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That's a self-correcting problem, isn't it? Either those cafes and shops will raise prices and pay their staff more, or they'll close down. I've never understoo

That's a self-correcting problem, isn't it? Either those cafes and shops will raise prices and pay their staff more, or they'll close down. I've never understood why we're supposed to feel bad for "small business owners" who won't find staff when paying peanuts for their crappy jobs.

spockz 5y ago
The point is that before there existed an ecosystem. That “peanuts” is what the business owner was able to afford to pay which was enough for the employees to make a somewhat decent living. Now that isn’t possible anymore. The objection is to the change/disruption of a local ecosystem by outsiders.
- chrisseaton 5y ago
  Blaming outsiders - classic strategy, can’t go wrong!
  - imtringued 5y ago
    We are blaming outsiders for giving us too much money. Where is all that money going if not into the hands of locals who are selling their property?
    - im3w1l 5y ago
      Consider a community of 10000 households. 5000 rent their housing, 4500 own their own place, and 500 own more than one place. Now outsiders enter the picture and buy property driving up the prices. The 5000 renting households are now in trouble. If rents go up they are squeezed that way. With rent control there are still issues: Their kids are unable to move out, and separations become tricky. For the 4500 it's a mixed bag. They have the same issues with splitting the household, but they also have advantages. They can do a reverse mortgage and live well. Or they call sell and live well elsewhere. For the 500 elite households it's a pure win, they can buy more yachts than before.
      - chrisseaton 5y ago
        > Now outsiders enter the picture and buy property Buy it from who? Locals. So who gets the money? Locals. But anyway the point was don’t divide people into insiders and ‘outsiders’.
        afiori 5y ago
        In the scenarion the 5000 were renting houses from the 500, so probably the outsiders would buy those properties first. The 500 are also the most likely not to be local or own the land (which means a single sale can convert a low cost apartament building in a mansion). Also the reverse is possible...
aikinai 5y ago
You think those small business owners are packing away substantial profits they could use to pay staff significantly more?
- emodendroket 5y ago
  If a business can only exist by having serfs it wildly underpays then maybe it deserves to lose out to the big chains.
  - HelloNurse 5y ago
    Compared to a small business the "big chains" might be able to operate with smaller profit margins, or have lower non-labor costs, or profit from owned real estate, but it isn't enough for long term viability. Excessive rents are going to turn any neighbourhood into a desert like South Kensington.
  - llampx 5y ago
    Big chains aren't exactly known for treating unskilled workers with kids gloves. Amazon comes to mind, as does Walmart.
    - emodendroket 5y ago
      And yet they pay substantially better wages with better benefits on average. Even labor law compliance is much better (not to mention that small businesses are exempt from many regulations in the first place).
      - pempem 5y ago
        Not sure about that. The benefits are better and more structured and there are multitudes of articles about how they are much much harder to access, leaving most workers partially dependent on state benefits
        emodendroket 5y ago
limograf 5y ago
Sure, they can raise prices but the customers who paid £350,000 for their charming holiday cottage won't pay £35 for a cup of coffee. The house prices are so out of touch with the rest of the economy, there's no way to catch up for normal people. So the cafe closes. The self correction should actually be the house price crashing, but the UK government consistently props up, and pumps, the market. The average house price in Salcombe (Devon) is £950,000! That's 30 average salaries.
redis_mlc 5y ago
oh, the newb HN Econ 101 argument again. > we're supposed to feel bad for "small business owners" Yes, you should. What will happen is this. When their commercial lease comes up for renewal, the small business owner won't renew. Then you'll write even more idiotic posts like, "Why's there no entertainment venues in the area?" HN is so out-of-touch with businesses on the other side of the keyboard. Here's a clue, Marxist. As corona recedes, the news will start reporting on the craggy shoals of bk's and suicidal small business owners that surface. You know, the people you have no empathy for, but make up the character of a city. You can watch Louis Rossman's Youtube channel on how retailers have abandoned the most prime New York locations in the world to see how it plays out. "Madison Ave. is 39% empty" https://www.youtube.com/watch?v=xfHQZj3_TX4 https://www.youtube.com/watch?v=xfHQZj3_TX4
ClumsyPilot 5y ago
Your solution is the problem. The house prices are a blood-sucking squid, and you are pay for them every time you get a coffee or get any service - half the money is going to the labdowner that contributes nothing to the economy. That's why a coffee costs £5 and a plumber charges £100 an hour But we have fools that celebrate rising house prices because their nominal net worth went up
- ipaddr 5y ago
  If prices were going down would things be better? You bought a 500,000 and in ten years it will be worth 100,000 would you still make that investment? Everyone wants prices to remain the same forever. That takes a neutral population growth or more supply
  - ClumsyPilot 5y ago
    Certainly yes, it would be better - the value of a car goes down, do you still make an 'investment'? No, you buy a car if you need a car, we don't call buying a car 'investment', we don't encourage people to hoard cars they don't need, it contributes nothing to the economy. The optimal situation is for cars and houses to be as cheap as possible relative to earnings, that's what we call economic growth and improved quality of life.
    - seanmcdirmid 5y ago
      Housing (the structures) depreciates in Japan now of days, and so they mostly don’t have this problem.
  - imtringued 5y ago
    >If prices were going down would things be better? You bought a 500,000 and in ten years it will be worth 100,000 would you still make that investment? The idea that holding a property and doing absolutely nothing with it is an "investment" is absurd. The only people who would buy that home are those who want to live in it or who want to rent it out to someone who wants to live in it. No I wouldn't make that "investment". I would just rent the property out without "investing" the property.
Spooky23 5y ago
We’re in a suicide spiral where fiscal policy has staved off economic malaise by kicking the can down the road. Interest rates have been kept low, which drives real property prices up. Everyone intuitively knows that collapse or high inflation is the endgame, so money flocks to property, which drives up demand. The issue isn’t the coffee shop in the fishing village, it’s that the fishermen are selling real estate now and nobody actually lives in the village. You can see this in many places. Lake George, NY is a great example - beautiful village, great location, but can only support tshirt shops from Memorial Day to Labor Day. Manhattan is the same way — the Lower East Side is like a museum of what Manhattan was like, with $2M condo apartments being randomly dropped in and 1/3 of the storefronts vacant.
- imtringued 5y ago
  Low interest rates have made everything cheap but the supply of housing (specifically land) is extremely inflexible. You can make more cars but not land. The location value of your house skyrockets at the expense of everyone else. However, make no mistake. The problem isn't money. Even if you buy your house with Bitcoin you will run into the same problem. The problem is that location is a a monopoly. You can tax it or let it run wild.
  - Spooky23 5y ago
    I’m not making any mistake, cheap money is absolutely the biggest problem that we have today. My former mentor bought a house on Nantucket for $150k in 1990, sold for $3.5M earlier this year. That appreciation isn’t due to inflation or the constrained supply of homes — it’s always been constrained. It’s due to increased demand fueled by excess capital. There’s no money in traditional banking. Even with negligible interest, the spread is very tight. The only way to compete is with volume, aggregation and fee for service, and the only way to get volume is to lower standards. IMO, we’re in an economic time period similar to the 1860’s.
    - com2kid 5y ago
      > My former mentor bought a house on Nantucket for $150k in 1990, sold for $3.5M earlier this year. That is literally a luxury good with a fixed supply. As the # of people who desire that good has sky rocketed generation to generation, of course the price went up. There are limited production run cars from that era that underwent similar price inflation. For someone who wants to live in Nantucket, there is literally no substitutable good!

spockz 5y ago

The point is that before there existed an ecosystem. That “peanuts” is what the business owner was able to afford to pay which was enough for the employees to make a somewhat decent living. Now that isn’t possible anymore. The objection is to the change/disruption of a local ecosystem by outsiders.

chrisseaton 5y ago
Blaming outsiders - classic strategy, can’t go wrong!
- imtringued 5y ago
  We are blaming outsiders for giving us too much money. Where is all that money going if not into the hands of locals who are selling their property?
  - im3w1l 5y ago
    Consider a community of 10000 households. 5000 rent their housing, 4500 own their own place, and 500 own more than one place. Now outsiders enter the picture and buy property driving up the prices. The 5000 renting households are now in trouble. If rents go up they are squeezed that way. With rent control there are still issues: Their kids are unable to move out, and separations become tricky. For the 4500 it's a mixed bag. They have the same issues with splitting the household, but they also have advantages. They can do a reverse mortgage and live well. Or they call sell and live well elsewhere. For the 500 elite households it's a pure win, they can buy more yachts than before.
    - chrisseaton 5y ago
      > Now outsiders enter the picture and buy property Buy it from who? Locals. So who gets the money? Locals. But anyway the point was don’t divide people into insiders and ‘outsiders’.
      - afiori 5y ago
        In the scenarion the 5000 were renting houses from the 500, so probably the outsiders would buy those properties first. The 500 are also the most likely not to be local or own the land (which means a single sale can convert a low cost apartament building in a mansion). Also the reverse is possible...

aikinai 5y ago

You think those small business owners are packing away substantial profits they could use to pay staff significantly more?

emodendroket 5y ago
If a business can only exist by having serfs it wildly underpays then maybe it deserves to lose out to the big chains.
- HelloNurse 5y ago
  Compared to a small business the "big chains" might be able to operate with smaller profit margins, or have lower non-labor costs, or profit from owned real estate, but it isn't enough for long term viability. Excessive rents are going to turn any neighbourhood into a desert like South Kensington.
- llampx 5y ago
  Big chains aren't exactly known for treating unskilled workers with kids gloves. Amazon comes to mind, as does Walmart.
  - emodendroket 5y ago
    And yet they pay substantially better wages with better benefits on average. Even labor law compliance is much better (not to mention that small businesses are exempt from many regulations in the first place).
    - pempem 5y ago
      Not sure about that. The benefits are better and more structured and there are multitudes of articles about how they are much much harder to access, leaving most workers partially dependent on state benefits
      - emodendroket 5y ago

limograf 5y ago

Sure, they can raise prices but the customers who paid £350,000 for their charming holiday cottage won't pay £35 for a cup of coffee. The house prices are so out of touch with the rest of the economy, there's no way to catch up for normal people. So the cafe closes. The self correction should actually be the house price crashing, but the UK government consistently props up, and pumps, the market. The average house price in Salcombe (Devon) is £950,000! That's 30 average salaries.

redis_mlc 5y ago

oh, the newb HN Econ 101 argument again. > we're supposed to feel bad for "small business owners" Yes, you should. What will happen is this. When their commercial lease comes up for renewal, the small business owner won't renew. Then you'll write even more idiotic posts like, "Why's there no entertainment venues in the area?" HN is so out-of-touch with businesses on the other side of the keyboard. Here's a clue, Marxist. As corona recedes, the news will start reporting on the craggy shoals of bk's and suicidal small business owners that surface. You know, the people you have no empathy for, but make up the character of a city. You can watch Louis Rossman's Youtube channel on how retailers have abandoned the most prime New York locations in the world to see how it plays out. "Madison Ave. is 39% empty" https://www.youtube.com/watch?v=xfHQZj3_TX4 https://www.youtube.com/watch?v=xfHQZj3_TX4

ClumsyPilot 5y ago

Your solution is the problem. The house prices are a blood-sucking squid, and you are pay for them every time you get a coffee or get any service - half the money is going to the labdowner that contributes nothing to the economy. That's why a coffee costs £5 and a plumber charges £100 an hour But we have fools that celebrate rising house prices because their nominal net worth went up

ipaddr 5y ago
If prices were going down would things be better? You bought a 500,000 and in ten years it will be worth 100,000 would you still make that investment? Everyone wants prices to remain the same forever. That takes a neutral population growth or more supply
- ClumsyPilot 5y ago
  Certainly yes, it would be better - the value of a car goes down, do you still make an 'investment'? No, you buy a car if you need a car, we don't call buying a car 'investment', we don't encourage people to hoard cars they don't need, it contributes nothing to the economy. The optimal situation is for cars and houses to be as cheap as possible relative to earnings, that's what we call economic growth and improved quality of life.
  - seanmcdirmid 5y ago
    Housing (the structures) depreciates in Japan now of days, and so they mostly don’t have this problem.
- imtringued 5y ago
  >If prices were going down would things be better? You bought a 500,000 and in ten years it will be worth 100,000 would you still make that investment? The idea that holding a property and doing absolutely nothing with it is an "investment" is absurd. The only people who would buy that home are those who want to live in it or who want to rent it out to someone who wants to live in it. No I wouldn't make that "investment". I would just rent the property out without "investing" the property.

Spooky23 5y ago

We’re in a suicide spiral where fiscal policy has staved off economic malaise by kicking the can down the road. Interest rates have been kept low, which drives real property prices up. Everyone intuitively knows that collapse or high inflation is the endgame, so money flocks to property, which drives up demand. The issue isn’t the coffee shop in the fishing village, it’s that the fishermen are selling real estate now and nobody actually lives in the village. You can see this in many places. Lake George, NY is a great example - beautiful village, great location, but can only support tshirt shops from Memorial Day to Labor Day. Manhattan is the same way — the Lower East Side is like a museum of what Manhattan was like, with $2M condo apartments being randomly dropped in and 1/3 of the storefronts vacant.

imtringued 5y ago
Low interest rates have made everything cheap but the supply of housing (specifically land) is extremely inflexible. You can make more cars but not land. The location value of your house skyrockets at the expense of everyone else. However, make no mistake. The problem isn't money. Even if you buy your house with Bitcoin you will run into the same problem. The problem is that location is a a monopoly. You can tax it or let it run wild.
- Spooky23 5y ago
  I’m not making any mistake, cheap money is absolutely the biggest problem that we have today. My former mentor bought a house on Nantucket for $150k in 1990, sold for $3.5M earlier this year. That appreciation isn’t due to inflation or the constrained supply of homes — it’s always been constrained. It’s due to increased demand fueled by excess capital. There’s no money in traditional banking. Even with negligible interest, the spread is very tight. The only way to compete is with volume, aggregation and fee for service, and the only way to get volume is to lower standards. IMO, we’re in an economic time period similar to the 1860’s.
  - com2kid 5y ago
    > My former mentor bought a house on Nantucket for $150k in 1990, sold for $3.5M earlier this year. That is literally a luxury good with a fixed supply. As the # of people who desire that good has sky rocketed generation to generation, of course the price went up. There are limited production run cars from that era that underwent similar price inflation. For someone who wants to live in Nantucket, there is literally no substitutable good!