4 ms·

> Pension funds inherently depend on population growth to avoid shortfalls. Pension funds inherently depend on increases in production. Population growth is on

> Pension funds inherently depend on population growth to avoid shortfalls. Pension funds inherently depend on increases in production. Population growth is one factor, but technological development can also increase production. > The other near-ponzi scheme is the real estate market. In my city of Toronto, average real estate prices have gone from 2x average income in 1972 to 16x average income today. Hello from a Vancouverite! I broadly agree with this point, and I'm not sure how to work our way out of a housing bubble beyond popping it and dealing with the aftermath. Too many people are invested in the status quo, so any politician who tries to pop it will be crucified for destroying the savings of a large portion of the population.

TimPC 4y ago
I haven't worked out all the details but I think the right thing to do is some form of gradual transition to a Georgist taxation system (perhaps with compensation from the government for those who suffer sufficient adverse effects). Reducing the value of property to the structures on them by having heavy taxation rates on unimproved land is fairer than the current system and makes access to property far easier. It reduces speculation in real estate which also improves access. I also agree with the Georgist moral perspective that we have equal entitlements to all land and natural resources. From there, distributing land that is undertaxed seems to give certain individuals and companies unfair advantages. An added benefit is that income taxes and capital gains taxes have always from my perspective been on morally shaky ground as I struggle to find a good moral perspective that justifies them compared to other forms of taxation that seem morally just. Doing a transition like that will be just as difficult as popping a housing bubble (if not more so) but I think it will be of great benefit to society.
2ion 4y ago
>> Pension funds inherently depend on population growth to avoid shortfalls. > >Pension funds inherently depend on increases in production. Population growth is one factor, but technological development can also increase production. Interestingly, capital returns and population growth are (unquestionably?) on exponential curves. So, are production factors too slow to evolve along with the exponentials? Maybe they are, because of waste, lack of recycling, raw resources decline and environmental damage. >> The other near-ponzi scheme is the real estate market. In my city of Toronto, average real estate prices have gone from 2x average income in 1972 to 16x average income today. > >Hello from a Vancouverite! I broadly agree with this point, and I'm not sure how to work our way out of a housing bubble beyond popping it and dealing with the aftermath. Too many people are invested in the status quo, so any politician who tries to pop it will be crucified for destroying the savings of a large portion of the population. You could argue that in the same time frame, world population has more than doubled, and because the cost of capital is a lot cheaper elsewhere than in Canada, pressure on attractive living space in peaceful and stable countries has increased exponentially. At this point, the "liberal" view on capital flows and capital control, the fuel of foreign direct investments of Western countries into overseas properties since WWII, came back to bite the originators of the idea in the ass.
- kristjansson 4y ago
  Economic and biological growth curves look exponential right up until they don't. Both are limited by energy consumption, and nothing with limits can exceed the growth rate of its constraint.
  - kergonath 4y ago
    Yeah, and if the study of populations has shown us anything, exponentials can also turn quickly into gaussians when a tipping point is passed. Not all of them end up as nice (if you are not afraid of the end of growth anyway) logistic curves.
    - kristjansson 4y ago
      We’re lucky if we’re on a logistic trajectory
dv_dt 4y ago
Pension funds depend on increased in production, but are run on common management strategies locking them into broadly supporting large corporations - which actually run less efficiently overall in improving production than small to medium sized companies. Also imho, the public stock markets have decoupled from having a good effect on being able to promote good fundamental value creation behavior on public companies.
- asah 4y ago
  You sure about that claim re SMB vs enterprise? There's millions of local businesses that engage in very slow innovation, including restaurants, laundromats, etc. Meanwhile the SP500 have all gotten religion about innovation as a driver for productivity increases. (Not arguing just asking)
  - dv_dt 4y ago
    I had read a set of clearer papers on this, but I didn't keep a link to them (of course there are many economic views this is just mine). However a couple of large scale effects may indirectly capture it. First there are fewer and fewer new business starts, meaning surviving firms are getting larger and older, and second the overall gross productivity has been dropping. Maybe it's just correlation and not causation. I'll post again if i can find the more direct paper on the anticorrelation between very large corporations and productivity. https://www.brookings.edu/research/declining-business-dynamism-implications-for-productivity/ https://www.brookings.edu/research/declining-business-dynami... https://qz.com/633080/the-rise-and-fall-of-american-productivity-growth/ https://qz.com/633080/the-rise-and-fall-of-american-producti...
Manuel_D 4y ago
Building taller, denser housing doesn't pop the real-estate bubble. As cities grow denser, the land gets more expensive because land is finite. The solution to housing shortages is to build more, denser housing. The existing homeowners aren't getting a bad deal - they'll still be able to sell their houses at an immense gain. It's just that the same plot of land would occupy more units of housing. This is largely how dense cities like Tokyo manage to keep housing affordable [1]. When population increases you keep housing affordable by building more houses per unit of area. 1. https://www.youtube.com/watch?v=iGbC5j4pG9w https://www.youtube.com/watch?v=iGbC5j4pG9w
- TimPC 4y ago
  Density is not a panacea though. Density reduces revenue per capita as you end up with property tax from the cheaper housing so as you build it you see declines in services. Most notably education, if you ever wondered why suburbs tend to have much better schools than urban areas a big factor in any jurisdiction where schools are paid for in part through property tax is that the suburbs have more property tax per student. Roads are also an issue as it is seldom viable to build more of them and there is limited ability to widen the ones we do have. The net result is a substantial worsening of transit infrastructure to levels far worse than ever intended for those neighbourhoods.
  - Manuel_D 4y ago
    Property taxes can be raised, if higher density makes it so that existing taxes are too low. Furthermore, education is more strongly correlated with parental education and involvement than with spending per pupil. Wealthier, more educated people tend to live in suburbs, that's why schools do better there. Higher density makes mass transit systems like subways more viable, opening up alternatives to automobiles. Furthermore, greater density means more revenue to spend on infrastructure projects. When a metro area experiences growth, higher density is inevitable. It's more a question of how that density will be accommodated. Construct no housing and it will take the form of ever-increasing home costs, and higher rents for increasingly subdivided apartments. Construct denser housing and people will be able to live comfortable and affordably.

TimPC 4y ago

I haven't worked out all the details but I think the right thing to do is some form of gradual transition to a Georgist taxation system (perhaps with compensation from the government for those who suffer sufficient adverse effects). Reducing the value of property to the structures on them by having heavy taxation rates on unimproved land is fairer than the current system and makes access to property far easier. It reduces speculation in real estate which also improves access. I also agree with the Georgist moral perspective that we have equal entitlements to all land and natural resources. From there, distributing land that is undertaxed seems to give certain individuals and companies unfair advantages. An added benefit is that income taxes and capital gains taxes have always from my perspective been on morally shaky ground as I struggle to find a good moral perspective that justifies them compared to other forms of taxation that seem morally just. Doing a transition like that will be just as difficult as popping a housing bubble (if not more so) but I think it will be of great benefit to society.

2ion 4y ago

>> Pension funds inherently depend on population growth to avoid shortfalls. > >Pension funds inherently depend on increases in production. Population growth is one factor, but technological development can also increase production. Interestingly, capital returns and population growth are (unquestionably?) on exponential curves. So, are production factors too slow to evolve along with the exponentials? Maybe they are, because of waste, lack of recycling, raw resources decline and environmental damage. >> The other near-ponzi scheme is the real estate market. In my city of Toronto, average real estate prices have gone from 2x average income in 1972 to 16x average income today. > >Hello from a Vancouverite! I broadly agree with this point, and I'm not sure how to work our way out of a housing bubble beyond popping it and dealing with the aftermath. Too many people are invested in the status quo, so any politician who tries to pop it will be crucified for destroying the savings of a large portion of the population. You could argue that in the same time frame, world population has more than doubled, and because the cost of capital is a lot cheaper elsewhere than in Canada, pressure on attractive living space in peaceful and stable countries has increased exponentially. At this point, the "liberal" view on capital flows and capital control, the fuel of foreign direct investments of Western countries into overseas properties since WWII, came back to bite the originators of the idea in the ass.

kristjansson 4y ago
Economic and biological growth curves look exponential right up until they don't. Both are limited by energy consumption, and nothing with limits can exceed the growth rate of its constraint.
- kergonath 4y ago
  Yeah, and if the study of populations has shown us anything, exponentials can also turn quickly into gaussians when a tipping point is passed. Not all of them end up as nice (if you are not afraid of the end of growth anyway) logistic curves.
  - kristjansson 4y ago
    We’re lucky if we’re on a logistic trajectory

dv_dt 4y ago

Pension funds depend on increased in production, but are run on common management strategies locking them into broadly supporting large corporations - which actually run less efficiently overall in improving production than small to medium sized companies. Also imho, the public stock markets have decoupled from having a good effect on being able to promote good fundamental value creation behavior on public companies.

asah 4y ago
You sure about that claim re SMB vs enterprise? There's millions of local businesses that engage in very slow innovation, including restaurants, laundromats, etc. Meanwhile the SP500 have all gotten religion about innovation as a driver for productivity increases. (Not arguing just asking)
- dv_dt 4y ago
  I had read a set of clearer papers on this, but I didn't keep a link to them (of course there are many economic views this is just mine). However a couple of large scale effects may indirectly capture it. First there are fewer and fewer new business starts, meaning surviving firms are getting larger and older, and second the overall gross productivity has been dropping. Maybe it's just correlation and not causation. I'll post again if i can find the more direct paper on the anticorrelation between very large corporations and productivity. https://www.brookings.edu/research/declining-business-dynamism-implications-for-productivity/ https://www.brookings.edu/research/declining-business-dynami... https://qz.com/633080/the-rise-and-fall-of-american-productivity-growth/ https://qz.com/633080/the-rise-and-fall-of-american-producti...

Manuel_D 4y ago

Building taller, denser housing doesn't pop the real-estate bubble. As cities grow denser, the land gets more expensive because land is finite. The solution to housing shortages is to build more, denser housing. The existing homeowners aren't getting a bad deal - they'll still be able to sell their houses at an immense gain. It's just that the same plot of land would occupy more units of housing. This is largely how dense cities like Tokyo manage to keep housing affordable [1]. When population increases you keep housing affordable by building more houses per unit of area. 1. https://www.youtube.com/watch?v=iGbC5j4pG9w https://www.youtube.com/watch?v=iGbC5j4pG9w

TimPC 4y ago
Density is not a panacea though. Density reduces revenue per capita as you end up with property tax from the cheaper housing so as you build it you see declines in services. Most notably education, if you ever wondered why suburbs tend to have much better schools than urban areas a big factor in any jurisdiction where schools are paid for in part through property tax is that the suburbs have more property tax per student. Roads are also an issue as it is seldom viable to build more of them and there is limited ability to widen the ones we do have. The net result is a substantial worsening of transit infrastructure to levels far worse than ever intended for those neighbourhoods.
- Manuel_D 4y ago
  Property taxes can be raised, if higher density makes it so that existing taxes are too low. Furthermore, education is more strongly correlated with parental education and involvement than with spending per pupil. Wealthier, more educated people tend to live in suburbs, that's why schools do better there. Higher density makes mass transit systems like subways more viable, opening up alternatives to automobiles. Furthermore, greater density means more revenue to spend on infrastructure projects. When a metro area experiences growth, higher density is inevitable. It's more a question of how that density will be accommodated. Construct no housing and it will take the form of ever-increasing home costs, and higher rents for increasingly subdivided apartments. Construct denser housing and people will be able to live comfortable and affordably.