6 ms·

This, a thousand times. What a lot of people do not understand, is that when demand for an asset goes down, prices come down and adjust to market (although in

by jazzyk 11y ago

This, a thousand times. What a lot of people do not understand, is that when demand for an asset goes down, prices come down and adjust to market (although in real-estate, the process takes a bit longer). The best way to promote home ownership is to make sure people can get decent paying jobs. Promote economic growth and stop outsourcing jobs.

toomuchtodo 11y ago
Also, stop subsidizing low interest rates and the mortgage interest tax deduction. These are further distortions in the housing market.
- jazzyk 11y ago
  Absolutely. Many of my friends look at me as if I just lost my mind - "but, but... low interest rates are good for everybody, right?". It is an uphill battle, but I keep at it :-)
- tcbawo 11y ago
  By low interest rates, do you mean Federal Funds, or the bond market? My impression is that mortgage rates tend to track the 10 year bond rate, given most people refi/sell before then. These and long term rates have been on a multi-decade decline. I'm not sure how much influence recent policy has had.
  - toomuchtodo 11y ago
    Federal GSEs (Fannie, Freddie, FHA) and the Federal Reserve's QE activities (artificially propping up housing).
readams 11y ago
People who are against outsourcing of jobs because it hurts workers have what appears to me to be a small view of the set of humanity that matters. I don't see any particular reason why workers in the US are more entitled to good jobs than workers in other countries. There is no force more powerful for improving the quality of life and well-being of _billions_ of people than economic development, of which foreign investment is one of the best sources. I want to see a world where there aren't poor countries and rich countries, but rather a global economy where someone born in (e.g.) Africa has opportunity and education similar to someone born in the US. Once this is accomplished (and the challenges in front of us for doing so are enormous!), outsourced jobs won't be a problem. Rather than being opposed to trade and globalization (which are, frankly, unstoppable) we should be focused on mitigating losses for those affected. Erecting barriers to trade will only make US industry uncompetitive, our economy smaller, and those same workers, ultimately, worse off.
- p4wnc6 11y ago
  You are arguing against Last Place Aversion [0] and even if your argument makes sense, I think it simply will not succeed. If you imagine everyone in the world has a "quality of life" score and this is distributed normally, then outsourcing jobs tends to help people in the bottom quartile, at the expense of people in the second quartile. It is like pinching up a little bit of the probability mass living way out in the left tail, and folding it over into the second quartile region. Some of the people in the second quartile have to be displaced (in an ordinal sense) to the left, thus losing status. We'd like to pretend like material well-being of, say, impoverished third-worlders, matters more than social pecking order status of poor-but-mostly-OK first worlders. Would you like to go first? Would you like to ensure your children have no access to decent education or a college with a social network that could raise their social status? Yeah, sure, you'll have acceptable food and someone will throw you some afterthough scraps in terms of feigned medical care. You'll have a middling life, mostly unpleasant, lots of mental health issues and lots of risk to you and your family of getting caught up in substance abuse or drugs, but you'll live into your 60s or 70s before you die. Status really impacts health. Status affects your attitude about your own health, your willingness and access to seek help. It's not solely about material resource. So I certainly sympathize. Why aren't we extracting wealth from the top quartile as a means for delivering aid to third world workers? Why instead are we extracting wealth from the second quartile to pay for the first quartile? In this sense, your comment comes off as a little bit naive and insensitive. I'm sure down to brass tacks that people living in the second quartile understand what you are saying and feel compassion for people who have it even worse. But how can you ask them to lay down and agree to be the lowest status group willingly? Yes, please outsource my already-degrading-and-menial job, reducing me into the bottom quartile of a slightly right-translated distribution. We're all slightly better off in absolute material terms, but now I'm worse off in relative status terms (which really, physically, affects my health and opportunity). It's ... complicated. [0] < http://www.nber.org/papers/w17234 http://www.nber.org/papers/w17234 >
  - readams 11y ago
    That's the small view of humanity again. Nobody in the US is in the bottom quartile. You also see this as a zero-sum game: a process of extracting wealth from someone and handing it to someone else. Trade increases the overall amount of wealth. It's important for policy to recognize, as I said, that there are winners and losers and mitigate the negative effects for the losers. But this can come from the new wealth generated by the trade. Remember: this is new wealth, created entirely from nothing, that did not exist before.
CuriouslyC 11y ago
Demand is a function of price. Prices for a good or service only go down reliably as a result of decreases in demand if supply is constant. If supply isn't constant, then the change in price is a function of the fixed versus variable costs of production, and the price elasticity of demand for the product. If fixed costs dominate the equation, prices will go down so producers can recoup their capital investment; on the other hand, if variable costs dominate the equation and the price elasticity of demand for the product is low, the price may not change, or may even increase.
briandear 11y ago
I think you mean 'offshoring.' Eliminating outsourcing would close down every software consultancy, independent accounting firm and outside counsel firm. As far as 'offshoring' -- I can't afford to pay onshore engineers $200+ and hour by hiring a consultancy for a short term project. So that project would never happen. With offshoring, I can afford to pay to get the project built. Once the project is built and actually generating revenue, then I can afford to hire onshore employees for the long term. Don't be so quick to dismiss offshoring as a 'job killer' because there's a good chance that if it couldn't be done cheaply, it just wouldn't be done at all. Those things that are built by offshore teams-- those are going to result in dozens of eventual salespeople, marketing people as well as money for infrastructure and future development. All the the goes to zero if I can't use a lower cost offshore team at the outset. Most of us building software products don't have the luxury of a VC cousin in the incestuous circle jerk that is Silicon Valley venture capital. Some of us build companies using money we saved. That concept certainly pisses off the Bernie and Trump voters who think labor protectionism is a good thing, but we don't live in the 1950s where creating a business involved having a factory and 'workers.' Creating a business should be easy and do By things like restricting offshoring is pretty close to the $15 minimum wage in sheer economic stupidity. If I can't offshore, then I will just do nothing. That capital just sits on the sidelines when it could be actually creating wealth. People seem to think jobs are created by huge companies with million dollar CEOs. That isn't the case. It's the small business owner that does most of the job creating -- not the big companies and not the government. It's the man or woman that puts their capital at risk to try to build something. We should be making that process easier. Start fast, fail fast. Yet when people talk about eliminating outsourcing and offshoring, they really don't think about that. They see business as some 'Dr. Evil' entity. The see the economy like fatalist Marxists: finite classes of workers and "the rich." The 'rich' are only looking to exploit people and keep then oppressed. That's bullshit 19th century thinking. We need to make offshoring even easier! That will spur economic growth.

by jazzyk 11y ago

toomuchtodo 11y ago

Also, stop subsidizing low interest rates and the mortgage interest tax deduction. These are further distortions in the housing market.

jazzyk 11y ago
Absolutely. Many of my friends look at me as if I just lost my mind - "but, but... low interest rates are good for everybody, right?". It is an uphill battle, but I keep at it :-)
tcbawo 11y ago
By low interest rates, do you mean Federal Funds, or the bond market? My impression is that mortgage rates tend to track the 10 year bond rate, given most people refi/sell before then. These and long term rates have been on a multi-decade decline. I'm not sure how much influence recent policy has had.
- toomuchtodo 11y ago
  Federal GSEs (Fannie, Freddie, FHA) and the Federal Reserve's QE activities (artificially propping up housing).

readams 11y ago

People who are against outsourcing of jobs because it hurts workers have what appears to me to be a small view of the set of humanity that matters. I don't see any particular reason why workers in the US are more entitled to good jobs than workers in other countries. There is no force more powerful for improving the quality of life and well-being of _billions_ of people than economic development, of which foreign investment is one of the best sources. I want to see a world where there aren't poor countries and rich countries, but rather a global economy where someone born in (e.g.) Africa has opportunity and education similar to someone born in the US. Once this is accomplished (and the challenges in front of us for doing so are enormous!), outsourced jobs won't be a problem. Rather than being opposed to trade and globalization (which are, frankly, unstoppable) we should be focused on mitigating losses for those affected. Erecting barriers to trade will only make US industry uncompetitive, our economy smaller, and those same workers, ultimately, worse off.

p4wnc6 11y ago
You are arguing against Last Place Aversion [0] and even if your argument makes sense, I think it simply will not succeed. If you imagine everyone in the world has a "quality of life" score and this is distributed normally, then outsourcing jobs tends to help people in the bottom quartile, at the expense of people in the second quartile. It is like pinching up a little bit of the probability mass living way out in the left tail, and folding it over into the second quartile region. Some of the people in the second quartile have to be displaced (in an ordinal sense) to the left, thus losing status. We'd like to pretend like material well-being of, say, impoverished third-worlders, matters more than social pecking order status of poor-but-mostly-OK first worlders. Would you like to go first? Would you like to ensure your children have no access to decent education or a college with a social network that could raise their social status? Yeah, sure, you'll have acceptable food and someone will throw you some afterthough scraps in terms of feigned medical care. You'll have a middling life, mostly unpleasant, lots of mental health issues and lots of risk to you and your family of getting caught up in substance abuse or drugs, but you'll live into your 60s or 70s before you die. Status really impacts health. Status affects your attitude about your own health, your willingness and access to seek help. It's not solely about material resource. So I certainly sympathize. Why aren't we extracting wealth from the top quartile as a means for delivering aid to third world workers? Why instead are we extracting wealth from the second quartile to pay for the first quartile? In this sense, your comment comes off as a little bit naive and insensitive. I'm sure down to brass tacks that people living in the second quartile understand what you are saying and feel compassion for people who have it even worse. But how can you ask them to lay down and agree to be the lowest status group willingly? Yes, please outsource my already-degrading-and-menial job, reducing me into the bottom quartile of a slightly right-translated distribution. We're all slightly better off in absolute material terms, but now I'm worse off in relative status terms (which really, physically, affects my health and opportunity). It's ... complicated. [0] < http://www.nber.org/papers/w17234 http://www.nber.org/papers/w17234 >
- readams 11y ago
  That's the small view of humanity again. Nobody in the US is in the bottom quartile. You also see this as a zero-sum game: a process of extracting wealth from someone and handing it to someone else. Trade increases the overall amount of wealth. It's important for policy to recognize, as I said, that there are winners and losers and mitigate the negative effects for the losers. But this can come from the new wealth generated by the trade. Remember: this is new wealth, created entirely from nothing, that did not exist before.

CuriouslyC 11y ago

Demand is a function of price. Prices for a good or service only go down reliably as a result of decreases in demand if supply is constant. If supply isn't constant, then the change in price is a function of the fixed versus variable costs of production, and the price elasticity of demand for the product. If fixed costs dominate the equation, prices will go down so producers can recoup their capital investment; on the other hand, if variable costs dominate the equation and the price elasticity of demand for the product is low, the price may not change, or may even increase.

briandear 11y ago

I think you mean 'offshoring.' Eliminating outsourcing would close down every software consultancy, independent accounting firm and outside counsel firm. As far as 'offshoring' -- I can't afford to pay onshore engineers $200+ and hour by hiring a consultancy for a short term project. So that project would never happen. With offshoring, I can afford to pay to get the project built. Once the project is built and actually generating revenue, then I can afford to hire onshore employees for the long term. Don't be so quick to dismiss offshoring as a 'job killer' because there's a good chance that if it couldn't be done cheaply, it just wouldn't be done at all. Those things that are built by offshore teams-- those are going to result in dozens of eventual salespeople, marketing people as well as money for infrastructure and future development. All the the goes to zero if I can't use a lower cost offshore team at the outset. Most of us building software products don't have the luxury of a VC cousin in the incestuous circle jerk that is Silicon Valley venture capital. Some of us build companies using money we saved. That concept certainly pisses off the Bernie and Trump voters who think labor protectionism is a good thing, but we don't live in the 1950s where creating a business involved having a factory and 'workers.' Creating a business should be easy and do By things like restricting offshoring is pretty close to the $15 minimum wage in sheer economic stupidity. If I can't offshore, then I will just do nothing. That capital just sits on the sidelines when it could be actually creating wealth. People seem to think jobs are created by huge companies with million dollar CEOs. That isn't the case. It's the small business owner that does most of the job creating -- not the big companies and not the government. It's the man or woman that puts their capital at risk to try to build something. We should be making that process easier. Start fast, fail fast. Yet when people talk about eliminating outsourcing and offshoring, they really don't think about that. They see business as some 'Dr. Evil' entity. The see the economy like fatalist Marxists: finite classes of workers and "the rich." The 'rich' are only looking to exploit people and keep then oppressed. That's bullshit 19th century thinking. We need to make offshoring even easier! That will spur economic growth.