> Those looking to buy a home but cannot afford the record high prices, are not faring well in this economy.
This is apples v oranges. Housing prices are the result a years, if not decades of mismanagement, bad decisions, sociopolitical forces, etc. On the other hand, "this economy" is a short term view of the present.
That aside The Fed's big problem is The Fed. It creates situations and then has to go to extremer extremes to dig itself out. The fact no one - most importantly, including Uncle Sam - can cut itself off from the addiction to debt certainly doesn't help.
That and of course every implementation of austerity seems to do long term damage to the economy of countries that apply it. I recall a few articles even saying that the maths that supported austerity was the result of a spreadsheet error, though whether that’s true I don’t know.
What we do know is that tax cuts for businesses and high earners has never demonstrated any gains for the majority of citizens but has resulted in increasing disparity and reduction in the rate at which people can move up the economic ladder.
It remains weird to me that there’s an entire cohort of people who look back with yearning to the 50s-70s where that tax rates were reasonable, but then aggressively complain about any attempt to move even slightly in the direction of restoring those tax rates.
Instead we get “we will fix the economy with austerity” in which we reduce the taxes for people and companies with no cash problems, but drastically increase the costs for everyone else. If need be we will also use the taxes paid by the group that isn’t getting tax cuts to bank roll the people getting tax cuts.
Virtually all of it goes “to the people.” Even the military budget is mostly payroll or operations (only 18% is procurement going to defense contractors). Social security is checks to individuals. Medicare is checks to healthcare providers.
A lot of those 4000% markup stories are apparently not real, but rather accounting artifacts; they're cases where, like, a wrench bills out at $20,000, but what's actually happening is that the procurement was for a whole stealth bomber, and the cost gets spread across all the line items pro rata.
Especially taxes on upper middle class people. The biggest difference between US tax rates and say Germany or Sweden is not corporate taxes or taxes on capital gains, but income and consumption taxes on people above the median income.
We had an au pair from Germany, who had an entry level administrative job before coming to the US. Her total tax rate in Germany was 40%, about the same as what we had in Maryland with a top 1% household income. If you want universal healthcare and college, that’s what it costs.
We also don't want a healthcare system that focuses on prevention. A significant percentage of what the USA spends on healthcare could be mitigated with prevention. But there's no profit in prevention, and the general population doesn't want to sacrifice comfort and convenience. "What do you mean change my diet and lifestyle??"
Drugs such as semaglutide (Ozempic, Wegovy) and tirzepatide (Mounjaro, Zepbound) are making massive profits, and also have decent odds of preventing many obesity-induced (and also diabetes-induced) diseases
Okay, they also have side effects, and it is possible the disease burden caused by the side effects may (in the long-run) turn out to be worse than the disease burden they prevent. But, while that's a possibility, it is only a possibility, a possibility which could easily not come pass to
And even if some of those drugs turn out to have unacceptable side effects in the long-run, there are other drugs in that class in the pipeline which might avoid those side effects, in which case the profits will shift to those
> Okay, they also have side effects, and it is possible the disease burden caused by the side effects may (in the long-run) turn out to be worse than the disease burden they prevent. But, while that's a possibility, it is only a possibility, a possibility which could easily not come pass to
This is very unlikely to happen. This isn't like other obesity drugs that were first in class, glp-1 agonists have been around a long time and have a great safety record.
Why exactly do we need higher taxes when the Federal government must still borrow to just pay the interest on its debt? There aren’t enough tax payers to cover the costs.
The UK system is going broke, and Australia and Canada are weirdly efficient with their government spending and the US has no hope of matching them. I don’t think we could implement universal healthcare and education as efficiently as Italy. We are basically the richest Latin American country at this point.
> The UK system is going broke, and Australia and Canada are weirdly efficient with their government spending and the US has no hope of matching them. I don’t think we could implement universal healthcare and education as efficiently as Italy. We are basically the richest Latin American country at this point.
I wonder what explains their being "weirdly efficient"?
The most obvious difference is the parliamentary instead of a presidential system (also found in most of Latin America). Maybe what the US really needs is a Prime Minister? [0]
There's a lot more ways in which the Australian and Canadian systems differ from the US (and also from each other), but I think that's the most obvious one.
Although that doesn't explain the UK's "going broke", since it has a parliamentary system too. Possible explanation: the UK lacks federalism [1], the US has overly strong federalism, Australia and Canada are more in the "sweet spot" in the middle of the federalism spectrum
[0] doesn't require a monarchy, a Prime Minister can coexist with a figurehead President, as in Austria, Germany, Greece, Ireland, Israel, Malta, etc
[1] ok, it has devolution, which while technically not federalism, is kind of like a very weak form of it
Both Canada and Australia have strong federalism. About half of all expenditure is run through the state and local governments in the US. In Australia it’s similar, and in Canada it’s 75%.
I think the Presidential system has a lot to do with it. The people have a lot to do with it too. Large-scale immigration of Germans, then Irish and Italians, and now Hispanics has left a long tradition of ethnic machine politics in the U.S. that’s simply absent from Canadian and Australian politics. Even as say distinct Italian or Irish identity has diminished, our politics, especially on the left, is still centered around identity. In a typical national election, almost no political bandwidth is spent discussing efficiency of government services.
Look at Obama—the archetype of the modern Democrat. What was his job before politics? He wasn’t a labor leader or anything like that. He was a community organizer in Chicago’s ethnic-based political machine. He’s inspired a generation of people on the left—necessarily, the ones who would otherwise be most invested in government efficiency and quality of services—to become activists for their various identity groups. Do you think those folks are going to become efficient and confident administrators when they grow up?
> Both Canada and Australia have strong federalism. About half of all expenditure is run through the state and local governments in the US. In Australia it’s similar, and in Canada it’s 75%.
Just looking at who spends the money ignores some big differences. For example, unlike the US, Australia has a unified court and criminal justice system - the federal courts have jurisdiction to hear appeals even on purely state law questions; there are no federal prisons (federal prisoners serve their sentences in state prisons); outside of the military, almost all federal criminal trials happen in state courts (technically some federal courts have the jurisdiction to hold criminal trials, but that almost never happens-federal courts do try civil cases, but in criminal matters are effectively appellate only); state prosecutors can prosecute federal crimes and federal prosecutors can prosecute state crimes (common for federal prosecutors to add on lesser state charges and vice versa)
Australia has institutions like the National Cabinet (council of heads of federal, state and territory governments) which have no parallel in the US-“cooperative federalism”. Formal agreements between the federal and state governments plays a big role in Australia’s federalism, lacks much of an equivalent in the US-e.g. Australia’s food safety system is governed by an agreement between Australia’s federal, state and territory governments, and also the national government of New Zealand.
> The people have a lot to do with it too. Large-scale immigration of Germans, then Irish and Italians, and now Hispanics has left a long tradition of ethnic machine politics in the U.S. that’s simply absent from Canadian and Australian politics. Even as say distinct Italian or Irish identity has diminished, our politics, especially on the left, is still centered around identity
Last time you made an argument like this, I pointed out it ignores the importance of figures like Daniel Mannix (Irish Catholic Archbishop of Melbourne, 1917-1963) and B.A.Santamaria (Italian Catholic anti-communist activist; his height of political influence was in the 1950s) in Australia’s political history - between them those two men changed the outcome of more than one national election
And as to Canada, this argument of yours ignores the existence of Quebec, and also the (lesser) role that Anglophone-Francophone conflict has played in the history of some other provinces (e.g. New Brunswick, Ontario, Manitoba)
> What was his job before politics? He wasn’t a labor leader or anything like that. He was a community organizer in Chicago’s ethnic-based political machine.
Ethnic-based political organising exists in Australia too. For example, both major parties have done a lot of work on wooing the Chinese-Australian community, which includes interacting with that community’s social clubs, doing political interviews in Chinese language media, sometimes even running candidates from that background, etc
> Last time you made an argument like this, I pointed out it ignores the importance of figures like Daniel Mannix (Irish Catholic Archbishop of Melbourne, 1917-1963) and B.A.Santamaria (Italian Catholic anti-communist activist; his height of political influence was in the 1950s) in Australia’s political history - between them those two men changed the outcome of more than one national election
I’m not denying that immigrant groups were influential in Australia. But even today, 60% of Australia is English or “Australian” (which is mostly English). 80% are from the British Isles. By contrast, English are not even the plurality in most U.S. states: https://simple.wikipedia.org/wiki/Ethnic_groups_of_the_Unite.... Germans are the most common in the Midwest; Italians are the most common in New York, New Jersey, and Connecticut; Mexicans are the most common in the southwest; etc.
That has led to a completely different political mentality, where for more than a century, the center-left party has largely been organized around mobilizing its ethnic factions to “turn out” to vote. E.g. https://en.wikipedia.org/wiki/Tammany_Hall.
Of course you’re correct that Canada has a similar problem: the British were actually the ones who took over and supplanted the French founding population. They agreed to split up the country and give the French a great deal of latitude to do their own thing. That has mitigated what otherwise would have created tremendous conflict.
You’re certainly seeing more of that in Canada and Australia now given the mass immigration from Asia. But in the US this is been happening for 170 years or so. We’ll see if Canada and Australia are still well functioning and efficient after Chinese and Indian ethnic politics becomes a major force.
> But even today, 60% of Australia is English or “Australian” (which is mostly English). 80% are from the British Isles
From my perspective, you keep on wrongly downplaying the role that Irish Australians have played in Australian history. You acknowledge the significance of Irish Americans in American history, but ignore that Irish Australians are at least as significant in Australia's history, arguably even more so. By some estimates, 30% of Australians have Irish ancestry. [0] From the beginnings of British colonisation up until at least the end of WW2, the Irish have been Australia's single largest ethnic minority; in the US, I doubt they held that title for long (if ever), ending up being outnumbered by the Germans. The first substantial armed rebellion against British rule in Australia (there have not been many) was carried out by Irish convicts in 1804 near Sydney, many of whom were veterans of the 1798 United Irishmen Rebellion. [1] You seem to view Australia as a country which is mostly English, when the truth is that the majority of Australians have non-English ancestry (of course, English and non-English ancestry are not mutually exclusive categories).
> the center-left party has largely been organized around mobilizing its ethnic factions to “turn out” to vote
Irish-Australians have played a rather comparable role in the history of Australia's main center-left party (Labor) to what Irish-Americans have played in the Democratic Party. [2]
> You’re certainly seeing more of that in Canada and Australia now given the mass immigration from Asia. But in the US this is been happening for 170 years or so.
When you consider Irish immigration – in 1871, 25% of overseas-born Australians were born in Ireland [3] – it has been happening in Australia since the 19th century – which is significant given that modern Australian history begins in 1788.
Barack Obama was a community organizer working with the Catholic church for like a minute and a half in the mid-1980s.
You didn't live here at the time (also, you were like 2 years old), but you went to NWU and so you're still probably aware of what was happening on the south side in the '80s: the steel industry collapsed, gutting the south side economy. If anything, organizing in the 1980s was distinctively class-based, not race-based. It was a big story. The nuns taught it to us at St. Barnabas.
Meanwhile, Obama's "job" before "politics" was as a well-regarded full-time law teacher at the University of Chicago, a job he held 3x longer than his brief stint as an organizer 20 years prior.
2008 was a spell ago, but it seems my recollection is correct that Obama was the one who emphasized his experience as a community organizer: https://www.nytimes.com/2008/07/07/us/politics/07community.h... (“Mr. Obama’s three-year stretch as a grass-roots organizer has figured prominently, if not profoundly, in his own narrative of his life. Campaigning in Iowa, Mr. Obama called it ‘the best education I ever had, better than anything I got at Harvard Law School,’ an education that he said was ‘seared into my brain.’ He devoted about one-third of the 442 pages in his memoir, ‘Dreams From My Father,’ to chronicling that Chicago organizing period.”). Certainly, Obama was steeped in racial politics prior to his becoming president. And racial activism has flourished in the aftermath of his presidency—though it’s unclear whether he’s a cause of that or a symptom of it.
I’m not blaming Obama for these things—it’s not clear that politics in the US could be otherwise given the facts of history. But it’s certainly not conducive to good government.
I don't know what you're trying to say here. Obama's work history is knowable. We don't need to reconstruct it from the gists of his speeches. He was a community organizer in the mid-1980s, working with the Catholic church, when he was 22-24 years old, in the wake of the collapse of the steel industry in southeast Chicago and northwest Indiana --- a series of events that were not, as you would have had it in your previous comments, racialized. But his job immediately prior to his career in politics was adjacent to yours: he worked in the field of law.
My comment isn’t about Obama’s job history. It’s about what drives politics in the Democratic Party. When he ran for President and wrote his autobiography, community organizing was what he emphasized because that’s what plays to Democrats.
the australian economy digs up dirt from the ground and sells it for a lot, it covers all our issues. theres a lot more that could be said, but it fundamentally comes down to that
What you want or not is not related to what's best for a society. This radical individualism is, at best, short sighted.
You will benefit from a society that has healthcare and education, even if you individually would prefer not to be because you might not directly need it if you have your private money for your own healthcare and education. The rest of society might not and living in a society where people are decently treated is better for you in the long term.
From your own words:
> Would have done tons of things like this if I didn't have student loans hanging over my head.
With access to low cost/free education you'd be free from this, hence giving you more freedom. Healthcare is similar, without the lingering fear that it might bankrupt you in case you are not well covered you have more freedoms, you don't depend on an employer to have access to healthcare that won't destroy your life.
The warped view of freedom in America is baffling, you prefer to be "free to" than "free from". True liberation usually don't come only from being "free to"...
Believe it or not, I mostly agree! But we are not culturally proactive about our health. There are entire industries dedicated to making unhealthy people feel good about their obviously bad choices.If it were just 5% of the population, it would be no big deal, but it's not. 39.6% of americans are obese. If free healthcare came along with a cultural push that everyone who is able ought to get fit, I'd be excited about it. But as it stands I think it's simply not affordable, like our overzealous military spending.
As for degrees, college has a similar cultural issue. There are tons of degree programs that are frankly frivolous. I'm not even against humanities, but when I was in college I knew kids in $50k of debt making Picasso-esque garbage and writing conceptual poetry as the zenith of their studies. I still know them. They work in food service and are extremely unhappy and demoralised. In the same way we shouldn't be letting young people make these kinds of mistakes, we shouldn't subsidize them as a society. If we make STEM degrees free for anyone who can pass exams on the prerequisites, I'm all in. I'd like some support for humanities as well but it's incredibly hard to draw that line, especially now when people will sincerely argue that Jackson Pollock was as talented and important as Frederick Edwin Church.
She certainly didn't have a total tax rate of 40% with an entry level job. Maybe a marginal tax rate of 40% for a very small top percentage of her income.
You need an income of around 180k€/year to pay 40% total tax rate. That is very high end income here too, in the top 1% range.
Now, public health care (Germany does not have universal healthcare) and social security are not taxes, but if you include them in the total, you'd land at 40% somewhere around 40-50k€/year, which is still way out of reach for an entry level administrative job, which would be around half of that.
Both public health care and social security are near worthless here by the way, as both systems are near bankrupt and it shows. Mainly caused by millions of illegal immigrants receiving the same services for free, without ever paying a cent into the system.
> Now, public health care (Germany does not have universal healthcare) and social security are not taxes
If you don’t count these as taxes (you should, though), US comes out even stronger. At $200k/year, your effective income tax rate in Maryland is 23%. At $500k/year you’re still at just 33%.
For comparison, if you make in Maryland equivalent of 50k EUR/year, your effective tax rate, including social security and Medicare is just 21%. If you make $55k/year, your job typically offers some health insurance, so if you include employee side premiums for those, you will end up with something like 25%.
And that’s all before we even consider Germany’s 19% VAT vs MD’s 6% sales tax rate.
I agree with the US coming out stronger. One of the reasons why I'm working on moving myself and my business there.
I'm not so sure about counting them as taxes. Here are the edge cases for both in Germany:
1) You don't pay social security (~21%) if you are self-employed or a shareholder-director (with certain minimum percentage of shares) of a corporation. You can opt-in voluntarily, but most people don't like to light their money on fire, so almost nobody does that. There have been some attempts to turn this exemption over, but so far it stands. But the majority are employed with no way to avoid this, so they could count it as a tax.
2) Public health insurance is a percentage of your gross income (~20%), but it is actually mostly tax deductible. If you are over a certain income threshold (currently ~70k€/year), you can switch to private health insurance, which is a fixed rate instead of income percentage. This has pros (better service) and cons (hard to switch back to public health insurance after a certain time out of it, more expensive as you age, close family members not automatically included, preexisting conditions might be excluded from coverage).
What makes the whole thing even more complicated to compare, is that both public health insurance and social security are split between employee and employer on the payroll statement. So a gross salary of 60k€/year actually costs the employer 72k€/year. So for a better comparison, this total cost of employment and the total deductions should be compared. Most online calculators, politicians, discussions in the media, etc conveniently leave this out and therefore show much lower percentages, so your average employee isn't aware of this.
60k gross salary
72k total cost of employment
12,7k social security
12,2k public health insurance
10,7k taxes
A total of 49,33% deductions. And yes, after that comes 19% VAT (reduced to 7% for some goods, e.g. food) and other consumption taxes (fuel, energy, tobacco, etc). Tax on fuel is especially crazy at a total percentage of 59% for gasoline and 50% for diesel.
I guess everybody needs to decide for themselves if living (or employing people) in a declining socialist country is worth that much.
But they are raised, via inflation. When the Fed prints money (so to speak) to finance the debt, and your savings are devalued, that is effectively a tax. But no one calls it that. No one sees it that way. So no one is upset about their taxes going up, tho effectively they have.
A caucophoney of voices from the fed have been calling on Congress to address numerous issues through the years. The issues are ignored (more regulation etc) and then it falls on the Fed to wield it's hammers (quantitave easing or interest rate uppers and downers) when shit goes sideways.
No, we forget about that time when we ran up house prices so fast they doubled in like 10 years before crashing, catching people who had been allowed to borrow massively on the worth of houses, debt marked AAA.
The Fed has two official goals: low inflation and full employment.
It also has an existential goal that few people think about who aren’t deep into finance: maintain the integrity of the payment system. That 0th commandment as it were will trump its official goals when they conflict.
Inflation is the Fed's job, and rent is part of that. That doesn't extend into managing the housing market, but managing interest rates is a big thumb on the scale.
It’s a useless thumb for attempting to solve housing inflation. Housing shortages of millions of units means that if you’re priced out of a mortgage, you’re forced to rent with no rent price controls, so instead of mortgage bond investors collecting your housing spend, it’s instead landlords.
The only way to fix housing costs is to build baby build, as fast as you can, and the Fed has no power over fiscal policy (and policy in general) to strongly encourage such a build rate. This should be on the scale of the Manhattan Project or the Inflation Reduction Act.
I'll agree there needs to be a massive supply boost in the form of entry level housing (only for 1st time owners, get rid of corp land grabs).
That's what Singapore does quite well (I currently live here). The HDB system isn't a free market - new supply is only allowed for the first time home buyer, priced cheaply and you're not allowed to sell for 5 yrs. Covid had very big problems on supply but SG gov has kept it's promise in creating a lot of new housing in the past 2 yrs.
It has a lot of levers to control a housing bubble for its citizens and thusly a big portion of inflation.
Build baby build doesn't work when Black Rock and so many other private equity companies are content to buy as many houses as they can and then hold them to raise prices further or rent them out. 44% of all Single-Family Home Purchases were from Private Investors in 2023. A huge portion of the problem would be solved immediately by 1) a vacancy tax, 2) banning the purchase of single family homes by corporations.
Disagree [1]. Blackrock owns Invitations Homes, which does indeed own a large portion of US housing stock. They buy in cash or with loans that are a lot less interest rate than you or I would pay.
Your article actually admits they don't own that big a percentage of homes.
Invitation Homes operates in 16 cities, with the biggest concentration in Atlanta, where it owns 12,556 houses. (Though that’s not much compared with the 80,000 homes sold in Atlanta each year
> If a property in a residential area is being used 100% of the time to rent, it’s a business.
I don't think that's what zoning laws actually say. My understanding that zoning laws are about the primary use of the property by whoever is actually using it, not who owns it. So a single family home is residential because someone lives there, regardless of whether that person owns the home or is renting it.
Also, what about apartments? Those are zoned residential even though the actual owners are almost certainly not living there, and even if they are they aren't occupying more than a tiny portion of the total living space available.
You can get in Trouble for buying a commercial pr industrial property and living in it (though if you’re slick and quiet about it nobody may ever know).
>though if you’re slick and quiet about it nobody may ever know
i'm sure this varies by jurisdiction, but around here the fire marshal will know, because commercial properties get inspected semi-annually to make sure they meet fire code. you'd have to be very sneaky to get past the fire department. and it might not be their job to enforce the zoning laws, but living in a commercial space violates the fire code.
This is more about short-term rentals like AirBnb or empty second/n-th homes.
These create a shortage on the housing market for the local workforce. Not much benefit in having walkable communities if most of the workforce has to commute in for an hour.
> we shouldn’t oppose small scale sustainable businesses being embedded in residential zones.
In at least some areas of the US I have seen a move in the last ten years or so towards doing this in what would otherwise be typical suburban developments. Maybe that will spread.
I believe the parent was referring to short-term rentals. If a single family home is rented short-term through AirBnb, that certainly does not satisfy the primary use as a residence, as nobody actually has residence there.
> I believe the parent was referring to short-term rentals.
If short term rentals are the issue, then short term rentals specifically should be addressed. But that's not what the post I responded to actually said.
Also, I don't think the kind of renters that the article under discussion is saying are having difficulty making ends meet are people who are renting short term rental properties like AirBnbs.
I think the Fed's biggest problem is that setting interest rates has never shown to be a broadly effective way to control inflation, but it's the only tool they currently have. The most provably "effective" way that they can work is to raise rates to the point where it crushes the economy and there is a huge recession (which usually also brings down inflation), but up until that point they really don't seem to work very well. And obviously pushing everyone into recession, while in a way effective at bringing down inflation (because it makes it so most people can't afford to buy anything anyway), it's not a good way of doing it either. So it's altogether just bad policy to try and control the economy that way.
We've been running this experiment for a few decades now, and I think people really have to start pointing out that it's entirely failed.
Why is pushing everyone into recession not a good way of doing it? Recessions are healthy for the economy. We need double digit interest rates for ~5-10 years to clean up the past mismanagement. The longer we delay this, the more painful it will be, peaking at massive civil unrest.
The Fed's biggest problem is a gridlocked congress and a categorical reluctance to take money out of existence at the rate it needs to be (e.g. tax the rich). It's tantamount to trying to fly a hot air balloon. You might be able to keep the thing from crashing, but all you've got is one lever and you've got no real control over where it's going.
The solution is making government significantly smaller, more efficient and stop handing out all kinds of subsidies, welfare payments and other transfers.
>stop handing out all kinds of subsidies, welfare payments and other transfers.
We can agree there as well. But unprecedented wealth accumulation at the top is not some mysterious magical force - it's what happens when we stop taxing capital accumulation the way we used to. Both are necessary to control money supply.
The problem is that such calls inevitably get neutralized and perverted by the political establishment, which of course does not wish to shrink itself. Entrenched interests have been very good at making sure the trough of corporate welfare is never called into question (including the artificially low rates powering the overleveraged financial industry), by construing that message of "smaller government" to mean only cutting back on spending and legislation that's aimed at mitigating the damage from the overwhelming government welfare going to companies. So while I'm a proponent of decentralization in general, as long as the corporate welfare (and the rest of the general corporate legislative agenda) continues unabated it does make sense to point out how much taxes have been cut for the same upper class that is the chief beneficiary of most types of government handouts.
Taxes were, up until the 80s, how the government controlled inflation. They run a deficit and print to spend (or more accurately, borrow from the fed who prints), and then they tax to remove some of that from circulation. Now they don't do the last part. But you've got to ask yourself, why do it this way? How is it better for everyone?
First, consider that in a democratic system, there will always be political will to spend, and there will always be political will to reduce taxes. It was inevitable that taxes would come down and inflation would then soar. So "run a deficit and then tax the rich/corporations/just a little more" doesn't work forever. Eventually people demand more for less.
It also has the added feature that the cantillion effect can be used to redistribute wealth. Sounds good, but then you're at the mercy of whatever is more politically expedient to the representative voting on the tax rates. If he is more beholden to his constituents, capital flows to them. If he's more beholden to his donors, guess who benefits from it. If his constituents are corn farmers, prepare for farming subsidies. Also think of this: rich people understand this wealth redistribution mechanism, most regular people or poor people do not. So while it sounds good, tax the rich more and redistribute wealth, it is more likely to be used in the opposite direction, and inevitably it will be. Better if the tool just doesn't exist at all.
To me, just getting rid of this complexity and budgeting based on tax revenue, the old way, and keeping money supply out of the hands of government, solve all these problems. Government can't print and spend, it taxes who can afford to pay based on what it needs, and it can't spend money on things that aren't in the interest of the people and businesses it is sovereign over. It doesn't find itself in a political conundrum that ensures that it spends more and taxes less, it spends only based on its ability to pay and it taxes people only based on their ability to pay. And you get rid of the cantillion effect, so no siphoning wealth to the top from the working stiff.
Political will doesn't directly equal majority vote, for better or worse. There are factions within an electorate that matter that can imbalance even with a small contingent of the population changing their support. A guy's district has 5% who work at some steel mill for example, and he wins elections with 52%, and those steel workers support him. He might not be able to do something that all his supporters would want that they wouldn't, or to do it he might have to do things to win over another contingent to ensure his reelection. Also he needs patronage from businesses to fund his reelection, he has to think about that too. So political will is quite a bit more complex than just more than half of people wanting it. Objectives that people want have to align and not interfere with each other.
There's a steady history over the last 200 years of the economy becoming much less cyclical. Are you suggesting we return to the wild chaos of the booms and busts of the 1800's?
Just to point out, it's absolutely not the only tool that they have.
They can control deposit reserve requirements, and they have a huge power over investment regulations. Oh, and they can also print money, don't they? (Or is it the direct government?)
That said, yes, all the precision interventions are on the hands of the direct government, and out of reach to the FED. I do think all countries need an UBI whose value is decided by the monetary authority. This would give them an entire new degree of freedom.
It makes little sense that low interest rates get credit for fueling the current housing bubble, but higher interest rates are somehow ineffective at curbing it.
One could say that people still need a place to live regardless of the interest rate.
If average people can't afford the interest rates my parents were paying back in the '70s and the people who can afford these rates -- because they can get a reasonable ROI through something like AirBnB -- are still buying up the supply of 'excess' homes then it could be argued that the Fed's meddling is ineffective.
It stands to reason, then, that a low interest rate now would potentially drive an even bigger bubble in the future. A high interest rate now might not solve housing affordability today, but it could perhaps stabilize things farther down the road.
House prices are sticky on the way down. It also takes quite a few years for interest rises to really affect them. Volume of market may shrink as it is unaffordable but unless there are a lot of forced sales, home owners will just stay put.
No, I think there is pretty strong evidence putting rates too low certainly does create asset bubbles (housing, equities etc.), true. Raising them will rein that in. But I don’t see any firm evidence of a causal relationship in dropping rates to stimulate the general economy and raising them to control general cost inflation (as they claim they are attempting to do when they are doing either one).
Can anyone point me to the primary source for the theory that underpins the Fed's policy of interfering with interest rates (instead of letting the market decide)? At best I understand it's Keynes, but last I spoke to an economist, they said he was only concerned with fiscal policy, not monetary.
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[ 4.4 ms ] story [ 212 ms ] threadThis is apples v oranges. Housing prices are the result a years, if not decades of mismanagement, bad decisions, sociopolitical forces, etc. On the other hand, "this economy" is a short term view of the present.
That aside The Fed's big problem is The Fed. It creates situations and then has to go to extremer extremes to dig itself out. The fact no one - most importantly, including Uncle Sam - can cut itself off from the addiction to debt certainly doesn't help.
What we do know is that tax cuts for businesses and high earners has never demonstrated any gains for the majority of citizens but has resulted in increasing disparity and reduction in the rate at which people can move up the economic ladder.
It remains weird to me that there’s an entire cohort of people who look back with yearning to the 50s-70s where that tax rates were reasonable, but then aggressively complain about any attempt to move even slightly in the direction of restoring those tax rates.
Instead we get “we will fix the economy with austerity” in which we reduce the taxes for people and companies with no cash problems, but drastically increase the costs for everyone else. If need be we will also use the taxes paid by the group that isn’t getting tax cuts to bank roll the people getting tax cuts.
Not in a privatized defense environment where things are marked up 4000%. Yeah, you read that right.
That is how money disappears. Like the $3 trillion that the Pentagon 'lost' and still 'cant find'.
We had an au pair from Germany, who had an entry level administrative job before coming to the US. Her total tax rate in Germany was 40%, about the same as what we had in Maryland with a top 1% household income. If you want universal healthcare and college, that’s what it costs.
The US spends more, per captia on socialized medicine than Germany.
Why do we need to spend even more?
The NHS costs half as much per captia as medicare, medicaid, etc and provides universal coverage.
That isn't it. It's simply theft.
Drugs such as semaglutide (Ozempic, Wegovy) and tirzepatide (Mounjaro, Zepbound) are making massive profits, and also have decent odds of preventing many obesity-induced (and also diabetes-induced) diseases
Okay, they also have side effects, and it is possible the disease burden caused by the side effects may (in the long-run) turn out to be worse than the disease burden they prevent. But, while that's a possibility, it is only a possibility, a possibility which could easily not come pass to
And even if some of those drugs turn out to have unacceptable side effects in the long-run, there are other drugs in that class in the pipeline which might avoid those side effects, in which case the profits will shift to those
This is very unlikely to happen. This isn't like other obesity drugs that were first in class, glp-1 agonists have been around a long time and have a great safety record.
I wonder what explains their being "weirdly efficient"?
The most obvious difference is the parliamentary instead of a presidential system (also found in most of Latin America). Maybe what the US really needs is a Prime Minister? [0]
There's a lot more ways in which the Australian and Canadian systems differ from the US (and also from each other), but I think that's the most obvious one.
Although that doesn't explain the UK's "going broke", since it has a parliamentary system too. Possible explanation: the UK lacks federalism [1], the US has overly strong federalism, Australia and Canada are more in the "sweet spot" in the middle of the federalism spectrum
[0] doesn't require a monarchy, a Prime Minister can coexist with a figurehead President, as in Austria, Germany, Greece, Ireland, Israel, Malta, etc
[1] ok, it has devolution, which while technically not federalism, is kind of like a very weak form of it
I think the Presidential system has a lot to do with it. The people have a lot to do with it too. Large-scale immigration of Germans, then Irish and Italians, and now Hispanics has left a long tradition of ethnic machine politics in the U.S. that’s simply absent from Canadian and Australian politics. Even as say distinct Italian or Irish identity has diminished, our politics, especially on the left, is still centered around identity. In a typical national election, almost no political bandwidth is spent discussing efficiency of government services.
Look at Obama—the archetype of the modern Democrat. What was his job before politics? He wasn’t a labor leader or anything like that. He was a community organizer in Chicago’s ethnic-based political machine. He’s inspired a generation of people on the left—necessarily, the ones who would otherwise be most invested in government efficiency and quality of services—to become activists for their various identity groups. Do you think those folks are going to become efficient and confident administrators when they grow up?
Just looking at who spends the money ignores some big differences. For example, unlike the US, Australia has a unified court and criminal justice system - the federal courts have jurisdiction to hear appeals even on purely state law questions; there are no federal prisons (federal prisoners serve their sentences in state prisons); outside of the military, almost all federal criminal trials happen in state courts (technically some federal courts have the jurisdiction to hold criminal trials, but that almost never happens-federal courts do try civil cases, but in criminal matters are effectively appellate only); state prosecutors can prosecute federal crimes and federal prosecutors can prosecute state crimes (common for federal prosecutors to add on lesser state charges and vice versa)
Australia has institutions like the National Cabinet (council of heads of federal, state and territory governments) which have no parallel in the US-“cooperative federalism”. Formal agreements between the federal and state governments plays a big role in Australia’s federalism, lacks much of an equivalent in the US-e.g. Australia’s food safety system is governed by an agreement between Australia’s federal, state and territory governments, and also the national government of New Zealand.
> The people have a lot to do with it too. Large-scale immigration of Germans, then Irish and Italians, and now Hispanics has left a long tradition of ethnic machine politics in the U.S. that’s simply absent from Canadian and Australian politics. Even as say distinct Italian or Irish identity has diminished, our politics, especially on the left, is still centered around identity
Last time you made an argument like this, I pointed out it ignores the importance of figures like Daniel Mannix (Irish Catholic Archbishop of Melbourne, 1917-1963) and B.A.Santamaria (Italian Catholic anti-communist activist; his height of political influence was in the 1950s) in Australia’s political history - between them those two men changed the outcome of more than one national election
And as to Canada, this argument of yours ignores the existence of Quebec, and also the (lesser) role that Anglophone-Francophone conflict has played in the history of some other provinces (e.g. New Brunswick, Ontario, Manitoba)
> What was his job before politics? He wasn’t a labor leader or anything like that. He was a community organizer in Chicago’s ethnic-based political machine.
Ethnic-based political organising exists in Australia too. For example, both major parties have done a lot of work on wooing the Chinese-Australian community, which includes interacting with that community’s social clubs, doing political interviews in Chinese language media, sometimes even running candidates from that background, etc
I’m not denying that immigrant groups were influential in Australia. But even today, 60% of Australia is English or “Australian” (which is mostly English). 80% are from the British Isles. By contrast, English are not even the plurality in most U.S. states: https://simple.wikipedia.org/wiki/Ethnic_groups_of_the_Unite.... Germans are the most common in the Midwest; Italians are the most common in New York, New Jersey, and Connecticut; Mexicans are the most common in the southwest; etc.
That has led to a completely different political mentality, where for more than a century, the center-left party has largely been organized around mobilizing its ethnic factions to “turn out” to vote. E.g. https://en.wikipedia.org/wiki/Tammany_Hall.
Of course you’re correct that Canada has a similar problem: the British were actually the ones who took over and supplanted the French founding population. They agreed to split up the country and give the French a great deal of latitude to do their own thing. That has mitigated what otherwise would have created tremendous conflict.
You’re certainly seeing more of that in Canada and Australia now given the mass immigration from Asia. But in the US this is been happening for 170 years or so. We’ll see if Canada and Australia are still well functioning and efficient after Chinese and Indian ethnic politics becomes a major force.
From my perspective, you keep on wrongly downplaying the role that Irish Australians have played in Australian history. You acknowledge the significance of Irish Americans in American history, but ignore that Irish Australians are at least as significant in Australia's history, arguably even more so. By some estimates, 30% of Australians have Irish ancestry. [0] From the beginnings of British colonisation up until at least the end of WW2, the Irish have been Australia's single largest ethnic minority; in the US, I doubt they held that title for long (if ever), ending up being outnumbered by the Germans. The first substantial armed rebellion against British rule in Australia (there have not been many) was carried out by Irish convicts in 1804 near Sydney, many of whom were veterans of the 1798 United Irishmen Rebellion. [1] You seem to view Australia as a country which is mostly English, when the truth is that the majority of Australians have non-English ancestry (of course, English and non-English ancestry are not mutually exclusive categories).
> the center-left party has largely been organized around mobilizing its ethnic factions to “turn out” to vote
Irish-Australians have played a rather comparable role in the history of Australia's main center-left party (Labor) to what Irish-Americans have played in the Democratic Party. [2]
> You’re certainly seeing more of that in Canada and Australia now given the mass immigration from Asia. But in the US this is been happening for 170 years or so.
When you consider Irish immigration – in 1871, 25% of overseas-born Australians were born in Ireland [3] – it has been happening in Australia since the 19th century – which is significant given that modern Australian history begins in 1788.
[0] https://en.wikipedia.org/wiki/Irish_Australians
[1] https://en.wikipedia.org/wiki/Castle_Hill_convict_rebellion
[2] https://www.jstor.org/stable/23193797
[3] https://www.homeaffairs.gov.au/mca/files/2016-cis-ireland.PD...
You didn't live here at the time (also, you were like 2 years old), but you went to NWU and so you're still probably aware of what was happening on the south side in the '80s: the steel industry collapsed, gutting the south side economy. If anything, organizing in the 1980s was distinctively class-based, not race-based. It was a big story. The nuns taught it to us at St. Barnabas.
Meanwhile, Obama's "job" before "politics" was as a well-regarded full-time law teacher at the University of Chicago, a job he held 3x longer than his brief stint as an organizer 20 years prior.
I’m not blaming Obama for these things—it’s not clear that politics in the US could be otherwise given the facts of history. But it’s certainly not conducive to good government.
I don't want these. Maybe if you penalize smokers, drinkers, and overeaters and get rid of degrees where you study socio-nonsense.
You will benefit from a society that has healthcare and education, even if you individually would prefer not to be because you might not directly need it if you have your private money for your own healthcare and education. The rest of society might not and living in a society where people are decently treated is better for you in the long term.
From your own words:
> Would have done tons of things like this if I didn't have student loans hanging over my head.
With access to low cost/free education you'd be free from this, hence giving you more freedom. Healthcare is similar, without the lingering fear that it might bankrupt you in case you are not well covered you have more freedoms, you don't depend on an employer to have access to healthcare that won't destroy your life.
The warped view of freedom in America is baffling, you prefer to be "free to" than "free from". True liberation usually don't come only from being "free to"...
As for degrees, college has a similar cultural issue. There are tons of degree programs that are frankly frivolous. I'm not even against humanities, but when I was in college I knew kids in $50k of debt making Picasso-esque garbage and writing conceptual poetry as the zenith of their studies. I still know them. They work in food service and are extremely unhappy and demoralised. In the same way we shouldn't be letting young people make these kinds of mistakes, we shouldn't subsidize them as a society. If we make STEM degrees free for anyone who can pass exams on the prerequisites, I'm all in. I'd like some support for humanities as well but it's incredibly hard to draw that line, especially now when people will sincerely argue that Jackson Pollock was as talented and important as Frederick Edwin Church.
You need an income of around 180k€/year to pay 40% total tax rate. That is very high end income here too, in the top 1% range.
Now, public health care (Germany does not have universal healthcare) and social security are not taxes, but if you include them in the total, you'd land at 40% somewhere around 40-50k€/year, which is still way out of reach for an entry level administrative job, which would be around half of that.
Both public health care and social security are near worthless here by the way, as both systems are near bankrupt and it shows. Mainly caused by millions of illegal immigrants receiving the same services for free, without ever paying a cent into the system.
If you don’t count these as taxes (you should, though), US comes out even stronger. At $200k/year, your effective income tax rate in Maryland is 23%. At $500k/year you’re still at just 33%.
For comparison, if you make in Maryland equivalent of 50k EUR/year, your effective tax rate, including social security and Medicare is just 21%. If you make $55k/year, your job typically offers some health insurance, so if you include employee side premiums for those, you will end up with something like 25%.
And that’s all before we even consider Germany’s 19% VAT vs MD’s 6% sales tax rate.
I'm not so sure about counting them as taxes. Here are the edge cases for both in Germany:
1) You don't pay social security (~21%) if you are self-employed or a shareholder-director (with certain minimum percentage of shares) of a corporation. You can opt-in voluntarily, but most people don't like to light their money on fire, so almost nobody does that. There have been some attempts to turn this exemption over, but so far it stands. But the majority are employed with no way to avoid this, so they could count it as a tax.
2) Public health insurance is a percentage of your gross income (~20%), but it is actually mostly tax deductible. If you are over a certain income threshold (currently ~70k€/year), you can switch to private health insurance, which is a fixed rate instead of income percentage. This has pros (better service) and cons (hard to switch back to public health insurance after a certain time out of it, more expensive as you age, close family members not automatically included, preexisting conditions might be excluded from coverage).
What makes the whole thing even more complicated to compare, is that both public health insurance and social security are split between employee and employer on the payroll statement. So a gross salary of 60k€/year actually costs the employer 72k€/year. So for a better comparison, this total cost of employment and the total deductions should be compared. Most online calculators, politicians, discussions in the media, etc conveniently leave this out and therefore show much lower percentages, so your average employee isn't aware of this.
A total of 49,33% deductions. And yes, after that comes 19% VAT (reduced to 7% for some goods, e.g. food) and other consumption taxes (fuel, energy, tobacco, etc). Tax on fuel is especially crazy at a total percentage of 59% for gasoline and 50% for diesel.I guess everybody needs to decide for themselves if living (or employing people) in a declining socialist country is worth that much.
Also, people need housing and when that gets out of whack people start whispering about replacing the government.
or, "a bunch of banks crashed the economy and took down the housing market"
It also has an existential goal that few people think about who aren’t deep into finance: maintain the integrity of the payment system. That 0th commandment as it were will trump its official goals when they conflict.
What you're talking about is what the fed is already try to do - bring inflation down with high interest rates.
The only way to fix housing costs is to build baby build, as fast as you can, and the Fed has no power over fiscal policy (and policy in general) to strongly encourage such a build rate. This should be on the scale of the Manhattan Project or the Inflation Reduction Act.
https://www.fanniemae.com/research-and-insights/perspectives...
https://www.npr.org/2024/01/25/1225957874/housing-unaffordab...
https://www.jchs.harvard.edu/americas-rental-housing-2024
https://youtu.be/Jl7vrujr1J4
That's what Singapore does quite well (I currently live here). The HDB system isn't a free market - new supply is only allowed for the first time home buyer, priced cheaply and you're not allowed to sell for 5 yrs. Covid had very big problems on supply but SG gov has kept it's promise in creating a lot of new housing in the past 2 yrs.
It has a lot of levers to control a housing bubble for its citizens and thusly a big portion of inflation.
Tax those who hold single family homes for renting to others and the problems will fix itself.
Housing is seen as an investment. If a big portion of rent starts going into taxes, then it doesn’t become a speculative instrument.
Have apartment complexes managed by corps with central management.
Don’t make single family homes and townhomes a tool of speculative investment.
US economy would grow a lot faster if the money sitting on houses went into companies producing goods and services.
[1] https://slate.com/business/2021/06/blackrock-invitation-hous...
Invitation Homes operates in 16 cities, with the biggest concentration in Atlanta, where it owns 12,556 houses. (Though that’s not much compared with the 80,000 homes sold in Atlanta each year
https://www.politico.com/news/2024/03/21/aoc-sanders-unveil-... ("AOC, Sanders unveil ‘Green New Deal’ for housing")
https://www.politico.com/f/?id=0000018e-5eee-d570-adaf-fefe1...
If a property in a residential area is being used 100% of the time to rent, it’s a business.
I’m blown away by communities, especially ones like mountain towns where space a is a premium, where they aren’t enforcing this.
I don't think that's what zoning laws actually say. My understanding that zoning laws are about the primary use of the property by whoever is actually using it, not who owns it. So a single family home is residential because someone lives there, regardless of whether that person owns the home or is renting it.
Also, what about apartments? Those are zoned residential even though the actual owners are almost certainly not living there, and even if they are they aren't occupying more than a tiny portion of the total living space available.
You can get in Trouble for buying a commercial pr industrial property and living in it (though if you’re slick and quiet about it nobody may ever know).
i'm sure this varies by jurisdiction, but around here the fire marshal will know, because commercial properties get inspected semi-annually to make sure they meet fire code. you'd have to be very sneaky to get past the fire department. and it might not be their job to enforce the zoning laws, but living in a commercial space violates the fire code.
You shouldn’t segment commercial and residential zones and suburbia in general is a massive disaster.
You want sustainable cities, you need high dense walkable cities with commercial spaces embedded.
Sure move the giant factories somewhere else, but we shouldn’t oppose small scale sustainable businesses being embedded in residential zones.
https://youtu.be/bnKIVX968PQ?feature=shared
This is more about short-term rentals like AirBnb or empty second/n-th homes.
These create a shortage on the housing market for the local workforce. Not much benefit in having walkable communities if most of the workforce has to commute in for an hour.
In at least some areas of the US I have seen a move in the last ten years or so towards doing this in what would otherwise be typical suburban developments. Maybe that will spread.
If short term rentals are the issue, then short term rentals specifically should be addressed. But that's not what the post I responded to actually said.
Also, I don't think the kind of renters that the article under discussion is saying are having difficulty making ends meet are people who are renting short term rental properties like AirBnbs.
We've been running this experiment for a few decades now, and I think people really have to start pointing out that it's entirely failed.
Let the treasury auctions decide yields.
The solution is making government significantly smaller, more efficient and stop handing out all kinds of subsidies, welfare payments and other transfers.
Let the economy breath again.
We can agree there as well. But unprecedented wealth accumulation at the top is not some mysterious magical force - it's what happens when we stop taxing capital accumulation the way we used to. Both are necessary to control money supply.
Power will be seized by the powerful. Take the power away from the government.
Think about all the meddling the government has done in the economy for the last few decades and where all the money has gone.
First, consider that in a democratic system, there will always be political will to spend, and there will always be political will to reduce taxes. It was inevitable that taxes would come down and inflation would then soar. So "run a deficit and then tax the rich/corporations/just a little more" doesn't work forever. Eventually people demand more for less.
It also has the added feature that the cantillion effect can be used to redistribute wealth. Sounds good, but then you're at the mercy of whatever is more politically expedient to the representative voting on the tax rates. If he is more beholden to his constituents, capital flows to them. If he's more beholden to his donors, guess who benefits from it. If his constituents are corn farmers, prepare for farming subsidies. Also think of this: rich people understand this wealth redistribution mechanism, most regular people or poor people do not. So while it sounds good, tax the rich more and redistribute wealth, it is more likely to be used in the opposite direction, and inevitably it will be. Better if the tool just doesn't exist at all.
To me, just getting rid of this complexity and budgeting based on tax revenue, the old way, and keeping money supply out of the hands of government, solve all these problems. Government can't print and spend, it taxes who can afford to pay based on what it needs, and it can't spend money on things that aren't in the interest of the people and businesses it is sovereign over. It doesn't find itself in a political conundrum that ensures that it spends more and taxes less, it spends only based on its ability to pay and it taxes people only based on their ability to pay. And you get rid of the cantillion effect, so no siphoning wealth to the top from the working stiff.
They can control deposit reserve requirements, and they have a huge power over investment regulations. Oh, and they can also print money, don't they? (Or is it the direct government?)
That said, yes, all the precision interventions are on the hands of the direct government, and out of reach to the FED. I do think all countries need an UBI whose value is decided by the monetary authority. This would give them an entire new degree of freedom.
If average people can't afford the interest rates my parents were paying back in the '70s and the people who can afford these rates -- because they can get a reasonable ROI through something like AirBnB -- are still buying up the supply of 'excess' homes then it could be argued that the Fed's meddling is ineffective.