Boom Headed to Bust
Mar. 23rd, 2022 12:38 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
ndrosenSlate had an article on the rise in home values; the increase in the value of the average home exceeded the median family income last year, which is described as the “triumph of capital over labor.” Georgists know that it is no such thing, since what has increased is principally the price of land, not of houses, and (a fine point) by Henry George’s definitions, houses used by their owners as dwelling places are not capital, a subcategory of wealth. Houses are considered wealth, although land is not.
Capital is not triumphing; if it were, the returns on capital would not be so low, nor stocks priced at such a high ratio to earnings. It is true that labor is being triumphed over, and that, as the article says, the landed gentry are doing well.
One important point is that this cannot go on forever, and will not. Sooner or later, the bubble in land prices will burst, and if the eighteen year cycle holds good, we may expect the next Great Recession in about 2026. You have been warned, and if you’re a long-time reader of my blog, the warning is being reiterated.
Another point is that both the conventional Left and conventional Right do not understand what is going on, and are not taking or proposing effective action to deflate the land bubble. Effective action would involve taxing the value of land, while cutting taxes on buildings, and other taxes as well.
Capital is not triumphing; if it were, the returns on capital would not be so low, nor stocks priced at such a high ratio to earnings. It is true that labor is being triumphed over, and that, as the article says, the landed gentry are doing well.
One important point is that this cannot go on forever, and will not. Sooner or later, the bubble in land prices will burst, and if the eighteen year cycle holds good, we may expect the next Great Recession in about 2026. You have been warned, and if you’re a long-time reader of my blog, the warning is being reiterated.
Another point is that both the conventional Left and conventional Right do not understand what is going on, and are not taking or proposing effective action to deflate the land bubble. Effective action would involve taxing the value of land, while cutting taxes on buildings, and other taxes as well.
