Re: Lucas: Shame on the redistributionists

royls_at_telus.net
Date: 06/14/04 

Date: Mon, 14 Jun 2004 04:03:09 GMT

On Sun, 13 Jun 2004 04:54:57 GMT, Grinch <oldnasty@mindspring.com>
wrote:

>On Sun, 06 Jun 2004 18:56:23 GMT, "sinister" <sinister@nospam.invalid>
>wrote:
>
>>"Matt Timmermans" <mt0000@sympatico.nospam-remove.ca> wrote in message
>>news:uSvwc.56914$Hn.1513416@news20.bellglobal.com...
>>> <royls@telus.net> wrote in message
>>news:40c22d6b.18938402@news.telus.net...
>>> > Economists talk so much about distribution, Gini coefficients, etc. in
>>> > order to discourage anyone from thinking about exactly _how_ the
>>> > distribution got to be the way it is.
>>>
>>> Determining the optimal distribution and how best to encourage movement in
>>> that direction is far more practically important than worrying about _how_
>>> it got to be the way it is.
>>
>>Not when one of the most important factors behind the current distribution
>>is government forcing people to pay holders of titles to scarce natural
>>resources like land for the use of said resources.
>
>I'm still waiting for the data showing that land produces higher-than-
>rest-of-the-market risk-adjusted investment returns

And I am still waiting for you to twig that the absence of data
showing just what the return to land is is a big fat clue -- except to
the clueless, that is...

>-- and the
>explanation for this truly extraordinary example of never-ending
>market failure that somehow the entire investment world and economics
>profession have both missed forever -- even though they can read all
>about it on usenet.

?? I have already explained that to you, Grinch. Investors are
mortal. Land is eternal. Because people tend to steeply discount
returns that will happen after they are dead, both sellers and buyers
of land undervalue them. But the buyer (or a subsequent buyer -- at
any rate the land _holder_) is the one who has to end up getting them.

Also, sellers of land are very often estates, which are not
particularly motivated to sell high (the executor does not get to keep
the dough, after all), and often have to sell quickly, at a
substantial discount, in order to comply with laws regarding
liquidation of estate assets. Land sellers are also very often
elderly people who may not be very motivated to hold out for the best
price, or may have failing faculties, and be unaware of what the
property is really worth.

>Or, absent any claim that land systematically provides such
>above-market returns, an explanation of how investing in it has any
>more distortionate effect on the income and wealth distributions than
>does investing in bonds, pork bellies, McDonald's franchises, or
>anything else that also doesn't systematically provide such
>above-market returns.

It's not the investment per se that distorts, but the exorbitant
subsidy system that makes land investment so profitable, though
totally unproductive.

>[ And yes, yes, as to getting the above market returns I remember how
>Roy explained that landlords are such dimwits that they always
>underprice their properties when they sell them,

<sigh> I did not say "always," lying filth.

>which always sets up
>the buyer to get above-market return on what he pays until he equally
>dimwittedly undersells, and the landlords never learn, forever

<sigh> It seems you need periodic reminding of a certain fact: they
don't _live_ forever. By the time they figure out that land has
outperformed every other major class of investment over their
lifetimes, it's too late for them to do anything about it.

>-- at
>the same time as they are so smart, powerful and organized

They are indeed powerful. Very. So they don't have to be very smart
or organized.

>as to be
>able to suppress all mention of their successful looting of the nation
>out of all the investment and economics texts.

Problem is, investment guides, especially real estate investment
guides, _do_ tell their readers to check estate sales, obituaries,
etc. for real estate bargains. Estate assets are _hugely_ weighted to
land.
  
> That was so lame I figured he must have been having a bad day and
>didn't even hold it against him.

<yawn> IOW, you refused to know the facts I identified for you.

> But seriously, suppose some fellow from misc.invest stumbles in
>here by accident, reads how land provides above market returns, goes
>"Holy crap, what great conspiracy has kept this from us all?", then
>rushes back to his own ng and tells all about it.

Now _that_ would be stupid. When understanding dawns that you have an
opportunity to take above-market profits for the rest of your life, at
very little risk, you don't go around _telling_ everyone about it.
Not if you want the opportunity to stick around, anyway. It's like
the corporate insiders dumping their stock: they disclose as little of
what they are doing and why as possible, even at the risk of going to
jail over it.

>What's then to
>keep the folks over there rushing out and grabbing those above market
>returns for themselves by *bidding them out of the market*, pronto?

The finite money supply, for one.

> And why has this not ever happened in hundreds of years?

It has. In Japan in the 1980s, for one.

>Or at
>least since usenet dawned to break the conspiracy of dunce landlords
>and spread the word?

What do you think _has_ been happening, hmmm? Others are not as
ineducable as you.

-- Roy L

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