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The Social Recession Is Accelerating
- stavros 2y ago> Did wages rise 10-fold to match the 10-fold rise in the cost of a modest house? No. Where is all that money going? How can a house cost so much more, but wages are stagnant? Who benefits?
- wahnfrieden 2y agoIsn’t it obvious
- stavros 2y agoIsn't it obvious it's not?
- bumby 2y agoI think it’s a bad comparison. The author cherry picks the SV area which is not indicative of the country as a whole. (And it goes without saying that the explosion of tech in the area coincides with the decades being compared). The author also makes no mention of the change in preferences that accompanied these prove changes. E.g., the average house size has increased dramatically.
- chrsw 2y agoI don't think what happened in SV is completely unique though. I live on the other coast and the price of housing maybe isn't as bad as SV but it is still outrageous. And I think some people lucky enough to afford it are buying in on the promise that will be even worse in the future so they can sell off.
- bumby 2y agoAll I’m saying is that the degree is unique. By and large, home prices have went up in other parts of the country but not by 10x like implied by the author. Once you strip away the preference piece (ie, measure by $/sqft rather than absolute values) the effect is still there but much less pronounced.
- chrsw 2y agoThat's true. My point was if you're part of the population that has a good job and still can't afford a home where you live, because of how we've allowed this situation in the housing market to happen, and which is a large population of people, then I don't think your zip code matters very much.
- recursivedoubts 2y agothe housing/income ratio of the US is at an all time high: https://www.longtermtrends.net/home-price-median-annual-income-ratio/ https://www.longtermtrends.net/home-price-median-annual-inco...
- randomdata 2y agoFairly low with respect to average personal income, though.
- DHPersonal 2y agoAverage personal income of the entire population of the country, millionaires and billionaires included? If so, wouldn't that deeply skew the results?
- randomdata 2y agoSkew in what way?
- DHPersonal 2y ago> Skew in what way? https://introductorystats.wordpress.com/2011/09/04/when-bill-gates-walks-into-a-bar/ https://introductorystats.wordpress.com/2011/09/04/when-bill...
- randomdata 2y agoImplying that Bill Gates buys a lot of real estate? That's probably true – he does have nearly 300,000 acres of farmland after all – but I'm not sure really answers the question.
- nairboon 2y agoThe chart says it's median income.
- maxsilver 2y ago> The author cherry picks the SV area which is not indicative of the country as a whole. The whole country is SV now, plus or minus a few percentage points. Even in nowheresville-Michigan, any house near any job costs about 4 to 5 times what it did 15 years ago. We even have cities that have lost total population and the prices still skyrocketed. Even if you scope it to just say, a specific small town -- a house that cost $80k in 2012, that exact same house now costs $360k in 2024, and wages did not rise 400% to compensate. Tech folks sit in SV with a $200k/yr income and think, "ah, see, Michigan is so affordable". But the people here are holding Masters Degrees and student debt and make $45k/yr, $360k is every bit as out of reach to them, as a $1.5 million house is to you in SV. Sure, not every place is SV from a literal perspective. But from a relative percent basis, nearly every city in every state in the US is now experiencing their own SV-like housing price explosion (regardless of whether their total population has grown or shrank, regardless of whether they have made it difficult to develop, or have been very open to new development, as most of Michigan has always been).
- randomdata 2y ago> But the people here are holding Masters Degrees and student debt I wonder how long before we finally admit that said student debt is the very source of money that has pushed home prices so high? Not backed by anything real and non-dischargeable makes it a dream for the benefactors.
- iosguyryan 2y agoHuh? Debt. Paid to another entity that was not the house seller. Walk me through the logic.
- randomdata 2y agoIt turns out colleges don't burn the money they receive. They either invest it themselves or pass it on to the next guy to do the same.
- rchaud 2y agoStudent debt didn't cause the financial crisis of '08, opaque securitization of home mortgages did. That created a domino effect of brokers handing out variable-rate loans to people who didn't understand the terms. They didn't care about the deliquency rate because they could sell that mortgage to another party and make it their problem. The whole thing was a ticking time bomb. None of that applies to student loans because those aren't collateralized with a real asset the way home loans are.
- jncfhnb 2y agoGenerally speaking the money is coming from returns on investments. The sp500 has increased by 28% over the past 12 months with no mention of dividends.
- stavros 2y agoYeah, I'm definitely kicking myself for selling all my stock a year ago...
- staticman2 2y ago28.8% with dividends going by the TSP C fund which doesn't pay dividends but keeps them in fund.
- morninglight 2y agoIt’s all about the taxes. Income and inheritance taxes have created a biased system that is destroying the economy for average Americans. PSA: Don't forget to pay your quarterly estimated tax payment by Sept 16.
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- oliwarner 2y agoLenders. 50+ years of principal explosion means you can borrow more so you can afford more, which means you repay even more. Homebuilders have to pay higher wages, higher material costs, better materials too. I'm sure they're also making it work for them but the banks are pure profit, very little risk. It'd be silly to ignore the possibility they're the ones driving prices as they benefit most from higher loans.
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- nicomeemes 2y agoI recently finished Peter Turchin's "End Times: Elites, Counter-Elites, and the Path of Political Disintegration": https://www.goodreads.com/book/show/62926960-end-times https://www.goodreads.com/book/show/62926960-end-times. I thought his insight (that societies often fall into so-called secular cycles, rather profound and illuminating).
- science4sail 2y agoI think that historical cycles have been a popular topic ever since at least the days of Socrates and his philosophical peers. That said, have any of these predictions ever managed to stop the cycle? As far as I know, both Turchin and Ibn Khaldun (who Turchin calls out a lot in his books) felt that such cycles were inevitable. The more common response to these predictions seems to be some variant of "this is cherry-picked data, our society is different!" Or are such predictions instead intended to speed the advent of the next cycle? Perhaps we should be like King Wen Zhou in pre-imperial China, watching the skies for a sign from heaven to bring about the new age.
- genghisjahn 2y ago> As a result, those who bought assets a generation or two ago now own most of the nation's wealth… Well…yeah. Hasn’t this always been true?
- AnimalMuppet 2y agoYeah. Those who 1) could afford to buy assets a generation ago and 2) could afford to hold them for a generation, those people hold most of the nation's wealth. Why? Because 1) they were starting ahead of everyone else. And 2) because long-term investing (done reasonably wisely) gives higher returns than short-term investing. So if you started out with more assets than everyone else, and got higher returns for a generation, of course you're far ahead of everyone else!
- mydogcanpurr 2y agoThat all sounds obvious and inevitable, but it also relies on the return from capital out-earning the return from labor by quite a lot. This hasn’t always been true, but it does seem likely to continue.
- AnimalMuppet 2y agoWell, the return on enough capital will always out-earn the return from labor by quite a lot. Labor doesn't scale the way capital does. You can have 10 billion invested instead of 1 billion, but you can't work 80 hours a day. But more, most of labor is saving single-digit percentages of the return from labor, if they are investing at all. The people who had capital to invest a generation ago, and left it invested for a generation, kind of by definition kept all of that capital invested for a generation. So I don't think it's as simple as "return from capital > return from labor". (Or maybe I'm demonstrating that it is exactly that, and I'm just thinking of it using different words.)
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- jauntywundrkind 2y agoExcellent illustration of the truly shocking scale of the impacts of corporate consolidation & winner takes all economics. The scope and scale of companies is just so high. Unlike the world as it used to be, where lots of companies were doing the same jobs, we've concentrated industries into so few titans. It's hard to imagine how we keep the social contract alive, with conditions as is. It feels like America has made leap and bounds of progress towards de-governance, towards making legislating and regulating harder and harder. The FTC has finally awoken from a near total slumber, but with the courts aligned as they are it's hard to see that they'll really be allowed leverage to tilt the scales towards more human scaled, competitive markets. Competitive markets wouldn't just be good for consumers; making competition viable is necessary to allow new opportunities to get started. Right now, the Thomas Piketty cycle of rich organizations and people getting wealthier has no remedy, has so few vectors open for others to try to match this. (Addressing housing and health care costs, such that the risk of doing other things is less, would help enormously.)
- rchaud 2y agoAny discussion of 'social recession' has to include something about the dwindling amount of free time an individual has to actually do things unrelated to basic survival (work, school, groceries, cooking, transportation time). That's just scratching the surface. After all that, there's the decline and disappearance of third places, the hollow mirage of dating apps and the exorbitant cost of social activities (gyms, bowling, camping, even going for a coffee/drink etc.) which are now marketed as "lifestyle activities" with the corresponding markup.
- aprilthird2021 2y agoBut don't we see the rise of things like Twitch streaming where people watch other people play games for hours? Longer and longer gameplay experiences are becoming more common. And I do think it's people with higher incomes who have shrinking and shrinking social circles. I do think it's primarily a reaction to our current internet and smartphones, the social contracts which broke during COVID, etc. Many many many cities and countries have complained about the exorbitant cost of everything for centuries, but we have not seen loneliness like this before, imo.
- rchaud 2y agoThe article is referring to adults. I don't know that the % of grown adults watching Twitch all day is significant. I would say the loneliness issue here is more related to the fact that it's not easy to live close to friends, and neighbourhoods for the most part aren't designed for meeting new people.
- bumby 2y agoI think what you're referencing is just a change in social norms. The lowest rate (according to BLS data) is 35-44 year olds and they are still spending > 2 hours per day just watching TV. In an era where groceries can get delivered and there are many more remote work/school options, I think people may have more time than they think but it gets fractured across too many activities and just falls through the cracks due to too many pulls on our attention.