Re: Neo-Georgism--Replying to Chris Cook
- From: w_b_ryan@xxxxxxxxx
- Date: 5 Jun 2006 23:02:31 -0700
Chris, this is truly a bizarre reply. It's as if I'm
conversing with someone from another planet, if not
another century. Let me start with this last sentence
of yours:-
"... the economic growth necessary for the system to
continue lacks the availability of energy supplies to
maintain it."
------------------------------------------------------------
It's an article of faith of monetary cranks that
growth is *compelled* by the financial system, rather
than what is really the case, that growth is
*facilitated* by the financial system. And then to
juxtapose this article of faith in a false religion to
the Malthusian false premise, the alleged limited
availability of "land," and by extension, "energy
supplies." In reality they are a function of discovery
and development--that is to say, human activity, which
in the modern world is facilitated through financial
techniques and mechanisms, etc., which are themselves
technologies.
For god's sake, there are oceans of petroleum and
mountains of coal beneath the ground, already
discovered and waiting to be discovered. Underground
is also natural gas in prodigious quantities. Because
of environmental considerations, in my opinion, these
"fossil fuels" should be increasingly reserved for
fertilizers and plastics.
We should rapidly introduce nuclear technology for
energy production, a technology which has been in our
possession for half a century.
It is true that existing nuclear technology is limited
to the availability of deposits of uranium, also in
"limited" quantity.
If conventional power plants are replaced by nuclear
plants utilizing the once-through process, existing
reserves of uranium (already discovered) will last
some 25,000 years.
If replaced by plants utilizing the breeder process,
existing reserves will last some 100 million years.
-
"There are now entire generations with no prospect of
ever owning a property because prices have inflated
out of sight."
------------------------------------------------------------
Let me now amend my earlier statement. It's as if I'm
conversing with someone who has never read an ordinary
newspaper or book, who apparently confines his
"reading," such that it is, to the crank literature.
There was an attachment to my post which evidently you
didn't receive, a copy of an article from a recent New
York Times.
I append it below.
It contradicts explicitly your assertion above.
I also refer you to the work of Kevin Cahill, the
distinguished author of the recently published, "Who
Owns Britain?," and the forthcoming, "Who Owns the
World?"
--- cjenscook <cojock@xxxxxxxxxxx> wrote:
I would be interested to know exactly what it is that
William has against the principle underpinning
Georgism that those who have exclusive private use of
a "Commons" - such as Land - should compensate those
they exclude.
--
One simple example: the thirty-year home mortgage,
mostly a post WW2 phenomenon, which has enabled family
occupied home ownership to reach nearly 70% in the
United States and the Western democracies, by far the
highest it has ever been in the history of the world
(several multiples of that now existing in the
remainder of the world).
And that's real value.
Yes and no. Mortgage loans are not value, they are a
claim over value. We have seen as a result of this
wonderful mortgage tool a concentration of wealth (the
houses created, and more to the point, the land in
private ownership on which they stand) in the hands of
those who are "credit-worthy" ie able to obtain from
banks the claims over future wealth which they issue
virtually without limit.
There are now entire generations with no prospect of
ever owning a property because prices have inflated
out of sight. This may be comfortable for the moneyed
generation of which William is presumably a member,
but is not sustainable even in the medium term.
This asset price inflation is caused by the virtually
"value-less" lending known as "fractional reserve
banking": it's that simple.
William's view is that this is a triumph (I guess
because he is a beneficiary), not a tragedy.
I happen to disagree with him, for the simple reason
that the economic growth necessary for the system to
continue lacks the availability of energy supplies to
maintain it.
Best Regards
Chris Cook
-------------------------------------------------
-----------------------------------------------
F_A_I_R U_S_E C_L_A_I_M_E_D
http://www.nytimes.com
Copyright 2005 The New York Times Company The New York
Times December 29, 2005 Twenty Years Later, Buying a
House Is Less of a Bite By DAVID LEONHARDT and MOTOKO
RICH
PORTLAND, Me. - Despite a widespread sense that real
estate has never been more expensive, families in the
vast majority of the country can still buy a house for
a smaller share of their income than they could have a
generation ago.
A sharp fall in mortgage rates since the early 1980's,
a decline in mortgage fees and a rise in incomes have
more than made up for rising house prices in almost
every place outside of New York, Washington, Miami and
along the coast in California. These often-overlooked
changes are a major reason that most economists do not
expect a broad drop in prices in 2006, even though
many once-booming markets on the coasts have started
weakening.
The long-term decline in housing costs also helps
explain why the homeownership rate remains near a
record of almost 69 percent, up from 65 percent a
decade ago.
Nationwide, a family earning the median income - the
exact middle of all incomes - would have to spend 22
percent of its pretax pay this year on mortgage
payments to buy the median-priced house, according to
an analysis by Moody's Economy.com, a research
company.
The share has increased since 1998, when it hit a low
of 17 percent before house prices began rising sharply
in many places. Although the overall level has reached
its highest point since 1989, it remains well below
the levels of the early 1980's, when it topped 30
percent.
"This is a good deal - a good, fair price," Dale
Ruttenberg, a 53-year-old bar manager said of a tan
one-bedroom bungalow, with a remodeled kitchen and
finished hardwood floors, that he is buying for
$211,000 after having rented in Portland for most of
the last decade. "Within a couple hours of being here,
it was like, 'I'm home.' "
In high-profile places like New York and Los Angeles,
home to many of the people who study and write about
real estate, families buying their first home often
must spend more than half of their income on mortgage
payments, far more than they once did. But the places
that have become less affordable over the last
generation account for only a quarter of the country's
population.
Elsewhere, families tend to spend far less on housing.
In Dallas, the share of income needed to buy a typical
house has fallen to 13 percent this year, from 14
percent in 1995 and 31 percent in 1980. In Tampa, it
has dropped to 21 percent, from 26 percent in 1980.
Even in New England, where the soaring prices of the
last decades have frustrated many young families,
house values have still not reached the heights of the
early 1980's, when calculated as a share of income.
"Over 20 years, affordability has definitely improved
because interest rates are much lower," said Kenneth
T. Rosen, chairman of the Fisher Center for Real
Estate and Urban Economic Research at the University
of California, Berkeley. Houses have also grown bigger
during that time, he said, so people are getting more
for their money.
Here in Portland, a smaller version of the big-city
real estate boom has been in full swing until just the
last few months. House prices have jumped since 2000,
hundreds of new real estate agents have gotten their
licenses and an old factory along the waterfront, once
famous for making bright-red hot dogs, is set to be
replaced with condominiums.
With many suburban houses now selling for $300,000 and
up, young families have a much harder time buying
their first home than they did a few years ago. Still,
housing has been less expensive this year - as a share
of local incomes - than at any point during the
1980's, according to Moody's Economy.com.
Beyond cost, many families who simply could not have
bought a house 10 or 20 years ago find themselves able
to do so, thanks to changes in the ways banks lend
money. In the past, a home buyer often needed to make
a down payment equal to 20 percent of a house's value
to get a mortgage; today, little or no down payment is
common.
The most money that Tim W. Gilbert has ever had in his
possession was $15,000, he said, in the form of a
check for a job he had done as a carpenter. But he and
his wife, Marjorie, were still able to buy a 1936 Cape
Cod-style house this year for $176,000 in Poland,
about 45 minutes north of Portland.
They took out two mortgages rather than making a down
payment and they use Mr. Gilbert's $5,000 or so in
pretax monthly income to cover $1,600 in mortgage, tax
and insurance payments. Ms. Gilbert, a writer, home
schools their daughters, ages 4 and 6. "I paid rent
for 18 or 19 years," Mr. Gilbert, 38, said. "We waited
years and years. We wanted to make this happen."
If almost anything had been different - if interest
rates had been higher or if the bank had required a
down payment - the Gilberts would still be living in
an apartment underneath a loud landlord, Mr. Gilbert
said. Instead, their house sits on three acres, and
they get their tap water from the same source as the
Poland Spring Water Company.
"We're making this work," he said. "It doesn't mean
things are a lot easier, but finally we are in
control. It's been a long time coming."
The Moody's Economy.com calculations took into account
the decline in down payment size in recent years. But
even though these lower down payments mean home buyers
are taking out loans equal to a larger share of a
house's price than in the past, monthly payments have
remained reasonable in much of the country.
The sharp fall in mortgage rates - from above 10
percent through most of the 1980's to less than 6
percent in the last few years - is the main reason.
Upfront mortgage fees have also dropped to about a
third of a percentage point of a loan's value, from
2.5 percent 20 years ago. Computers have made lenders
more efficient, and huge pools of global capital have
brought more competition to a business that was once
largely local.
But when the list prices of houses are climbing as
they have in recent years, it can be hard to imagine
that real estate is more affordable than it once was.
In a nationwide New York Times/CBS News poll conducted
this month, 75 percent of respondents said they
thought most families in their community spent a
larger share of their income on housing now than in
the 1980's. Only 5 percent said the share was smaller.
One possible reason for the perception is that many
families have recently taken on mortgage debt to pay
for items other than housing. Some have folded higher
interest loans, like credit card debt, into their
mortgage, said Mark Zandi, chief economist at Moody's
Economy.com. Others have used home equity loans to pay
for a new car, tuition or even a vacation.
This has caused mortgage payments to rise over the
last generation - especially among high-income
families, according to Federal Reserve data - for
reasons besides the cost of housing.
But the monthly payments needed to buy a house still
seem to be dictating people's behavior, if not their
perceptions. The number of home sales has reached a
record this year, according to the National
Association of Realtors. In the Times/CBS poll, 90
percent of respondents said they were satisfied with
their homes.
"People aren't really shopping prices," said Bill
Trask, a broker at Coldwell Banker Friends and
Neighbors Realty in suburban Portland. "They're
shopping payments."
Christopher Muncie recently bought his first home, a
1,000-square-foot condominium with a sunken living
room and exposed beams in Portland's West End, for
$169,000. It is part of a house built in 1838; a
similar apartment in the building sold for $81,000 in
1990, according to real estate records.
That increase starts to look less striking, though,
when viewed in light of family incomes that have grown
more than 50 percent in Portland over the same span
and interest rates that have fallen nearly in half.
"I walked away thinking I'm getting a bargain," said
Mr. Muncie, 36, a psychologist. "I was actually
pleasantly surprised."
The median-earning family in the Portland area would
need to spend about 23 percent of its pretax income on
mortgage payments for a typical house this year, down
from about 27 percent for much of the 1980's. But it
is up sharply from the low of 16 percent reached in
1999, and some people here said the cost of housing
has become onerous again.
With mortgage rates having inched up in recent months,
houses are taking longer to sell, and asking prices
have dropped. Homes that would have sold for $300,000
this summer are now selling for about $285,000, said
Rita Yarnold, president of Bay Realty.
The market has also slowed in California and most
other places where housing costs have risen far more
rapidly than in Maine. In New York, the median-earning
family would have to spend about half its income on
the mortgage payments for a median-priced house, up
from a third of its income in 1985. That will act as a
drag on house prices in coming years, many economists
say.
"When you get affordability stretched so much, all the
creative financing in the world can't stop some
correction of house prices," Mr. Rosen, the University
of California economist, said. "It happened in Hong
Kong, Japan and England."
It looks as if it may not happen, though, in most of
the United States.
David Leonhardt reported from Portland, Me., for this
article and Motoko Rich from New York.
-
.
- References:
- Neo-Georgism
- From: w_b_ryan
- Neo-Georgism
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