3 ms·

The economy is just increasingly fake or rewarding foolish scummy behaviour instead of honest cooperative work. People coasted for 10+ years now on "passive inc

The economy is just increasingly fake or rewarding foolish scummy behaviour instead of honest cooperative work. People coasted for 10+ years now on "passive income" from printed money along with almost no enforcement action against scams. That gave rise to a chain reaction of people trying to scam each other in a general revenge. Take for example a big slice of the economy - real estate. Honest real estate agents who try to match real needs to real properties were totally displaced (or outcompeted) by agents who spam fake ads in order to secure an exclusive contract with unfair terms and sell you the biggest property you can afford with no regard of your actual needs. The Fed in turn backstops any losses and buys toxic mortgages perpetuating the scheme. Further, imagine an economy entirely comprised of real estate agents (or even NFT traders). In such economy, there is only so much real need for agents, at some point there will be more agents than the market really needs. At that point the only way to survive in the market is to become adversarial, it is in your best interest to outspend everybody on deceptive marketing, then mismatch buyers and sellers so that they will have to come back to you looking for new deals once they realise they were mismatched. And again the only reason people can keep this mismatched economy going is because the Fed/congress flood the system with money and their mistakes are rewarded (in asset price inflation at least). This is the economy we have now more or less in the different sectors. And policy makers can't touch anything because they prioritise stability and growth.

ryan93 4y ago
real estate agents aren't responsible for people overspending. come on
operatingthetan 4y ago
>Honest real estate agents who try to match real needs to real properties were totally displaced (or outcompeted) by agents who spam fake ads in order to secure an exclusive contract with unfair terms and sell you the biggest property you can afford with no regard of your actual needs. The Fed in turn backstops any losses and buys toxic mortgages perpetuating the scheme. There's lot's to criticize about real eastate agents but this ain't it. Try taking huge commissions for a disproportionate amount of work from the value of the house for one.
- onlyrealcuzzo 4y ago
  It's only disproportionate for buyer's agents in a buyer's market or seller's agents in a seller's market when the cost of a crap shack is $800k+ - which unfortunately is a growing part of the country. If you're unaware - the brokerages can take up to 40% of the agent's commission. That's where the real rip off is. There's lots of places where the median home is still <$250k. It's a lot of work to sell that house (in a buyer's market). In a seller's market - it's a lot of showings and offers before something gets accepted. 70% of 3% of $250k = $5250 Typically, R/E agents are 1099 - which means they're paying ~10% more income tax in the employer's side of Medicare and Social Security. That's $4446 after payroll tax but BEFORE income tax. You're lucky if you're selling >1 house a month. Just because real estate agents aren't writing code and aren't making doo-dads, doesn't mean they're doing nothing, or that their time is worthless.
hezralig 4y ago
I commented elsewhere but I studied Econ in college because it was a particular interest of mine. I hated it. I also wanted to understand it, so that I could know why it rubbed me the wrong way and live intentionally to push against it. There was this moment when I was in a grad course and the professor was talking about self-optimizing markets. That's when it hit me. I literally stood up in the class, interrupted everything and went like "wait, the math isn't optimizing for income inequality". It was kind of funny watching more than 100 little economists in training suddenly start tearing apart the equation at once. You could literally hear the sound of frantic spreadsheeting and charting. In the end, the professor himself said that it was true, you could achieve a fully "optimized" economy with literally everything being owned by a handful of people. Made me think. How is a system supposed to be beneficial for us all when the mathematics at its core don't actually consider societal benefit? If an economy is fully "optimized" but everyone is sick, sad, and angry - is it actually optimal? A mathematical model can make sense without being sensible. This is why I have an implicit distrust of algorithms and other systems of optimization.
- maxboone 4y ago
  You can be pareto optimal / efficient without a everyone having a 1/n share. The idea of optimization is that everyone gets the best possible set. E.g. Alice prefers tomatoes, Bob prefers mangos. Thus, Alice ends up with 100% of the tomatoes, Bob with 0%. Unfortunately it's mostly the externalities and irrationality / wrong assumptions that fail us. An economy is not optimal (or pareto efficient) iff people are disproportionally sick, sad and angry because of economical reasons (and don't trade this sickness, sadness and angriness for something that gives them more utility).
- underdeserver 4y ago
  That's the cold, hard truth of capitalism: It converges on the rich-get-richer, economies-of-scale winner-takes-all endgames. Used to be you needed lots of skilled workers to get anything done. You had to pay them. Now with automation and tech and specialization due to global free trade, you only need skilled workers in a handful of professions, the value of doing anything else steadily decreases.
robocat 4y ago
> real estate The financial incentives to an agent are to sell as many houses as they can as quickly as possible. Every sale is an end to ongoing time being "wasted" dealing with potential buyers. Every deal is money in the bank now. Agents don't really care about the price beyond talking the seller and the buyer to agree to some number (overpriced or underpriced is mostly irrelevant). The US system appears batshit crazy to me - very adversarial? In New Zealand there is usually only a sellers agent: it is rare to have a buyers agent. Buying a house in New Zealand has less percentage cost in total fees, from what I can tell. Total agent fees are commonly around 4% for the first $400k of the sale price (median house price $800k in NZ) and around 2% for the remainder. We have real estate companies advertising lower rates. Plus maybe 1% for marketing? https://www.nzherald.co.nz/property/what-does-it-cost/YO4VZMU27Q6DUAKGJZRAPEODMA/ https://www.nzherald.co.nz/property/what-does-it-cost/YO4VZM...

ryan93 4y ago

real estate agents aren't responsible for people overspending. come on

operatingthetan 4y ago

>Honest real estate agents who try to match real needs to real properties were totally displaced (or outcompeted) by agents who spam fake ads in order to secure an exclusive contract with unfair terms and sell you the biggest property you can afford with no regard of your actual needs. The Fed in turn backstops any losses and buys toxic mortgages perpetuating the scheme. There's lot's to criticize about real eastate agents but this ain't it. Try taking huge commissions for a disproportionate amount of work from the value of the house for one.

onlyrealcuzzo 4y ago
It's only disproportionate for buyer's agents in a buyer's market or seller's agents in a seller's market when the cost of a crap shack is $800k+ - which unfortunately is a growing part of the country. If you're unaware - the brokerages can take up to 40% of the agent's commission. That's where the real rip off is. There's lots of places where the median home is still <$250k. It's a lot of work to sell that house (in a buyer's market). In a seller's market - it's a lot of showings and offers before something gets accepted. 70% of 3% of $250k = $5250 Typically, R/E agents are 1099 - which means they're paying ~10% more income tax in the employer's side of Medicare and Social Security. That's $4446 after payroll tax but BEFORE income tax. You're lucky if you're selling >1 house a month. Just because real estate agents aren't writing code and aren't making doo-dads, doesn't mean they're doing nothing, or that their time is worthless.

hezralig 4y ago

I commented elsewhere but I studied Econ in college because it was a particular interest of mine. I hated it. I also wanted to understand it, so that I could know why it rubbed me the wrong way and live intentionally to push against it. There was this moment when I was in a grad course and the professor was talking about self-optimizing markets. That's when it hit me. I literally stood up in the class, interrupted everything and went like "wait, the math isn't optimizing for income inequality". It was kind of funny watching more than 100 little economists in training suddenly start tearing apart the equation at once. You could literally hear the sound of frantic spreadsheeting and charting. In the end, the professor himself said that it was true, you could achieve a fully "optimized" economy with literally everything being owned by a handful of people. Made me think. How is a system supposed to be beneficial for us all when the mathematics at its core don't actually consider societal benefit? If an economy is fully "optimized" but everyone is sick, sad, and angry - is it actually optimal? A mathematical model can make sense without being sensible. This is why I have an implicit distrust of algorithms and other systems of optimization.

maxboone 4y ago
You can be pareto optimal / efficient without a everyone having a 1/n share. The idea of optimization is that everyone gets the best possible set. E.g. Alice prefers tomatoes, Bob prefers mangos. Thus, Alice ends up with 100% of the tomatoes, Bob with 0%. Unfortunately it's mostly the externalities and irrationality / wrong assumptions that fail us. An economy is not optimal (or pareto efficient) iff people are disproportionally sick, sad and angry because of economical reasons (and don't trade this sickness, sadness and angriness for something that gives them more utility).
underdeserver 4y ago
That's the cold, hard truth of capitalism: It converges on the rich-get-richer, economies-of-scale winner-takes-all endgames. Used to be you needed lots of skilled workers to get anything done. You had to pay them. Now with automation and tech and specialization due to global free trade, you only need skilled workers in a handful of professions, the value of doing anything else steadily decreases.

robocat 4y ago

> real estate The financial incentives to an agent are to sell as many houses as they can as quickly as possible. Every sale is an end to ongoing time being "wasted" dealing with potential buyers. Every deal is money in the bank now. Agents don't really care about the price beyond talking the seller and the buyer to agree to some number (overpriced or underpriced is mostly irrelevant). The US system appears batshit crazy to me - very adversarial? In New Zealand there is usually only a sellers agent: it is rare to have a buyers agent. Buying a house in New Zealand has less percentage cost in total fees, from what I can tell. Total agent fees are commonly around 4% for the first $400k of the sale price (median house price $800k in NZ) and around 2% for the remainder. We have real estate companies advertising lower rates. Plus maybe 1% for marketing? https://www.nzherald.co.nz/property/what-does-it-cost/YO4VZMU27Q6DUAKGJZRAPEODMA/ https://www.nzherald.co.nz/property/what-does-it-cost/YO4VZM...