1) When I'm doing work on the side and want to get it done. I'll work on the weekend.
2) When I'm being paid well and able to telecommute, and there's a task that needs to be done - I'll work on the weekend. Heck, in that situation, I've worked late nights too. The working environment couldn't get more comfortable, with my own kitchen and bathroom and climate control. And when my brain shuts down late at night, I'm a few feet from the bed.
When I'm on-site... and I'm eating from the vending machine, trying to avoid using the low-privacy, cesspool toilets, and it's too cold or too hot, and I can't take a few minutes off and relax on the couch or outside in peace - yeah, I have no interest in staying there longer than my 8 hours. I don't care how interesting the work is. I've done it of course, both late night and weekends, but under duress like the parent poster noted.
My basic problem with Sanders was very well expressed by Margaret Thatcher: "The problem with socialism is that eventually you run out of other people's money." So let's radically change our government so we can start confiscating and spending other people's money even faster, because that will make everything better!
Actually you can print up a pretty hefty amount - see Japan and the US Quantitative Easing (QE). How long that can last, who knows, but it's really appealing to politicians. And some Nobel Laureate economists are big fans of it too.
In short, Congress cannot define a group of people, and require people to give up their right to speech when joining it, to take advantage of that group's provided features.
The salaries for lawyers vary like those for software developers. There are a vast number of grunts doing basic work and making adequate salaries. BUT, towards the top of the pyramid, which is exceptionally difficult to reach, there are those making eye-popping salaries.
Ditto with the IT field. That guy who "stole" code from Goldman Sachs, Sergey Aleynikov, was pulling down 400K a year at Goldman. He was set to get 3 times that amount from another company upon leaving Goldman. That's like an elite lawyer's salary. BUT - some guy doing PHP on a no-benefits contract - what, 50-60K? Some average guy doing intranet programming, or building websites for small businesses as an employee? Probably averaging in the same range, maybe a tad higher.
The difference is that there is no bar to entry for programmers. Lawyers have to pass the bar. Anybody can start slapping together apps or get on a no-benefits contract with a little experience. Plus lawyers are highly organized, with the ABA, the American Trial Lawyers association (representing plaintiff lawyers), etc. IT types are way too... I dunno, disorganized, libertarian, low-social-IQ (in general) for that kind of thing. But people that make businesses are not low social IQ. They're dealmakers. And they absolutely hate having to pay these high salaries. They figure if they can flood the market, they can lower their labor costs.
Jokes on them a bit though. True, they'll suppress IT salaries in general. But the superstars will still be a small fraction of the overall IT pool, and they'll still command the stratospheric, though a bit lower, salaries.
And programmers ought to be organizing more behind the ACM, I guess, and encouraging some kind of "PE" (Professional Engineer) equivalent to mark one as someone who actually knows the theory of computer science and practice of programming.
Corporations were not considered in the original list of entities that would need to be included in the checks-and-balances equation. Back in the Founders day, there was the East India Tea Company, but still governments were unquestioningly the shot callers. So, there was an effort to place checks and balances within government.
Today, businesses have grown large enough to co-opt government. And they definitely influence society.
"When they own the information, they can bend it all they want." - John Mayer, "Waiting On The World To Change"
There are a lot of very powerful interest groups that want to gain control of the information flowing over the Internet. That would, I think, be a terrible blow to the advancement of the human race, and a slide back into oligarchy.
And also, this concept of local government officials - chieftains - working as fronts for very specific interest groups is troubling. It's commonly seen in DC where lobbyists write sections of laws which apply to themselves or competitors. Also on Wall Street where financial companies can direct prosecution (e.g. Aleynikov) as well as write law. This kind of behavior is a dereliction of duty, and should be treated as such.
"At a medical conference Dr. Marty Makary saw one of his Harvard professors who “looked out at a room of 2,000 doctors and asked ‘How many of you know of another doctor who should not be practicing because he is too dangerous?’ Every hand went up.” Yet few report bad doctors and those that do often get fired.
Hospital staff knows they are practicing bad medicine and mostly do nothing. In Makary’s provocative book, Unaccountable, he describes one Ivy League-trained doctor who’s popular with patients yet dubbed Hodad, by his colleagues, for his continuing string of patient deaths. Hodad is their dark humored acronym for “hands of death and destruction.”
Doctors are kind of like cops. They both do a life and death, high stress job, and are under assault from all corners (for different reasons). So they protect their own. But to improve illness survivability, and in the interest of trying to get more information to patients, there has to be some way to get information about doctors to patients.
On the other hand, any metric will be gamed. So - if doctors aren't willing to police themselves... what choice is there but trying to get metrics on them? We're not talking about a good and a bad choice, we're talking about a bad and worse choice - which one is less bad?
And if you think the teachers union is badass - the AMA is made up of doctors, who are smart and relentless and wealthy. They're a big lobby in DC (although smaller than I thought prior to looking them up. In recent election cycles, with Obamacare, I recall seeing them near the top of the list).
I read Bloom County throughout the eighties. It was a brilliantly funny comic, nothing like Doonesbury which was highly political. Yes, Breathed obliquely dealt with political issues ("caucus raucous!") but in an evenhanded fashion, which was unusual for back then. I'm amazed Breathed is bringing this back. I'm really looking forward to it and hope he has a long and humorous run.
No. I found it curious that the manufacturer, after having likely spent extra effort/expense on the rBGH-free animal, would be mandated to include the statement that there is no difference.
The manufacturer wasn't claiming any benefit to the rBGH-free animals; merely that they were rBGH-free.
I would suggest instead that non-GMO products should voluntarily label themselves as non-GMO, and enforce the veracity of that claim under truth in advertising laws.
The ag lobby has already blocked things like this. On containers of yogurt not made from cows given recombinant bovine growth hormone (rBGH), you'll see a label which says that. But there's also a mandated label (at least in the mid-Atlantic) which says there is no difference in milk from cows given rBGH and cows not given it.
I'm no fan of Putin, I think he's a corrupt oligarch. But I see things like this, shenanigans in the financial sector and various other regulations swayed by donations at all levels of government. And I have to wonder if Putin and his cronies are right.
I remember first seeing on a container of recombinant-bovine-growth-hormone-free yogurt that stated there was no difference between it and rbgh containing yogurt.
I thought - "What? Why would the manufacturer put both of those labels on his product?" Of course, it's because the agricultural lobby paid off politicians in order to force non-rBGH manufacturers to put such labels on their product.
You know how Tom Wheeler, former top lobbyist for the cable industry is now head of the FCC? Yeah, it's safe to assume that this sort of thing occurs throughout the US regulatory apparatus. You know the IRS scandal regarding the targeting of conservative groups? Yeah, Big Ag seems to do the same thing but through the regulatory apparatus.
Fortunately, we don't have law breaking like that here. First the bribery and conflicts of interest are legalized of course, THEN the "favors" occur. So - no illegality.
[Aside: I notice your interesting post is at 0 points: Reminder to certain mods: There's no "-1 disagree"]
Regarding your post - what is the net result of individuals being able to pick up a small gig here and there? What is the social cost of that? Yeah, it can generate some spending money, but is the overall result to drive down wages of workers, while increasing wealth among business owners?
Or does it lower costs for business, both in regulation and wages, leading to greater business innovation and business creation, and greater social welfare?
Or does it lead to deflation as wages are pressured down? How about deflation along with greater income inequality leading to even worse social outcomes?
I don't know - but my point is that policy makers (politicians) should be trying to understand the big picture, guided by what most improves social welfare, and not what gets them the most contributions (hah).
"Creative Destruction" is the destruction of the "worse" which is replaced by the "better". Hopefully resulting in better overall social welfare.
Would the destruction of the current model of the taxi industry lead to higher general social welfare? If the choice is between concentrating more of the profit at the top and less of it among the workers, probably not. If it means more profit for workers, and more workers, then it would improve social welfare.
Trying to identify which model improves social welfare is the key. Change is scary and disruptive, and not always good. But without technology-driven change, we'd still have a wagon-wheel manufacturing industry. On the other hand, we have lost a great deal of manufacturing, with all the costs and benefits that entails. IMO the costs outweigh the benefits in losing manufacturing.
Unfortunately, we don't see creative destruction in other important areas such as finance or politics. The financial system imploded in 2008, due to consistent patterns of misjudgment and malfeasance. But, they are among the biggest donors to federal politicians, so they received a rescue. I can understand saving the banks, but no executives were penalized, much less jailed. And the business models didn't change. Too Big To Fail just got bigger. Also, we don't see creative destruction in politics where the game is heavily rigged to favor the incumbent. If taxi drivers can convince (i.e. contribute sufficiently to) local, state and federal politicians, they may be able to save their business model, regardless of the social welfare implications.
The first point has been addressed many times already - even if you're powering your electric car on 100% fossil-fuel electricity you're still doing better than burning gasoline.
Do you have a link? A document dump is not helpful - just a clear link from an authority.
The problem with drone pilots is there's no prestige in the job currently and no future outside the military with that training. It's not like a pilot who can take that training when he leaves the military and make a lucrative career out of it. And on top of that - there's no medals for bravery or heroism for a drone pilot, even if he does something that saves a platoon.
It's a weird beast, the drone operator.
Drones are absolutely essential and helped save a lot of lives, both American soldiers and "collateral damage" in acting as a long range gunsight with precision munitions. But it's probably got the least applicability on the outside.
If you don't borrow to buy, you are doing it wrong. Borrow $400k for a $400k house, paying $28k in interest, $10k in carrying cost, and charging $3k for rent.
Google says 280K in interest, not 28K @ 3.92% interest over 30 years.
All other costs and income is labeled "per year", so why would you change that for the interest?
Nowhere did you label your timeframe. The 3K rent sounds like a month, the 10K in carrying costs could be over who knows what timeframe, and the 28K interest makes no sense. I clearly labeled my timeframe.
If you don't borrow to buy, you are doing it wrong. Borrow $400k for a $400k house, paying $28k in interest, $10k in carrying cost, and charging $3k for rent. Though, I used unfavorable rent, and a high carrying cost, so I'm sure you'll take exception at the rental price. The numbers aren't far off for many places. A $300k house in Anchorage will rent for $2300 per month.
Google says 280K in interest, not 28K @ 3.92% interest over 30 years. Just Google "interest calculator", and Google displays their built-in interest calculator.
If interest rates ever normalize - even go to 5%, interest jumps to 373K - about the price of the house.
The goal with a rental is to break-even cashflow. The market will go up 100% in 7-15 years, and you will make 2-5% above inflation with more "guarantee" than any other investment with those returns.
How much people can borrow determines how much they pay for real estate, for the most part. And there's evidence we're at peak debt now. There are two measures - the absolute amount of debt, and how much people have to pay to service their debt. That second measure, the debt service ratio / financial obligation ratio, put out by the central bank, is paradoxically at historical lows. Credit low interest rates for that I suppose, or it's just flat out inaccurate, as the About link admits it's difficult to measure.
There's also competition with big all cash investors, though they're down to around 36% of purchases at this point, which drives up prices.
You can speculate on a 100% increase in the next 7-15 years, but that's a rearward looking indicator and the central bank and government have already done a tremendous amount of intervention already, between the bailouts and quantitative easing (lowering interest rates plus buying mortgages and government debt with printed money). Will it continue? Who knows, I'd say it's a 50-50 shot, provided the distortions they're introducing (namely that low interest rates spark asset bubbles) don't break something.
Houses have carrying costs which people need to understand as well. Investors often buy with no mortgage so they don't have to pay interest costs. Interest is typically the biggest single cost for the buyer using a mortgage. As far as the investors go, they're in and out as quickly as they can be to avoid the other carrying costs of the house - taxes, insurance, utilities, maintenance, other fees. The hidden costs of home ownership, at CNBC - they're claiming 6K a year on average carrying costs. And that's a Zillow spokesperson talking about that, so they might even be understating the carrying costs.
To make a profit on a house, the selling price plus the sum of rents have to be greater than the sum of the carrying costs.
The interesting question is how long can this last before we reach a level that is not affordable to the majority of the demographic that is being serviced.
Care to guess what happens at that point? New construction doesn't sell, developers go bankrupt, new construction is sold at auction for lower prices. Then the new units available at lower prices push down prices of other housing, which makes purchase more affordable, which results in renters buying, which curbs rent prices.
Unless of course, large financial companies and well-connected donors are threatened by that circumstance.
My point is simply this: house prices did not revert to historical norms because of the big players - donors - that would have been deleteriously impacted by it. With big players moving into the rental market, if something went wrong with their business plan, don't expect them not to use their clout to get the government and central bank to do something about it.
You noted but didn't bother to post any evidence supporting your claims. We can wait.
Fair enough.
First, a thought experiment: Imagine Acme company sells widgets at 10 dollars each. One hundred people buy the widgets. Another hundred would like them, but cannot afford them. Uncle Phil sees this. Uncle Phil is a multi-billionaire. Uncle Phil says to those who cannot afford them, "I'll buy you your widgets for you." So now you have two hundred people buying widgets. The business sees its demand going up, and thus begins increasing prices. Most of the original hundred keep paying. Phil is a multi-billionaire so price isn't an option. The business owner wants maximum revenue, which is the maximum (price x quantity). So, business keeps jacking up costs until he reaches that point. If the widgets are essential to life (i.e. have inelastic demand), the original hundred do everything they can to keep paying the higher price.
So - that's the thought experiment.
Here's a paper by a Nobel (equivalent) laureate in economics, the conclusion of which states that subsidies will drive up prices in monopolistic environments (see page 28, the first paragraph of the section titled 'Conclusion': "This paper demonstrates two ways that a subsidy may increase equilibrium prices in a monopolistically competitive market"). My addition is that they drive up prices when demand is inelastic as well: Paper by Joseph Stiglitz (PDF).
Slashdot Mirror
Times I've wanted to work on the weekend:
1) When I'm doing work on the side and want to get it done. I'll work on the weekend.
2) When I'm being paid well and able to telecommute, and there's a task that needs to be done - I'll work on the weekend. Heck, in that situation, I've worked late nights too. The working environment couldn't get more comfortable, with my own kitchen and bathroom and climate control. And when my brain shuts down late at night, I'm a few feet from the bed.
When I'm on-site... and I'm eating from the vending machine, trying to avoid using the low-privacy, cesspool toilets, and it's too cold or too hot, and I can't take a few minutes off and relax on the couch or outside in peace - yeah, I have no interest in staying there longer than my 8 hours. I don't care how interesting the work is. I've done it of course, both late night and weekends, but under duress like the parent poster noted.
I'm reminded of this video (53 seconds, NSFW): "Simple Explanations" (or, 'How to get bitches on a boat')
Actually you can print up a pretty hefty amount - see Japan and the US Quantitative Easing (QE). How long that can last, who knows, but it's really appealing to politicians. And some Nobel Laureate economists are big fans of it too.
Yes, but the executives take the logical construct's money, of which there is a copious amount, and use it to influence legislators. It's not their own personal money they're spending. Putting limits on how they can spend the construct's money is not the same thing as putting limits on how they can spend their own money.
The salaries for lawyers vary like those for software developers. There are a vast number of grunts doing basic work and making adequate salaries. BUT, towards the top of the pyramid, which is exceptionally difficult to reach, there are those making eye-popping salaries.
Ditto with the IT field. That guy who "stole" code from Goldman Sachs, Sergey Aleynikov, was pulling down 400K a year at Goldman. He was set to get 3 times that amount from another company upon leaving Goldman. That's like an elite lawyer's salary. BUT - some guy doing PHP on a no-benefits contract - what, 50-60K? Some average guy doing intranet programming, or building websites for small businesses as an employee? Probably averaging in the same range, maybe a tad higher.
The difference is that there is no bar to entry for programmers. Lawyers have to pass the bar. Anybody can start slapping together apps or get on a no-benefits contract with a little experience. Plus lawyers are highly organized, with the ABA, the American Trial Lawyers association (representing plaintiff lawyers), etc. IT types are way too... I dunno, disorganized, libertarian, low-social-IQ (in general) for that kind of thing. But people that make businesses are not low social IQ. They're dealmakers. And they absolutely hate having to pay these high salaries. They figure if they can flood the market, they can lower their labor costs.
Jokes on them a bit though. True, they'll suppress IT salaries in general. But the superstars will still be a small fraction of the overall IT pool, and they'll still command the stratospheric, though a bit lower, salaries.
And programmers ought to be organizing more behind the ACM, I guess, and encouraging some kind of "PE" (Professional Engineer) equivalent to mark one as someone who actually knows the theory of computer science and practice of programming.
They don't have to buy the country, just the government. And all that's required to do that is merely to spend enough to influence a sufficient number of the 535 legislators who make its laws.
The same dynamic works at the state and local levels.
All corporations allocate a certain amount to lobby/invest in government. Those investments typically have a very high rate of return. Another more in-depth analysis is here.
Corporations were not considered in the original list of entities that would need to be included in the checks-and-balances equation. Back in the Founders day, there was the East India Tea Company, but still governments were unquestioningly the shot callers. So, there was an effort to place checks and balances within government.
Today, businesses have grown large enough to co-opt government. And they definitely influence society.
Eisenhower warned of the Military-Industrial complex in his famous speech: "In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist."
Today, the financial sector dwarfs defense in its lobbying efforts. Technology is also another gigantic sector with a growing influence.
So - Business must now be included in the check and balance equation of governing. Unfortunately, virtually no one willingly gives up power.
The problem is that we can't provide cushy sinecures for them after they complete their government service.
Looking at the Revolving Door can be truly startling.
"When they own the information, they can bend it all they want." - John Mayer, "Waiting On The World To Change"
There are a lot of very powerful interest groups that want to gain control of the information flowing over the Internet. That would, I think, be a terrible blow to the advancement of the human race, and a slide back into oligarchy.
And also, this concept of local government officials - chieftains - working as fronts for very specific interest groups is troubling. It's commonly seen in DC where lobbyists write sections of laws which apply to themselves or competitors. Also on Wall Street where financial companies can direct prosecution (e.g. Aleynikov) as well as write law. This kind of behavior is a dereliction of duty, and should be treated as such.
HODAD- "Hands of Death And Destruction" - A Hopkins doctor wrote a book about the subject.
From the article:
"At a medical conference Dr. Marty Makary saw one of his Harvard professors who “looked out at a room of 2,000 doctors and asked ‘How many of you know of another doctor who should not be practicing because he is too dangerous?’ Every hand went up.” Yet few report bad doctors and those that do often get fired.
Hospital staff knows they are practicing bad medicine and mostly do nothing. In Makary’s provocative book, Unaccountable, he describes one Ivy League-trained doctor who’s popular with patients yet dubbed Hodad, by his colleagues, for his continuing string of patient deaths. Hodad is their dark humored acronym for “hands of death and destruction.”
Doctors are kind of like cops. They both do a life and death, high stress job, and are under assault from all corners (for different reasons). So they protect their own. But to improve illness survivability, and in the interest of trying to get more information to patients, there has to be some way to get information about doctors to patients.
On the other hand, any metric will be gamed. So - if doctors aren't willing to police themselves... what choice is there but trying to get metrics on them? We're not talking about a good and a bad choice, we're talking about a bad and worse choice - which one is less bad?
And if you think the teachers union is badass - the AMA is made up of doctors, who are smart and relentless and wealthy. They're a big lobby in DC (although smaller than I thought prior to looking them up. In recent election cycles, with Obamacare, I recall seeing them near the top of the list).
I read Bloom County throughout the eighties. It was a brilliantly funny comic, nothing like Doonesbury which was highly political. Yes, Breathed obliquely dealt with political issues ("caucus raucous!") but in an evenhanded fashion, which was unusual for back then. I'm amazed Breathed is bringing this back. I'm really looking forward to it and hope he has a long and humorous run.
No. I found it curious that the manufacturer, after having likely spent extra effort/expense on the rBGH-free animal, would be mandated to include the statement that there is no difference.
The manufacturer wasn't claiming any benefit to the rBGH-free animals; merely that they were rBGH-free.
The ag lobby has already blocked things like this. On containers of yogurt not made from cows given recombinant bovine growth hormone (rBGH), you'll see a label which says that. But there's also a mandated label (at least in the mid-Atlantic) which says there is no difference in milk from cows given rBGH and cows not given it.
I read this in The Economist recently:
"Mr Putin and his associates know, from first-hand experience, that courts and judges in Russia are for the most part obedient puppets of their political masters. They also believe, wrongly, that the Western system works on the same principle, but just dressed up with more hypocrisy and flimflam."
I'm no fan of Putin, I think he's a corrupt oligarch. But I see things like this, shenanigans in the financial sector and various other regulations swayed by donations at all levels of government. And I have to wonder if Putin and his cronies are right.
I remember first seeing on a container of recombinant-bovine-growth-hormone-free yogurt that stated there was no difference between it and rbgh containing yogurt.
I thought - "What? Why would the manufacturer put both of those labels on his product?" Of course, it's because the agricultural lobby paid off politicians in order to force non-rBGH manufacturers to put such labels on their product.
You know how Tom Wheeler, former top lobbyist for the cable industry is now head of the FCC? Yeah, it's safe to assume that this sort of thing occurs throughout the US regulatory apparatus. You know the IRS scandal regarding the targeting of conservative groups? Yeah, Big Ag seems to do the same thing but through the regulatory apparatus.
You know, El Chapo broke out of jail, probably with the help of Mexican authorities. It was reported that "He then hinted that the authorities had been complicit in the jailbreak by posting: 'The dog (slang for the Mexican government) dances for money, and I've bought it.'
Fortunately, we don't have law breaking like that here. First the bribery and conflicts of interest are legalized of course, THEN the "favors" occur. So - no illegality.
[Aside: I notice your interesting post is at 0 points: Reminder to certain mods: There's no "-1 disagree"]
Regarding your post - what is the net result of individuals being able to pick up a small gig here and there? What is the social cost of that? Yeah, it can generate some spending money, but is the overall result to drive down wages of workers, while increasing wealth among business owners?
Or does it lower costs for business, both in regulation and wages, leading to greater business innovation and business creation, and greater social welfare?
Or does it lead to deflation as wages are pressured down? How about deflation along with greater income inequality leading to even worse social outcomes?
I don't know - but my point is that policy makers (politicians) should be trying to understand the big picture, guided by what most improves social welfare, and not what gets them the most contributions (hah).
"Creative Destruction" is the destruction of the "worse" which is replaced by the "better". Hopefully resulting in better overall social welfare.
Would the destruction of the current model of the taxi industry lead to higher general social welfare? If the choice is between concentrating more of the profit at the top and less of it among the workers, probably not. If it means more profit for workers, and more workers, then it would improve social welfare.
Trying to identify which model improves social welfare is the key. Change is scary and disruptive, and not always good. But without technology-driven change, we'd still have a wagon-wheel manufacturing industry. On the other hand, we have lost a great deal of manufacturing, with all the costs and benefits that entails. IMO the costs outweigh the benefits in losing manufacturing.
Unfortunately, we don't see creative destruction in other important areas such as finance or politics. The financial system imploded in 2008, due to consistent patterns of misjudgment and malfeasance. But, they are among the biggest donors to federal politicians, so they received a rescue. I can understand saving the banks, but no executives were penalized, much less jailed. And the business models didn't change. Too Big To Fail just got bigger. Also, we don't see creative destruction in politics where the game is heavily rigged to favor the incumbent. If taxi drivers can convince (i.e. contribute sufficiently to) local, state and federal politicians, they may be able to save their business model, regardless of the social welfare implications.
Do you have a link? A document dump is not helpful - just a clear link from an authority.
Googling led to these links:
What is the efficiency of different types of power plants?
The International Energy Administration (IEA) indicates that combined cycle gas plants have a higher average efficiency than coal plants. Simple cycle plants have efficiencies ranging from 35 - 42% and combined cycle plants have efficiencies of 52 - 60% compared to efficiencies of up to 46% for supercritical coal plants and 50% for ultra supercritical coal plants.
Maximum theoretical efficiency of internal combustion engine
1) In an area which gets most of its electricity from fossil fuels, like DC Metro, the energy is still being mostly obtained from fossil fuels - including coal. So instead of directly using a fossil fuel, I'm using it with one degree of separation via electricity.
2) How long it lasts: Every X number of years, the battery has to be replaced at very significant cost.
3) How gracefully does the battery degrade: When the battery starts degrading, what does that do to performance?
4) Environmental impact of building and disposing of the battery: Are giant leach pits being left behind and aboriginals being looted?
5) Annual and lifetime carrying costs are hazy versus those of an oil burner.
The problem with drone pilots is there's no prestige in the job currently and no future outside the military with that training. It's not like a pilot who can take that training when he leaves the military and make a lucrative career out of it. And on top of that - there's no medals for bravery or heroism for a drone pilot, even if he does something that saves a platoon.
It's a weird beast, the drone operator.
Drones are absolutely essential and helped save a lot of lives, both American soldiers and "collateral damage" in acting as a long range gunsight with precision munitions. But it's probably got the least applicability on the outside.
If you don't borrow to buy, you are doing it wrong. Borrow $400k for a $400k house, paying $28k in interest, $10k in carrying cost, and charging $3k for rent.
Google says 280K in interest, not 28K @ 3.92% interest over 30 years.
All other costs and income is labeled "per year", so why would you change that for the interest?
Nowhere did you label your timeframe. The 3K rent sounds like a month, the 10K in carrying costs could be over who knows what timeframe, and the 28K interest makes no sense. I clearly labeled my timeframe.
If you don't borrow to buy, you are doing it wrong. Borrow $400k for a $400k house, paying $28k in interest, $10k in carrying cost, and charging $3k for rent. Though, I used unfavorable rent, and a high carrying cost, so I'm sure you'll take exception at the rental price. The numbers aren't far off for many places. A $300k house in Anchorage will rent for $2300 per month.
Google says 280K in interest, not 28K @ 3.92% interest over 30 years. Just Google "interest calculator", and Google displays their built-in interest calculator.
If interest rates ever normalize - even go to 5%, interest jumps to 373K - about the price of the house.
The goal with a rental is to break-even cashflow. The market will go up 100% in 7-15 years, and you will make 2-5% above inflation with more "guarantee" than any other investment with those returns.
How much people can borrow determines how much they pay for real estate, for the most part. And there's evidence we're at peak debt now. There are two measures - the absolute amount of debt, and how much people have to pay to service their debt. That second measure, the debt service ratio / financial obligation ratio, put out by the central bank, is paradoxically at historical lows. Credit low interest rates for that I suppose, or it's just flat out inaccurate, as the About link admits it's difficult to measure.
There's also competition with big all cash investors, though they're down to around 36% of purchases at this point, which drives up prices.
You can speculate on a 100% increase in the next 7-15 years, but that's a rearward looking indicator and the central bank and government have already done a tremendous amount of intervention already, between the bailouts and quantitative easing (lowering interest rates plus buying mortgages and government debt with printed money). Will it continue? Who knows, I'd say it's a 50-50 shot, provided the distortions they're introducing (namely that low interest rates spark asset bubbles) don't break something.
Houses have carrying costs which people need to understand as well. Investors often buy with no mortgage so they don't have to pay interest costs. Interest is typically the biggest single cost for the buyer using a mortgage. As far as the investors go, they're in and out as quickly as they can be to avoid the other carrying costs of the house - taxes, insurance, utilities, maintenance, other fees. The hidden costs of home ownership, at CNBC - they're claiming 6K a year on average carrying costs. And that's a Zillow spokesperson talking about that, so they might even be understating the carrying costs.
To make a profit on a house, the selling price plus the sum of rents have to be greater than the sum of the carrying costs.
The interesting question is how long can this last before we reach a level that is not affordable to the majority of the demographic that is being serviced.
Care to guess what happens at that point? New construction doesn't sell, developers go bankrupt, new construction is sold at auction for lower prices. Then the new units available at lower prices push down prices of other housing, which makes purchase more affordable, which results in renters buying, which curbs rent prices.
Unless of course, large financial companies and well-connected donors are threatened by that circumstance.
Then, the central bank will step in, through its many channels, to put a floor under rental prices ("So I think if we spent enough money, got enough of a hit right now, it would look like a floor on house prices, and we might have something every bit as good as a floor on house prices."). The multiple government housing agencies (Fannie, Freddie, FHA, VA, USDA, etc) can also step in to influence the rental market, as they did the housing market.
Blackstone is a company securitizing rental flows and selling them. They are the largest private equity company in the world ("By both profit measures, the first quarter set quarterly records for Blackstone, the world’s largest private-equity firm").
The former head of the US central bank, Bernanke, is now employed by Citadel, a massive hedge fund.
My point is simply this: house prices did not revert to historical norms because of the big players - donors - that would have been deleteriously impacted by it. With big players moving into the rental market, if something went wrong with their business plan, don't expect them not to use their clout to get the government and central bank to do something about it.
You noted but didn't bother to post any evidence supporting your claims. We can wait.
Fair enough.
First, a thought experiment: Imagine Acme company sells widgets at 10 dollars each. One hundred people buy the widgets. Another hundred would like them, but cannot afford them. Uncle Phil sees this. Uncle Phil is a multi-billionaire. Uncle Phil says to those who cannot afford them, "I'll buy you your widgets for you." So now you have two hundred people buying widgets. The business sees its demand going up, and thus begins increasing prices. Most of the original hundred keep paying. Phil is a multi-billionaire so price isn't an option. The business owner wants maximum revenue, which is the maximum (price x quantity). So, business keeps jacking up costs until he reaches that point. If the widgets are essential to life (i.e. have inelastic demand), the original hundred do everything they can to keep paying the higher price.
So - that's the thought experiment.
Here's a paper by a Nobel (equivalent) laureate in economics, the conclusion of which states that subsidies will drive up prices in monopolistic environments (see page 28, the first paragraph of the section titled 'Conclusion': "This paper demonstrates two ways that a subsidy may increase equilibrium prices in a monopolistically competitive market"). My addition is that they drive up prices when demand is inelastic as well: Paper by Joseph Stiglitz (PDF).
You know who else wrote a cogent article on this? The Duke adult film actress, "Belle Knox." She talks about the impact of government subsidies in education, which isn't a monopoly, but for which demand is inelastic.