeboll (2013)
Automobile based development as a new norm, greatly reduces the level of economic rent in urban land - refer Robert Murray Haig (1926) "Towards an Understanding of the Metropolis" and Michael A. Goldberg (1970) "Transportation and Urban Land Rents - A Synthesis". We can consider the UK as an example where this process was prohibited from 1947 onwards - LSE research indicates that the cost of land per square foot is now 120 to 320 times higher than otherwise. Compared to a US city with no such constraints, this means new housing on half acre lots in the US city at prices consistent with a median multiple of 3, but in the UK city, it means 20 "housing" units to the acre at prices consistent with a median multiple of 6+ Since other nations like Canada and Australia have gone crazy for "save the planet" urban planning, their housing markets are transitioning from consumer-surplus, MM-3 markets, to rent-extractive, MM-6+ markets. Some US cities are doing the same, and if the current administration in the Federal Govt had its way it would do it to all cities. UGB's have this effect, but "rural" zoning surrounding a city can too. Geographic constraints are more often an excuse than a reality. Density zonings complicate the land rent issue, making the houses MM-6+ for larger ones, as in Boston, while the price of land per square foot is nowhere near as high as when high density is permitted. The land rentier class loves upzonings as well as UGB's.
"......That we're instead seeing nearly vertical movements for prices with respect to household income indicates that other factors have created a situation where housing is becoming increasingly unaffordable. After all, if the families who earn the median household income are increasingly unable to afford the median price of new homes for sale, something other than the fundamental driver of house prices is seriously skewing the real estate market. And history tells us that the other factors that can affect home prices do not have any significant staying power". This is flat wrong. The data for house price median multiples by city, such as the Demographia Reports, reveal that it is possible for one set of cities to have prices stable at a median multiple of around 3 virtually indefinitely. The other set of cities tend to have volatile prices that cycle around a median multiple of around 6+ and this is in spite of many of those cities having far higher density of housing in new developments (if not the existing housing stock as well - such as in UK cities). In the "developing" world the median multiples are typically 10+, with a long tail of households in "informal" housing. This is in spite of the highest densities of all. The difference is explained by the existence or absence of extractive economic rent in land. Classical economists were quite clear about economic rent, and the status quo in their day was that rent was almost entirely "extractive". That is, people had to pay the maximum they could possibly stand to get not just housing, but food and clothing as well. It was in this context that Marx advocated nationalisation of land and Henry George advocated land value taxes. Improvements in transport systems changed all this. Alfred Marshall was probably the earliest economist of note who predicted this. No-one now even thinks of the owners of land on which their food is produced, as being limited to a small radius surrounding their own city, and hence having monopoly rentier status. There is "consumer surplus" in almost everything, which is produced and sold on a cost-plus basis by suppliers in competition with each other. Cities with house price median multiples of 3, represent examples of the presence of consumer surplus in housing, and this is always the result of developers being able to convert low-cost rural land to housing developments. The quantities of such land within car-commuting distance of a city are vast.
In response to:

A Very Jolly Election

Phil from NZ Wrote: Mar 20, 2014 5:28 PM
Jolly good show, old chap!
The above thesis makes perfect sense. The corollary to it is that it matters very much HOW the wealthy MAKE their wealth. Zero-sum rent-seeking (see the latest issue of "The Economist" definitely increases inequality and transfers wealth upwards. The zero-sum rent embodied in urban land is the biggest problem here, and this is always a factor of regulatory interference in the market. The UK's cities with their strict central planning, have land prices 200 to 700 times higher per square foot than US cities that are free to grow (like Houston, Atlanta, Raleigh, Charlotte and so on). This is massive economic rent. Something that accompanies this is increased income to the finance sector because of much larger mortgages being necessary and indeed larger loans to productive businesses for the space they need. These are the main reasons, but there are others, why far more of the top 1% support Statist politics (you can bet Soros, the Rockefellers, etc all know which side their bread is buttered on when it comes to their interests in city property and in finance).
If they used it to attack a target in New Zealand, New Zealand has nothing to shoot it down WITH.........
In response to:

A Letter from Africa

Phil from NZ Wrote: Mar 11, 2014 2:59 PM
"......If everyone was evil then Hitler's treatment of the Jews wouldn't have been particularly unusual, Pol Pot's killing fields would have been repeated throughout Southeast Asia, etc......." These things actually are not unusual throughout human history. Whether hunter-gatherer tribes or Greek/Roman civilisation or whatever, the norms have been tyrannical leadership, cruel and unusual criminal justice, massacres and genocide, and slavery. Steven Pinker, "The Better Angels Of Our Nature: How Violence Has Declined" is about the trajectory of deaths by violence in human history, that shows a sustained falling trend in the modern era that is still occurring. Ironically, one of the reasons we are more humane in the modern era is that modern weaponry has enabled nation-states to exercise control over their own populace and over conquered populaces with a comparatively small force of police/soldiers. In the ancient era, the only guarantee of permanent victory was to completely massacre your enemy. Now all that is necessary is to make sure that it is you and not them, who has all the guns. Their mere survival is not an existential threat to your own existence. The idea of the "P.O.W. camp", for example, would have been nonsense when the only thing you had to keep enemy troops incarcerated was wooden stockade fences and guards with swords, and there was no surplus of food production with which to feed large numbers of unproductive prisoners. In ancient times, there was no fear of simply getting shot by the Police if you acted against the State, so the fear that kept people subject was the fear of cruel and unusual punishment. If you could organise a revolution, the State could not simply mow you down with machine guns and high explosives; they needed to send troops of sufficient number as to be able to take you out with swords and spears. "Numbers" meant a lot. If the populace could be kept less restive by fear of things like crucifixion or breaking on the wheel, that is what rulers used. Even the modern tyrannical State like North Korea is relatively humane compared to life in, say, Ancient Rome or even Spain at the height of its empire just a few centuries ago. Even so, "culture" has to explain why some countries have ended up as liberal democracies with humane values, while others have merely utilised modern weaponry and other technology to deepen the scope of either tyranny (North Korea) or constant tribal warfare (Somalia).
There is a crucial factor that is not often pointed out regarding "localism". A multitude of small local governments does not necessarily mean tax competition and other inter-jurisdictional competition. There is a crucial difference between a truly "free market" and the innate tendency to cosy oligopoly: that is the freedom of new entrants on the "supply" side of the market. Now, many States of the USA actually have something like this "freedom of entry" to the "supply of local governments" - the "Municipal Utility District" (MUD) system. Without it, "rural" municipalities can block urban growth and prevent city municipalities from providing properly for their own citizens - fringe growth is essential to keep housing affordable. The MUD system, where it exists under State law, allows any developer who has bought a site of sufficient size, to incorporate a statutory body to raise finance for infrastructure, and proceed with a development independent of the wishes of the adjacent municipalit(ies). The MUD bonds are secured against future "local tax revenue" from the eventual residents of the MUD. This system is pure genius and is the only real total guarantee of local inter-jurisdictional tax competition. I see the affordability of urban land as one of the most obvious factors that distinguishes between the pro-liberty parts of the USA and the Statist ones. This has major consequences. Inflated urban land costs are effectively an economic "rent", which is always harmful in the long run to real aggregate demand/production. This is a major reason along with a few others, why certain States are outperforming the rest economically (eg see Joel Kotkin's WSJ piece, "America's Red State Growth Corridors"). It is also a reason that the global economy is in trouble, because growth containment urban planning is an absolute plague everywhere, and this is destroying the prospects for economic growth and social mobility in crucial urban economies. I think the rentier, crony capitalist class plays an underhand role in this; they are reaping massive wealth transfer gains at the expense of the general economic interest. I pick that America's rentier-unfriendly local economies and States will become more and more "stand-out" performers globally as well as nationally. And the mere fact that these local economies exist, provides American businesses and workforces with somewhere to escape Statism and the rentier racket where they are.
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