Economics, Must Reads, Recommended

The End of Aspiration

Since the end of the Second World War,  middle- and working-class people across the Western world have sought out—and, more often than not, achieved—their aspirations. These usually included a stable income, a home, a family, and the prospect of a comfortable retirement. However, from Sydney to San Francisco, this aspiration is rapidly fading as a result of a changing economy, soaring land costs, and a regulatory regime, all of which combine to make it increasingly difficult for the new generation to achieve a lifestyle like that enjoyed by their parents. This generational gap between aspiration and disappointment could define our demographic, political, and social future.

In the United States, about 90 percent of children born in 1940 grew up to experience higher incomes than their parents, according to researchers at the Equality of Opportunity Project. That figure dropped to only 50 percent of those born in the 1980s. The US Census bureau estimates that, even when working full-time, people in their late twenties and early thirties earn $2000 less in real dollars than the same age cohort in 1980. More than 20 percent of people aged 18 to 34 live in poverty, up from 14 percent in 1980. Three-quarters of American adults today predict their child will not grow up to be better-off than they are, according to Pew.

These sentiments are even more pronounced in France, Britain, Spain, Italy, and Germany. In Japan, a remarkable three-quarters of those polled said they believe things will be worse for the next generation. Even in China, many young people face a troubling future; in 2017, eight million graduates entered the job market, but most ended up with salaries that could have been attained by going to work in a factory straight out of high school. 

Undermining of Home Ownership

Few metrics demonstrate the end of aspiration better than the decline in home ownership. The parents and grandparents of the millennial generation (born between 1982 and 2002) witnessed a dramatic rise in homeownership; in contrast, by 2016, home ownership among older millennials (25-34) had dropped by 18 percent from 45.4 percent in 2000 to 37 percent in 2016. Without a home, these millennials will face a “formidable challenge” in boosting their net worth. Property remains central to financial security: Homes today account for roughly two-thirds of the wealth of middle-income Americans; home owners have a median net worth more than 40 times that of renters.

Perhaps nowhere is shift more dramatic than in Australia, a country long renowned for both social mobility and widespread home ownership. Between 1981 and 2016, property ownership rates among 25 to 34 year-olds in Australia—a country with a strong tradition of middle- and working-class home ownership—fell from more than 60 percent to 45 percent. This is not, as some suggest, the result of a lack of developable land. Even in the relatively crowded United Kingdom, only six percent of the land is urbanized, while barely three percent of the US and 2.1 percent in Canada is urbanized. It’s less than 0.3 percent of Australia

So why has home ownership fallen? Largely due to regulations that have placed new affordable housing beyond the reach of younger Australians, something we also see in major cities in Great Britain, the United States, and Canada. In all these places, the main culprit has been “smart growth,” a notion that encourages the reluctant to move closer to dense urban cores and give up the dream of owning a home.

As a result, Australia’s once affordable cities are now among the world’s most expensive. According to demographer Wendell Cox, prices for homes in Sydney—even in the current downturn—are higher than Los Angeles, London, New York, Singapore, and Washington. These all are cities that by any estimate are more critical in the world economy and far more land constrained. Even Adelaide, an isolated and declining industrial hub, has higher prices based on income than Seattle, one of the world’s most dynamic tech hubs.

The impact on prices has been severe. In Sydney, planning regulations, according to a recent Reserve Bank study, now add 55 percent to the price of a home. In Perth, Melbourne, and Brisbane the impact is also well over $100,000 per house. Australian cities once filled with family-friendly neighborhoods are now dominated by dense apartments. According to projections from the Urban Taskforce, apartments will make up half of Sydney’s dwellings by the mid-century, whereas only one quarter of Sydney dwellings will be family-friendly detached homes.

These policies are widely supported among planners, academics, and the media; in virtually all countries, the cognitive elites congregate in elite urban centres. Indeed, when I produced data at a recent convention demonstrating that most Australians are continuing to move to the periphery, even in New South Wales, the moderator, Australian Broadcast commentator Ali Moore, described much of suburbia as “the wastelands.” This led one attendee to wonder “what country” she inhabited, given that 80 percent of all Australians live in suburbs, with more than four-fifths of families preferring to live in single family homes.

The Green Agenda

Historically, opposition to suburban lifestyles was based largely on aesthetic, social, or even economic considerations. Today, opponents are preoccupied with “green” and “sustainability” concerns. The environmental magazine Grist envisioned “a hero generation” that will escape the material trap of suburban living and work that engulfed their parents. One magazine editor proudly declared herself to be a part of the GINK generation (as in “green inclinations, no kids”) which not only afforded her a relatively care-free and low-cost adult life, but also “a lot of green good that comes from bringing fewer beings onto a polluted and crowded planet.”

This view is widely shared by both the oligarchy and the upper echelons of the planning clerisy. Like their medieval counterparts, they wish to see a more “ordered” planet, but in ways that do not threaten their own power or quality of life. Those at the top of class pyramid can purchase “indulgences” for their consumption by investing in forests, driving electric cars, solarizing their homes, while their wealth allows them to purchase expensive inner-city flats.    

This meme is applauded by publications like the Australian Financial Review, which insist that millennials do not want to live in suburbia. This is largely specious. In survey after survey, most millennials, in the United States and elsewhere, hope to buy a single-family house. The problem is simply that they can’t afford them, particularly in the highly regulated regions as in California, Australia, Canada, or the UK.   

This sets a stage for a future political conflict. Even in the teeth of policies that seek to discourage suburban growth, in most high-income countries, including Canada, Australia, and the US, suburban tastes remain predominant, and are likely to become more so. In America, among those under 35 who do buy homes, four-fifths choose single-family detached houses. According to a recent National Homebuilders Association report, over 66 percent, including those living in cities, actually prefer in the future to purchase a house in the suburbs.

From Upward Mobility to Neo-Feudalism

The drive against bourgeois aspirations underpins an emerging neo-feudal system in which people remain renters for life, enjoying their video games or houseplants. This may end the dream of ownership that has defined the middle class for a half millennium, but it could assure a steady profit for the owner class, a rent that would seem appropriate to a medieval landlord.

French economist Thomas Picketty has suggested that today’s ageing societies exacerbate this pattern. Older people dominate the stock and property assets, forcing up prices to the point that younger generations or newcomers to these countries face growing obstacles to upward mobility. High rents as well as rising house prices make the extension of property ownership increasingly difficult for all but inheritors.

This receding horizon is generating an ever more feudalistic mentality among the young—those with wealthy parents are far luckier to own a house and enter what one writer calls “the funnel of privilege.” In  America—like Australia, a country whose mythology disdains the power of inherited wealth—millennials are increasingly counting on inheritance for their retirement at a rate three times that of the boomers. Among the youngest cohort, those aged 18 to 22, over 60 percent see inheritance as their primary source of wealth as they age.

A Return to Bourgeois Aspiration

“Young people,” wrote Montesquieu in the mid-eighteenth century, “do not degenerate; this only occurs only after grown men have become corrupt.” By endorsing policies that restrict suburban development and home ownership, planners, investors, and the media are asking the next generation to accept conditions that their predecessors would never have tolerated.

Ultimately, this poses a threat to the powerful democratic ideal that arose in the second half of the last century. Instead of spreading the wealth, many of the leading Silicon Valley oligarchs’ solution to marginalization is to have the state provide housing subsidies as well as unconditional cash stipends to keep the peasants from rising against their betters. 

The oligarchs understandably do not want a populist rebellion from below; the Trump victory and Brexit were demonstrations of that threat. But nor do they worry all that much about being burdened by a call for societal generosity. Such people tend to be skilled at tax avoidance, so they won’t be picking up the bill. Instead, as occurred in the Middle Ages, the taxes will be paid by the remaining middle- and working-class residents, while the regulatory clerisy, both in government and the universities, enjoy cushy pensions and other protections unavailable to the masses. 

The erosion of upward mobility threatens a deepening conflict between the middle orders and the elites. It also threatens the future of liberal democracy. A strong landowning middle order has been essential in democracies from ancient Athens and the Roman and Dutch Republics to contemporary Europe, North America, and Australia. Now with fewer owning land, and many without even a reasonable expectation of acquiring it, we may be entering an era portrayed as progressive and multicultural but that will be ever more feudal in its economic and social form.

 

Joel Kotkin is a Presidential Fellow in Urban Futures at Chapman University and Executive Director for the Center for Opportunity Urbanism. His next book, On the Return of Feudalism, will be out early next year from St. Martin’s. 

193 Comments

  1. Cornfed says

    You get the government you deserve. Don’t want environmentalists determining where and how you live? Quit electing them.

    • Democrap says

      Democracy aggregates the beliefs and norms of voters. Those beliefs are influenced by a number of factors, but at least two major ones are the media and the education system. Both of these belief forming power centers are simultaneously hostile to large segments of the population while pushing a very narrow set of beliefs and norms. The “I blame the voters” view is bullshit. Doubly so in the face of major governmental decisions that don’t get voted on but are pushed by the media, e.g. wars, mass immigration, and other issues. Or do get voted on, but are completely ignored, e.g. Brexit. Or in a third case, an issue gets voted on, passes, but is suspiciously like the propaganda pushed via elites through the media and education system (power petitions the people that in turn tells power, via voting, what power wanted in the first place).

      • Ray Andrews says

        @Democrap

        Yup. Consent is manufactured. The trends mentioned in this article continue exactly the same under all governments. The establishment is careful to let us freely choose between Tweedle Dee and Tweedle Dum. The Tribunes of The People shower us with love, but their kids will get into Harvard and ours will not.

        • Michael Ku says

          Sometimes with the help of others taking their tests for them,

      • Doug F says

        The transformation of the education system and the media has been going on for decades and plenty of people have been raising the alarm. But people living in the bubble of prosperity and freedom of post WWII America assumed that we were immune to history – those types of things couldn’t happen here.

        In the end, the voters are to blame for letting it happen.

    • scribblerg says

      We just did that, are you even aware of how the EPA acted well beyond the statutory authority granted to it by our elected officials? What say you when the administrative state is supra-legal? Want evidence of that? Look at responsiveness to FOIA requests – most govt agencies violate those laws every day, resisting citizen oversight.

      Your sentiment is quite simplistic and doesn’t deal with the facts or reality we face. Look at immigration – the judiciary via activist lawfare and judicial activism – has written its own laws to create an open border with Mexico. We never voted for that and such a policy is opposed by 70%+ of Americans. The EPA turned C02 into a pollutant, in direct opposition to Congress, as well. You seem to think we have control over these agencies, but we don’t.

      Our democracy doesn’t work, and our govt exceeds its constitutional authority every day. What should the “voter” do about this?

      • Lert345 says

        scribblerg

        Our love for cheap latin american labor did vote for such a policy.

        • scribblerg says

          Simply untrue. We have laws on the books that are being violated. The American people last voted on this issue fulsomely in 1965. At that time we were assured that the shift in policy would not result in a flood of third world immigrants from incompatible cultures. That the ethnic composition of the U.S. would not even change significantly as a result.

          Also remember that many illegals are working using false papers. Their employers have complied with the law. Not all the time, obviously, but more often than most people realize. We are an open society, and it’s quite easy to break our laws. What we don’t do is enforce them, and that’s how we got here. But it’s even worse than that because what’s actually happened is that the Left has systematically undermined the system via “lawfare” making it literally impossible for us to stop massive numbers of people coming in.

          70% of Americans do not want open borders. This is a result of the join of leftist revolutionaries and right wing globalist scum who simply do not care for our nation at all. It’s a great example of how the administrative state and the elites have joined each other in advancing their minority agenda, regardless of the will of the people.

          Our govt’s immigration failures alone could easily be considered ample justification for revolution, given how the govt simply doesn’t honor the ‘self governance’ guaranteed in the constitution. The will of the people is to stop this madness and deport most of the people here. In fact, the majority of Americans support a serious slowdown in immigration or an outright freeze.

          Just sayin’…

          • But. A hard line on enforcement led to a decline in returns across the border. As a result of the expense, many Mexican workers stayed. What was circulation back and forth became a one way valve.

          • Groucho says

            Until they have to pick the lettuce themselves or pay for decently paid citizens to pick them. U all buy into such tropisims

      • Necessityofchoioce says

        ”Our democracy doesn’t work, and our govt exceeds its constitutional authority every day. What should the “voter” do about this?”

        How about doing what the framers of the constitution had in mind and using the provisions of the first and second amendments, to make your feelings known.
        The framers were always concerned about Government over reach hence these two directives sit at the apex of anything else the federal Gov. had to say about the relationship between it and US Citizens.

        You can win. Bundy v. Bureau of Land Management – BLM

        On February 10, 2016, Cliven Bundy traveled to Portland, Oregon, in response to federal law enforcement moving to end a standoff led by his sons Ammon and Ryan at the Malheur National Wildlife Refuge. He was arrested at the airport by the FBI and was incarcerated at the Multnomah County Jail. He was indicted for 16 federal felonies on February 17, along with Ammon and Ryan Bundy, militia leader Ryan Payne, and broadcaster Peter Santilli, who were already under arrest for their role in the Malheur standoff. Another 14 individuals were charged on March 3, 2016. Santilli subsequently pled guilty to felony conspiracy to injure or impede a federal officer.[6]

        On January 8, 2018, U.S. District Judge Gloria Navarro in Las Vegas dismissed with prejudice the criminal charges against Cliven Bundy, his sons Ammon and Ryan, and co-defendant Ryan Payne regarding the standoff.[7][8]

    • Tom Bombadil says

      Though mostly directed to the U.S., housing is more expensive because more people desire housing in the smaller spaces in and around urban areas, including nearby suburbs.

      When agriculture and more rural areas were a greater desire, property values were affordable. Demand has shifted and the desired properties have increased in price due to the demand.
      Is there a hope for the small towns? Will the notions of small towns being backward diminish with greater remote access to work? I live in a smallish growing agricultural town and work remotely. We have decent entertainment (though growing) and a modest hip population, but there are many groups that get together for intellectual and connecting activities in person — a sort of Inklings.

      I think one part of the solutions is to embrace smaller cities and towns and those suburbs around them. Turn them into the community you want. It is very rewarding.

      • David of Kirkland says

        Yes, there is lots of space and land and cheap housing in America’s rural lands. No demand, low prices. At some point, smarter folks will move rural where they can afford things, control their local governments better (a small town is easily overwhelmed by immigrants when it comes to voting), and then we can hear all those rural folks cry about the blight of the newcomers making land unaffordable through their gentrification.

        • The reason rural housing is cheap in the US is because people live where they work. A drastic decline of work in rural areas throughout the world is evident. Don’t call it ‘jobs’. Until very recently work included basic functions like keeping house, raising food, caring for the old and the young. Households were places of work. Rural communities were trading communities. The work had to be done in those small places. Networks, both transportation and communication networks, had to be small and slow because technology constrained them.

          I have a question. I have heard in Australia they mandate non-professional immigrants locate in rural communities for a period four years. These rural towns have declining populations and they desperately need people to fill vacant “jobs.” Why do the immigrants treat the four years like a jail sentence? They figure out ruses to maintain a residency without a physical presence, or they just run away and escape. They go to Sydney and they live in neighborhoods with their own tribesman, so to speak. They will put up with real hardships to escape the economic advantages of their mandated rural residence. The cheap housing and the type of economic opportunity has little appeal it anyone. People despise rural opportunities.

          Small, locally owned, enterprise is in a declining twilight. These days nobody knows the owner. Ownership is so diffused, its impossible to know the owner. The boss is not the owner. The Boss doesn’t even act like the boss. He’s a bureaucrat. He just follows rules and implements procedures. What exactly is a millennial supposed to aspire to? Nobody makes anything anymore. Who are the growers? Who are the farmers? The companies are so complex and so big people feel completely alienated from the enterprises they work in for.

      • @Tom Bombadil
        I agree with your sentiment and have watched this all play out in Oregon’s northern Willamette Valley over the past 12 years. We managed to acquire a home in Newberg, about 20 miles SW, of Portland and now that we’re here and have built equity, we can move laterally or up (depending on income) with ease. However, home prices have increased by 40% since we’ve been here due to community growth and were we to move to Newberg today, I doubt we could afford a home without a massive downpayment.

        Small farming communities further out are experiencing the same trajectory. Remote workers find affordable land, build a house, and after a few years the good restaurants, wine bars, and brewpubs move in…attracting more home buyers and increasing the cost of housing.

        The key to making this work is to first have remote work because commuting 50 – 60 miles each way every day will kill you. Then get in early and endure a scarcity of shopping conveniences and the local Greasy Spoon until better options arrive. Funny though – it doesn’t seem to happen everywhere. Some small towns are seeing no positive change whatsoever and I can’t figure out what the deciding variables are.

        • Leif says

          JD– We know a couple who own a house in Portland’s Kenmore neighborhood. The house is 1000 sq ft (90 meters squared)– quite small. The garden is small enough you could lick it, put it on an envelope, and mail it. The neighbor’s house in nearly identical and listed for $450,000 last year.

          Both work, with one commuting over an hour each way. Their children are out of the house. Together the couple earn well, but prices and taxes are so high that things are very tight– and there is no end in sight.

          • hooodathunkit says

            LOL, word sequence: 1000 sq ft is about 9 by 10 meters, or 90 square meters.
            OTOH “90 meters squared” is a geenormous, bigger than two football fields.

        • Me too. I’m appalled at Measure 2001 which wants to take R-1 out of the housing code to make room for multiplexes. I’m not just appalled, I’m outraged. i live in Eugene. I’m trying to wake people up the best I can.

      • Billy Moon says

        I completely agree with this sentiment having made the move rurally a couple of years ago and working remotely.

        It is humbling moving from a city to a small humble town but 100% agree with the sentiment to participate in your community and have it grow and develop.

        I do think that remote working is a blessing but will hopefully not denigrate to a curse in the future years to come for companies to unfairly leverage.

    • David of Kirkland says

      Only in the royal “you” sense… In the US, we have winner takes all, so the winner often doesn’t even have a majority of those few who did vote. We get what we’re offered; they give us what they want. It takes a revolution to change a culture that now prefers a government solve problems rather than ensure a fair playing field (which is diametrically opposed to what their intent).

    • Just cancelled my subscription to the WSJ due to their new censorship policy. Glad to see the Quillette still considers free speech so important.

    • Victoria says

      @cornfed

      The notion we elect “environmentalists” is farcical. Almost all elected officials buy into the liberal economic faith in perpetual growth, a paradigm that makes sense only if resources are infinite.

      A few band-aid-on-bullet-wound regulations don’t change the inexorable destruction of population growth.

      • Stephanie says

        Victoria, resources are infinite. It’s a big planet, and a big universe. We’re limited only by our ingenuity.

        • Sneed Urn says

          @ Stephanie Oh, Please stop. We ARE profoundly limited by our ingenuity. Similarly We are hamstrung by our critical lack of knowledge. As hooting primate clusters are limited by our lack of wisdom. Until we are far, far beyond where we are now with All of the above we better damn well pay attention to the very real limits of the natural systems we depend on to survive and tread far more carefully lest we get squashed.

        • Necessityofchoioce says

          Hi Vicki and Steph,

          The free market will ensure scarcity leads to higher prices, and in response, ingenuity has ALWAYS led to the development of economy of use, and / or substitution, of the scarce item

    • Michael says

      The tell-tale buzz words are there: sustainability, smart cities etc . . .

      But why no mention of the UN’s Agenda 21/30 programme which spawned them, or the severely limited little lives we will be living when it is complete?

      I say “we”, but in Agenda 21’s brave new world it will be necessary to reduce the population to a level commensurate with the Earth’s shrinking resources. Hence the need, say its architects, to reduce human numbers by (wait for it) 90 percent.

      • Tom says

        yes, but first dump billions of 3rd world detritus on our civilization – who can add nothing to our societies except to produce 5 welfare babies per wife.

      • This is already happening everywhere except Africa. It is a natural result of education, the cost of living and material aspiration. Even China will have problems with a declining population. Hopefully people will adapt and maybe we’ll see less environmental strain. Pollyanna-ish, I know.

    • Tarantula says

      “Vote the bums out” is easier said than done. The bums that are in there now just replaced the previous bums. Sounds silly but it’s almost like The Invasion of the Body Snatchers. It seems like normal people you have known have been taken over by the pods and they’re closing in on you…

    • Michael Ku says

      Have been preaching we get the government we deserve, to people who do not want to either accept it or believe,

  2. It’s weird. It’s almost like free competition leads to a few people winning the competition. Who would have thought?

    • HLvtM says

      More like power elites and those that win big are anti-competitive and seek to snuff out upstart competition.

      • Christian says

        Ok but that’s the goal of participants In a winner take all market.

    • Jesse K says

      Weird. It’s almost like heavily regulated markets produce benefits mainly for those who have the resources to navigate the labyrinthine policies and structures in place and therefore primarily benefit the wealthy. In less regulated markets the prices are much more reasonable and lead to a more even distribution of wealth.

    • Trouble is ’80’s neoliberal policies were introduced to a tilted playing field so the haves became the have mores on the back of a lie. The lie being that the free market offered commercial parity but of course that could only be true if all previous wealth and ownership was confiscated and redistributed equally. The policies were simply a grab for the rest of the family silver.

      • Kessler says

        I would say it’s not that neoliberal policies produced a free market, but a market rigged for the benefit of certain class of people.

        • David of Kirkland says

          @Kessler – You can’t have a free market that’s rigged. That’s like saying you operate a single party democracy, or educating others with lies.

      • Craig Willms says

        I don’t know how old you are, but I was entering the adult world at the end of the 70’s and it was bad. You either had the money to go to college or you went out scrapping for the dwindling jobs, because the military wasn’t a viable option at the time. The interest rate on my first home was 15%, I bought it down to 11%, Inflation was chewing up the dollar. The cars we could afford sucked eggs. It was a terrible time in America economically.

        By the end of the 80’s I had a great salaried job a new reasonable mortgage at sub 8% and a 1986 Chrysler bought new off the lot. The 80’s were a transformation for us kids coming out of the lower middle class in 70’s. I just see the 80’s quite differently than the bitter beginning of some imagined screw job.

        • JWatts says

          +1, the 70’s were horrible, the 80’s were a return to the American dream. There’s a reason that Ronald Reagan won 49 out of 50 states in 1984.

          • Christian says

            Much of that growth was in spite of Reagan not because of him. The malaise in the 70s was a combination of oil crises and the closing of factories plus foreign competition becoming a stronger factor than it had been. RR s policies have back fired in the modern era.

        • Lightning Rose says

          I started exactly like you, Craig; got an entry-level clerical job, learned that job well, two years later after a personnel bloodbath was running that division for the parent company, and a year after that (having knocked my nose on the glass ceiling) left and started a similar business of my own that took off like wildfire.

          At age 27 I was pulling down 6 figures and leaving afternoons at 3 to play polo. No joke!
          Then the crash came in ’88 and I picked up the pieces while other people were looking for a high enough window to jump out of. Paid off my debts, built it back up again and walked away free and clear shutting it down at age 40 to start another business.

          YOU HAVE TO BE WILLING TO TAKE A RISK. You also have to network, make contacts, cut deals and PRODUCE VALUE. It also helps to have some basic knowhow, like a grasp of accounting and business law. I’m sorry, but sitting around in Starbucks’ whining about how your parents won’t give you enough allowance at age 30 just won’t cut it. I had a part-time job in a horse barn at 13, worked on lobster boats after that. You do what comes to hand, even if it’s not “glamorous” or “hip” or what your school major was about.

          I will categorically state that Trump is the best thing for our economy since Reagan, because HE GETS IT! about all this. People can and will flourish under favorable conditions, no different than growing a garden.

        • Lydia says

          Craig, That’s my experience of the 80’s too, right after college. After Jimmy’s malaise, lines at gas station, my mom could not sell because of interest rates. She had to stay until things changed. The 80’s were hope for me. Wide open. Exciting. People in their 20’s we’re buying homes and condos .

        • Exactly. The ’70s were a polyester-plaid-and-Generic-Products-Corporation kidney stone of a decade.

    • Jordan Hunter says

      The point is the housing market is heavily regulated. It isn’t free competition. How did you miss that?

    • David of Kirkland says

      It’s the lack of free markets that are causing the problem. Because competition is fierce and relentless, those with money and power ensure they keep their money and power by laws and regulations that preserve them “to make things better” (for them of course).

  3. S. Cheung says

    Being married with 2.3 kids, living in a house with a yard, and being better off than your parents….I believe that used to be called the American Dream. That dream does seem to be fading.

    You would need to address job training. Seemingly everyone has a degree now, most in useless fields. Kids would be better off learning a skill or trade, than to have a useless BA in something or other.

    We live in a gig economy, where jobs with benefits and defined benefit pensions seemingly don’t exist anymore. That may never turn around. But we also need jobs where people live, so that you can live where you work (be it city or suburb) rather than watching your life slip away in commuter traffic.

    We need less red tape that inflates the cost of housing. But we also need better banking rules to ensure that people have manageable debt servicing loads.

    Boy, that seems like a lot. And no doubt I haven’t even scratched the surface. Maybe we need a new American Dream, because the aspirational goals of yore do seem progressively out of reach.

    • Michael Jefferis says

      “Seemingly everyone has a degree now, most in useless fields. Kids would be better off learning a skill or trade, than to have a useless BA in something or other.” S. Cheung

      Actually 68% of Americans 25 and older do not have a college degree. 1/3 do, 2/3s do not.

      I would agree, though, that a degree does not have the same value in terms of employment that it once did, unless it is relevant to the current job market that one intends to enter. But many people have found that a BA degree (in something or other) has been helpful in obtaining work.

    • Craig Willms says

      I don’t know… At least where I’m from I see that all the McMansions out in the suburbs are occupied and have nice cars in the driveways. Someone has got to be doing OK in 21st America. Even in central city where I live I’m starting to see the old houses being torn down and rebuilt. This doom and gloom is being overstated by a large margin. .

      • Doug Schrader says

        I used to hold your view. I stated it almost in your exact words to a conservative economist good friend of mine – essentially, “how come all the [economic] gloom and doom when I see so many people living so well around me?” At first I didn’t understand his answer but since then I’ve done some reading and learning and now I understand it better. He explained that that “wealth” I see around us is very significantly “unearned wealth” that has been created out of thin air because the US dollar is the world’s reserve currency. This means that we, and only we, can print dollars to pay (the principle on) our massively growing debt. Other countries can’t do that. So when you hear things like, “we better change our ways or we’ll be in the same boat as Greece,” realize that we already are like Greece – the difference is they can’t print money to service or pay their debts, whereas we can, and do. The dollar used to have real value because it was backed by gold but that was ended in 1972 (I believe) at Bretton Woods II when Nixon took us off the gold standard. Now the dollar is a purely fiat currency backed by nothing but “faith” and crossed fingers. When the rest of the world decides it will trade in another currency because the dollar is so worthless, watch out, the bottom will completely fall out of our economy like we’ve not seen since the great depression. It’s only a matter of time before this happens. Nobody knows exactly when, but it has to – the massive debt we have and are steadily accumulating is completely unsustainable. In essence, as to wealth you’re observing – the McMansions, nice cars, etc. – represent nothing more than the American people living well beyond our means. The piper will have to be paid, by our kids and grandkids, somehow.

        • Doug Schrader says

          To put it differently, the US now is kind of like your neighbor who lives in a mansion and drives 3 Teslas because his brother in law is the president of the local bank, and allows your neighbor to get approved for multiple mega-loans. Your neighbor goes to town, lives high on the hog, pays only interest on the loans and appears, to you and most everyone else to be the richest guy in town.

        • David of Kirkland says

          @Doug Schrader – Bad economic thinking to my taste… If the US printed money to pay off the debt, then the debt would be lower, not higher every year. Printing money to pay off debts also causes inflation, which doesn’t exist. Try again…
          But the US does spend $380 billion each year just to pay the interest to bankers, foreign governments and of course wealthier Americans. That’s the fraud…buying so much in the prior generations without such low taxation that their riches came on the backs of debt that is now consuming so much money each year to service it. This is central planning, the socialism of the US that destroys the concepts of liberty, equal protection and limited federal powers.

          • dmm says

            @DoK Although it would have been more accurate for @DS to write “interest” instead of “principal”, governments pay off debt regularly. They just borrow more regularly, too – aided of course by their central banks. On the other hand, you are correct to write “Printing money to pay off debts also causes inflation”. Unfortunately, like government lackey economists, you don’t include asset price inflation in “inflation”. Most of the money pumped by the central banks via ultra low interest rates has gone into the housing market, where the cronies with access to the lowest rates try to earn the highest profit, while limiting the damage done by general price inflation. By funneling all that new money into housing, they actually prevent the CPI from rising.

      • Some of what you see is facade. I’m ~upperclass in my small community (i.e. poor by NYC standards), but I see TONS of cars nicer than mine driving around. Based on my unscientific research, most of these morons are way overextended and their retirement plan relies on an early death. Having said that, most things are overstated most of the time, so no surprises there.

        • JWatts says

          Yes, that describes my situation. When I first moved to my neighborhood, I thought most of my neighbors were making substantially more money than I made judging by the cars. It was only later on that I realized that the idea of paying cash for a car or of contributing 20% to their 401K was nearly unimaginable to most of them. I actually had a conversation where I mentioned saving up and paying cash for a car. That it’s actually cheaper than car loans. A neighbor replied that you had to be wealthy to pay cash for a car. I’m pretty sure that he didn’t believe me, when I replied that my wife and I had paid cash for every car that we have bought since 1999.

          • TarsTarkas says

            I always paid cash for my cars, starting with a used Beetle back in the 1970’s. It’s foolish to install pay or lease when you can buy outright. Ditto everything.

        • Lightning Rose says

          Cars mean less than nothing nowadays; all those BMW’s, Range Rovers and Benzes are leased. Take a look in the New York Post. I could drive a freakin’ MASERATI for $688 a month, which is about what I paid to BUY, not lease, my pickup truck. It’s all for show, smoke and mirrors. Half these assholes don’t even furnish the upper floors of their huge houses!

  4. Ray B says

    I see no mention in this article that many of todays young people have delayed moving out of the family home by many years, & have also delayed starting a family of their own. These 2 lifestyle choices, especially starting a family, are the biggest influence on the timing of the leap into home ownership by the young, & neither is affected, to any great degree, by government regulations on housing development.

    When I was young, most kids wanted to move out of home & become independent as soon as they could. We lived in shared rental houses & flats, whatever we could afford. Only those who got married & started families purchased houses, the rest of us were having a good time.

    • Craig Willms says

      @Ray B

      The fact that some young people are waiting to marry and start families will likely result in less divorce and smaller families. These are not necessarily bad things. I am seeing more young couples have one of them stay at home with the kids, or work only part-time (usually the mother). I also think this is a good thing. We never even considered this because are aspirations were out of whack. Today as empty-nesters we are shedding the junk we accumulated trying to acquire our happiness.

      • “The fact that some young people are waiting to marry and start families will likely result in less divorce and smaller families. These are not necessarily bad things.”

        First, the “less divorce” is a false canard. The single greatest predictor of divorce, after the marriage status of a couple’s parents, is whether or not a couple shacked up before getting married. The probability of divorce goes UP if they shacked up. Well, guess what? People who are “waiting to marry” are shacking up instead or “playing the field / riding the carousel”. Not surprisingly, the likelihood of marriage in the first place goes down as the number of partners goes up, as does the durability of marriage. (We won’t even get into the Kitten Ladies and Gamer Monks.)

        Second, smaller families (in the First World) IS a bad thing. Overpopulation in the West is not a problem, a looming demographic collapse is the problem. Furthermore, often the “smaller family” (across the population) in the West now is due to the woman waiting too long to become a mother, and FAILING as a result. That biological clock is real, and it is ticking.

        The future belongs to those who show up.

    • Slim says

      Maybe the causation runs in the other direction though. High housing costs and stagnant wages prevent young people from moving out and discourage taking on the additional financial burden of raising a child. That has been the case for my brother and his wife.

    • David of Kirkland says

      That’s because they have to pay down huge student debts, and because housing is unaffordable to them at their lower paid gig jobs. Those with medical, law and computer/engineering degrees tend to be well paid.
      This isn’t a lifestyle a choice, but the result of the high prices they face (due to regulation per the author).

      • JWatts says

        Sure, but if you got “huge student debts” for a major that doesn’t pay well, you were kind of dumb.

        • Emmanuel says

          Expecting poorly advised 18 y old boys and girls who know nothing about the job market to make intelligent choices in that matter is ridiculous. In every Western country (and many non Western ones like China and India), young people are misled to believe that they really need their degree without being told honestly about the outcomes of each specific degree and how most of them are nothing but low level signaling.

  5. aaron jensen says

    Individuals need to take responsibility for their own lives…
    The general human condition is just a collection of decisions, no one person is at the wheel.

    • David of Kirkland says

      True, no “one person” is at the wheel, but as we expand our central planning (in the US, giving ever more power to the Feds first, then to our state and local governments), it turns out there is a committee at the wheel. We do not control our destiny as much as in a free country with free markets rather than a highly regulated one that preserves the status quo.
      At one time, anybody could be a US immigrant just by arriving. Now we pretend “there’s no more room.” Income taxes were 1%, now they’re closer to 20% for the half that actually pays any. Homeless, the government will provide. Need healthcare, the government will provide. Can’t find a job, the government will provide. Need a safe place to inject heroin, Seattle or Vancouver will provide.

  6. Blue Lobster says

    This article isn’t complete bullshit but it definitely doesn’t smell great.

    Are property values high because older people dominate the market and force prices up or are prices artificially high due to planning regulation?

    Perhaps a bit of both but from my perspective real estate values are primarily driven by demand and demand varies markedly depending on location which, in a country as large and heavily populated as the United States, means dramatic variability based, in part, on urban, suburban or rural setting as well as regional desirability.

    For example, in 2001, my parents purchased a house (4 beds, 3.5 baths, 3200 sq feet, .66 acre lot) in NW Georgia, where my family resided during my high school years, for $190k. They sold that house in 2005 for the same price. According to an online real estate database company, it is currently worth $209k. By contrast, the home that my wife and I purchased in NW Washington state in 2015 (2 beds, 1 bath, 1000 sq feet, .46 acre lot) for $240k was sold in 2003 for $95k and is now worth north of $370k. I know from personal experience that the location of my home is far more desirable than the location of the home my parents owned 15 years ago for a variety of reasons. Without going into detail regarding those reasons, suffice it to say that the population of the city where I currently reside has increased by more than 10% since 2010 while the population of the city in which I grew up has increased by just over 5% during the same period despite having a higher per capita income, lower poverty rate and much smaller population.

    None of this is to say that people my age have an easy time entering the real estate market compared to my parents but they have a hell of a lot easier time entering it where I grew up than where I live now.

    • Peter from Oz says

      I always love watching those HGTV programmes where Americans can buy 5 bedroom houses in what look like solid middle class areas for under $300K

      Here in Sydney you need at least a million to get such a property, and even then you could be way out in the sticks.
      Unfortunately, the real problem is that those who bought their property when the market was high are going to lose out in large way if politicians interfere with the property market and cause prices to drop so that whiny millenials can afford a house.
      The current Opposition Leader is proposing abolishing the right to claim interest on investment property loans as a tax deduction unless the rent on the property exceeds the interest cost. This of course will lead to huge ructions in the property market. But he doesn’t care because he’s been got at by the whining lefties who think that somehow having investments is evil. According to them all people should work in easy jobs where they get paid a large salary for merely turning up. No-one other union officials should be allowed to invest in anything, because it would be too dangerous if ”ordinary people” actually became middle class.

    • ga gamba says

      Your comment reminds us of the mantra: location, location, location.

      I reckon if we were to examine the domestic markets of Australia, Canada, Britain, and the US we’d find several pockets of rapidly increasing property values and many others of stagnant or even falling prices. Lucky for us the Economist did a lot of the work by <a href=”https://www.economist.com/graphic-detail/2019/03/11/american-cities-house-price-index?date=2000-03&index=real_price&places=ATL&places=LAV>compiling this data for the US. going back to 1980.

      Since Q1 2000 housing prices in NYC are up 41%. In Chicago they are 4% lower. Detroit is down 19%. It’s 93% higher in LA.

      Our starting point of measure also matters as well. Since Q1 2000 housing in Houston has increased 8%, but measure it from Q1 1980 and homes fell 26%.

      There is also an index of global cities.. As most of the world was collapsing in 2008, Moscow’s real estate prices were going in the opposite direction. Now the reverse has happened. Since 1990 Tokyo’s real estate market has been on a steady trend down; it’s now 51% lower than almost three decades ago. The big gainers are hyper capitalist Hong Kong and pseudo socialist Oslo.

      Click around a bit and you’ll find that since Q1 1970 housing prices in Britain are 446% higher but only increased 13% in Germany during the same period – in fact Germany’s prices have been relatively flat for almost 50 years. Since 1975 real estate prices in almost all European countries increased more than the “unregulated capitalism” of the US – the exceptions being Germany and Italy whilst Switzerland’s values increased slightly lower than America’s.

      Concludes the Economist: Whatever the outcome, house price inflation in global cities is likely to slow down in the coming years. The cost of money is rising; wealth creation is slowing; governments are becoming more hostile to overseas investment; and supply is plentiful outside of a few highly coveted and space-constrained cities. For the moment it seems that the housing boom is drawing to a close.

    • David of Kirkland says

      Basic economics tells you that increased demand increases prices. But the corollary created by regulation is if you increase supply, prices will drop. Yes, those with money buy up the land, then make rules that make it impossible for new homes to be built, thus ensuring their wealth at the expense of others “to make our area livable.”

      • Blue Lobster says

        David,

        Your economics are sound but I think you’re a bit off base regarding regulation and development.

        It’s not really in the interest or necessarily the ability of those with money who buy up land, developers, to make rules that preclude new homes from being built. For one, developers can set up covenants, conditions and restrictions which exist between private parties but they have little if any say, depending on jurisdiction, in the creation of zoning ordinances. Furthermore, when developers purchase land it is typically their intent to maximize the return on their investment which, all other things being equal, means building as many houses as applicable zoning ordinances permit in the case of a residential development.

        Thus, it is most likely zoning and permitting regulations which are to blame for the supply of homes not meeting the demand resulting in increased prices. I know from experience as a municipal employee, though it’s also common sense, that developers are attracted to jurisdictions which are growth-oriented (for example, the city where I work) and repelled by those which are growth averse (for example, the city where I live).

        The unmentioned variable in the equation is the constituencies of the jurisdictions in question as democratic governments are (or should be) obligated to further the interests of the communities they serve. Whether a jurisdiction is oriented toward growth or averse to it is often a question of the preferences of the constituents with the most political clout.

        All things being equal, the laws that govern development in a given jurisdiction are a reflection of the desires of the citizens therein who establish and keep lines of communication open with their government.

        • Shamrock says

          Blue
          “building as many houses as applicable zoning ordinances permit ”
          It seems every few weeks I read about how a developer wants to build a new development but they want variances. In return they promise some water feature or beautification in return. Once approved, they go back several times and each time they ask for more such as reduced number of parking spaces or reduced setback to build more units and in return they will give the strata an electric vehicle or other financially insignificant item relative to the cost of the development.
          In the end there is no water feature and the builder/developer gets to build more units than originally approved.

          • Blue Lobster says

            Shamrock,

            Keep in mind that the news, as Steve Salerno essentially put it in a recent Quillette article, is news precisely because it is a presentation of that which is statistically rare enough that audiences find it entertaining and/or interesting.

            I am, of course, assuming that when you say that you frequently read about developers and the concessions they receive, that the source of the information is some kind of news media.

            From my perspective, the more frequent and, thus, more mundane occurrence works in the opposite direction. A new housing development (single-family) in the city where I work ended up actually being permitted 10% fewer homes than the city and the developer originally agreed upon.

          • P Burgos says

            @ Shamrock

            Correct me if I am mistaken, but shouldn’t higher density of housing units mean a higher value per acre to tax? Also, shouldn’t more housing units per acre mean more units per mile of electric lines, sewer lines, and roads? The main downside would seem to be more traffic congestion, but from a budgetary perspective wouldn’t it be prudent for a municipality to want higher density development?

  7. Stewie Griffith says

    I would contend that the reason for the enslavement of our young people has less to do with regulatory changes and more to do with Cultural changes among the elites within Australia, perhaps best summed up by Harry Triguboff’s purported quote when he arrived in Sydney and surveyed the landscape filled with happy people living in cottages and saidl “It is time these people started living in apartments.”

    From that moment forth the cultural change set forth with housing ceasing to viewed as an aspiration right for existing Australians, but as a commodity and store of wealth to be bought and sold and profited from. Our citizens ceased to be Australians, but cattle to be farmed in dog boxes to the sky, and when there were no longer enough people in Australia to sell them to it then more people were to be imported, and imported en-mass.

    This article attempts to blame the shortage of housing on Regulation – while completely ignoring the issue that is driving the demand for housing, Australia has been running the largest immigration program of any significant OECD nation for nearly 20 years. We are adding a city the size of Canberra each and every year, spread over 2 (perhaps 3 cities if you include Brisbane) that are already largely built out.

    THIS is the driving issue, we could be as well planned as the Germans and as industrious as the Chinese and still be overwhelmed with the sheer number of people being flooded into our nation for one reason and one reason only – to help the likes of Frank Lowy and Harry Triguboff become mind stonkingly rich as they feast on our land prices.

    This is the cause for a generation of young Australians becoming disenfranchised from their birth right, not poor planning, not regulation, not lax lending, but 400,000 being blasted into our nation each and every year, like a fire hose, scrubbing away the Australian dream.

    • Softclocks says

      Hear hear!

      How’s fresh gradutaes supposed to contend with government welfare for immigrants and well off adults buying their second/third home.

    • Andrew Worth says

      Here’s a graph of Australia’s population growth since 1950, there has not been any huge increase in population as a result of immigration, in fact the overall trend in population growth rate has been a decline over the last 70 years.

        • Stewie Griffith says

          Do you know how to read charts Andrew?

          Australia’s population has increased by 6m people since 2000, from 19m to 25m or a 32% increase, with natural increase accounting for less than half of that.

          Australia is growing faster than any other significantly sized OECD nation and has done so for nearly 20 years. We are growing faster than India, faster than Indonesia and faster than Bangladesh – in short we are growing faster than most developing nations and only beaten by third world nations in Africa. Sure there have been short periods of higher growth, but they have been staggered of 3 to 5 years max, nothing like what Australians have been forced to endure over the past 20yrs.

          http://worldpopulationreview.com/

          What Australian elites have inflicted on their citizens is unprecedented and represents one of the greatest betrayals of a ruling class ever, as they transfer our nations social capital to people who have played no part in its creation, simply so our ruling elites have a large population to farm.

          • Andrew Worth says

            Stewie Griffith, in the table you reference Australia’s current annual population growth rate is put at 1.28%, you claim that [Australia] is “growing faster than most developing nations and only beaten by third world nations in Africa.”

            Either you’re incapable of reading your own link or your geography is shockingly bad, evidently you believe that Malaysia, Singapore, Israel and numerous Latin American, South East Asian, South Asian and Pasifica countries are all in Africa.
            Your claim that Australia’s population growth rate over the last 20 years is high in historic terms is also wrong if measured as a rate of increase (which is the only sensible way to measure it) the rate of population increase has actually been about average for Australia since the mid ’70’s.

            I’ve noticed your marked xenophobia and your comments here are just you taking another opportunity to express that xenophobia.

          • Andrew Worth says

            Actually Stewie, While you’re wrong about there being a great change in Australia’s population growth rate, you would have been in part right if you’d attributed the population growth in large urban centers to international migration, as the vast majority of immigrants to NZ and Australia settle in those large urban centers, which is unlike native born people who don’t all head to the big city at such high speed. So land prices in the big cities has risen sharply with increased demand, step outside the big centers and population growth has been low.

          • Stewie Griffith says

            Andy, can I call you Andy? Probably not, I can’t imagine you’re the sort of person who’d let other people call him Andy and would find it really annoying. You’re an “Andrew” and God help anyone who calls you anything other than that.

            Andy, let me also copy and paste from above:

            “Australia has been running the largest immigration program of any significant OECD nation for nearly 20 years.”

            I don’t know how many times I repeated it in my above comments, yet you attempted to straw man me with a throw away remark about Africa – pathetic.

            The nations you listed are all either not on the list of OECD nations or are far smaller, like Singapore. If you knew about economics and the law of large numbers, you’d know that the level of effort and energy required to grow a small compact city state versus a much larger nations is significantly harder, or retro fitting existing built out cities with even more infrastructure becomes excessively expensive.

            The point is there are no nations as large as Australia with living standards as high as our own, growing at the same rate for the same length of time that we have had to endure it.

            I will agree with this article, that Australians are not the most efficient of planners and knowingly running the highest immigration rate of any significant OECD nation (as I have repeatedly said) into this planning incompetence is either shockingly criminal or corrupt – and probably both.

            Australia’s long term immigration program prior to the commencement of “Quantitative Peopling” was less than 70,000. Our permanent intake has been running as high as 210,000 per year, three times historical averages, while our combined permanent and temporary has exceeded 400.000. Prior to the betrayal represented by ‘permanent temporary’ working visas like the 457 visa (now the 482) temporary work visas were virtually non-existent.

            By the way, regional Australian centres are also over priced on a price to income basis, other culturally comparable western nations.

            https://www.macrobusiness.com.au/2017/03/migrants-flood-cities-morrison-pushes-youth-regions/

            Anyhow, Andy, I think I’ve dismantled all your points. Maybe next time you can come back with some actual facts as opposed to simply referencing your high opinion of your high opinion

          • Stewie Griffith says

            Andy (because I know you are pedantic)
            *If you knew about economics and the law of large numbers, you’d know that the level of effort and energy required to grow larger nations versus a small compact city state is significantly harder.

        • JAY M GOLDSTEIN says

          It is so wrong to accuse people of xenophobia or racism because they opposed immigration.

      • Victoria says

        @Andrew Worth

        “if measured as a rate of increase (which is the only sensible way to measure it) ”

        A population is either increasing, stable, or decreasing in absolute terms. You can’t deny that immigration, the sacrament of neoliberalism, has appreciable increased the population, so you resort to sophistry in which the rate is declared the only “sensible” metric.

        Infinite growth, regardless of rate, is ecologically unsustainable unless you find a way to utilize extraterrestrial resources, and even then quality of life issues develop as we pack more and more humans onto a finite planet.

        Maybe when all the megafauna of Africa exist only in zoos due to quadrupling of the populace of that continent by 2100, the concept of sustainability will puncture neoliberal hubris. People do like majestic and cute animals, certainly more than one another.

        • Stewie Griffith says

          So long as neoliberals can charge people to visit the zoo, than they will have no problem with societies economic benefit being maximised through totally denuding our continents of any and all wild life.

        • Peter from Oz says

          Victoria
          Neoliberalism is the term that lefties use to abuse free market conservatives.
          Conservatives do not agree with high immigration.
          Get your terms right

        • Shamrock says

          “Andy, can I call you Andy?…”

          That is gold, Stewie, gold.

    • Ray Andrews says

      @Stewie Griffith

      Same here in Canada. We are told that infinite growth is wonderful. It is wonderful if you are a rentier, but not so wonderful if you are a working person trying to live under a roof. Never mind ownership, that’s long been a shattered dream, even affording rent is critical. Neighborhoods of single family homes are now in fact bunk houses.

    • David of Kirkland says

      And how exactly did you get to Australia? Always blaming the next arrival as if your arrival gives you some lifetime advantage. Tyranny doesn’t result in a better world.

      • Stewie Griffith says

        @ David of Kirkland – there is nothing wrong with immigration when it is run for the benefit of the existing population. There is a great deal wrong with running ponzi levels of immigration that almost exclusively benefits just the immigrant and a tiny elite minority, that sit atop of the population pyramid and source their wealth by clipping tickets and farming those beneath them.

        It is an act of complete bastardy for a small group of elitists to use the social capital that an existing society and people have collectively built and invest in, in order to help perpetuate their own values, society and culture i.e. their kids, simply as a selling point to lure in more people. It represents the effective monetisation and transfer of our collective social capital.

        Furthermore, and I have said this elsewhere, deliberately pouring these competing people and cultures into our major capital cities, which should be the focal points of the underlying society supporting them, is an act of cultural genocide no less destructive over the long term, than the Han invasion of Tibet and Uighur.

        Your lame justification for lying back and doing nothing, is not only wrong, but it rooted in the immorality of dispossession.

        @Ray Andrews, Australia, Canada, the UK, NZ and the US and most of Western Europe, are all suffering from the same malaise; they have effectively outsourced their intellectual elite and thinkers, to a cultural group who instinctively seek to maximise diversity and openness, in order to maximise their own cultural well being… and if they destroy or smother the underlying gentile society hosting them, than that is of no concern, because as far as they are concerned, our societies don’t exist as as legitimate structures worth preserving in their own right.

        https://mobile.twitter.com/DavidHirsh/status/1115292157026476033

        The issue is this group collectively use past historical wrongs as both a sword and a shield to deflect all criticisms of these policies of suicidal openness as anything other than the right thing to do (from their perspective). Like the ant fungus Ophiocordyceps unilateralis it disarms the host societies intellectual defenseless against the pursuit of policies that are toxic towards their long term well being, and is ultimately fatal to their underlying culture.

        • Peter from Oz says

          Stewie
          You should also remember the other half of the problem that is being caused by leftist thinking amongst the political class, and that is the decline of the birthrate amongst the non-immigrant population..
          It is that drop in the birthrate that is causing the need for immigration, so that we have a future population to pay taxes to support the overbearing welfare state in the future.
          WOmen’s liberation has many good points no doubt. But it has led to a collapse in the birthrate and hoolowed out our culture.
          The problem is of course is the higher the proportion of migrants you have, the more diluted the culture becomes.
          Fortunately, I see a lot of very industrious migrants who understand that life is about adding value not just about getting a job. If only we could get the ”natives” to take up that attitude.
          My conclusion is that we will not see a solution to the immigration problem until we get rid of the overall cultural malaise of defeatism and inferiority that has been inculcated by the leftists and not efficiently combatted by the right.
          In short we have to take pride in our culture. We have to resist the left’s corrupted versions of chivalry and noblesse oblige.
          But the biggest leftist shiboleth we have to dismantle is the folk marxism of seeing all human relationships in terms of oppression by one group by another.
          I think the first way to achieve this is to distinguish between culture and race. The leftists have made such a fetish out of race, when they really are talking about culture. We have to correct them. The next time you are accused of being racist, your answer should be, no, I’m being culturalist and there is nothing wrong with that because culture is not an immutable characteristic.

          • Shamrock says

            Peter
            “It is that drop in the birthrate that is causing the need for immigration”
            Do we need more immigration though? We are becoming a more automated society and will have less jobs especially for low skilled labor.

            Consider the great strides we have made in the last 20 years. 20 years ago the internet was only just starting to become mainstream.

            People talk about supporting seniors for example with taxes but now we have smart phones and AI controlled thermostats, vaccum cleaners and remote doorbells. You can order food and everything else on the internet. Soon we will have self driving cars and medical devices that can monitor heart rate, blood pressure take blood and urine samples and analyse them and send the results to doctors remotely.

            Seniors will require less tax dollars as they will be able to stay at home unsupported by people for much longer.

            Same thing for non seniors.

            I am not convinced we need such high levels of immigration especially low skilled ones.

            In the new technological world I am not sure about how the economy will work, but I do believe we will be just fine if our population stayed the same or shrank.

        • P Burgos says

          @ Stewie Griffith

          At least in the US, the leading intellectuals and leaders have been just as NE WASP as they are Jewish. That is to say, in the US, the whole “elitist cosmopolitanism” is something that long predates Jewish emigration to the US, with prominent early proponents like Thoreau and Emerson, and from a more pragmatic direction, Alexander Hamilton, one of the chief architects of the US government. The Kennedy’s were also proponents of this (not surprising, given that they are Irish folk who managed to buy their way into the Boston Brahmin class), and again, certainly not even remotely Jewish, but rather aping the folkways of the NE WASPs. Obama is another example of this. And if you are going to blame anyone, it wold make a whole lot more sense to blame Catholics and the Catholic church, which has been explicitly very pro-mass immigration, and which does make its decisions in secret and does, very often, have rather unsavory and sinister motives, and has a documented relationship with criminal organizations (acting as money launderers), and has a culture of blackmail and illicit luxury, and greed, and a strong desire for worldly power.

          Granted, it is not as much fun to hate on the Catholic Church as it is Jews, but Jesus H. Christ, the Church really is a conspiracy of a lot of homosexuals, pedophiles, and criminals, and the Church really has been collaborating with the mob, and they also are staunchly pro-mass immigration, and they have a ton of influence all around the world. The Pope has way more influence than any Jew, or any group of Jews, or all Jews combined. Heads of state regularly seek audiences with him and every move he makes is covered by the global press. I cannot think of any Jews washing the feet of illegal immigrants. The Church, in portraying being pro-mass immigration as the “Christian” position, has done more to politically advance mass-immigration than practically anybody else. And this position isn’t new, going back to the early twentieth century.

      • Ray Andrews says

        @David of Kirkland

        The logical form of your comment goes something like this: There has always been migration, therefore it is invalid to ever disagree with an immigration policy. Or: People have moved in the past, therefore there must be no restrictions on their movement at present or in the future.

        In fact mass migrations in history have usually been disastrous for the receiving lands. The great migrations that populated North America and Australia were very rare exceptions, and even then the aboriginal inhabitants of both lands would disagree. Waves of more or less culturally compatible Europeans moving into an otherwise empty land — again the stone age previous occupants would disagree — is not comparable to what is happening today, where the immigrants do not assimilate and put huge burdens on social and economic structures that are not able to grow infinitely, even if it seemed that they could even 50 years ago. In short the migrations that founded Australia and the migrations that are happening now are very different.

    • Kencathedrus says

      @Stewie Griffith: My grandmother who has Dutch ancestry emigrated to Australia in the early 80s. She often complained how difficult it was for Europeans to mover there, but how easy it was for Southeast Asians. Is that still the case? I would have loved to have lived in Australia, but the immigration process seems tortuous.

    • The Bystander says

      You’re partially correct in that population growth is causing problems in Australian cities, particularly higher rents and congestion, although research indicates that the main cause of high house prices is a combination of low interest rates and tax concessions encouraging investment house purchases.

      Bad planning and a failure to build infrastructure are exacerbating these problems, and COULD be reformed to allow immigration to occur with much less on-the-ground consequences. However, we’re relying on Australian state and federal governments to get their act together to do this, and their track record in recent decades has been atrocious. They’d much rather pretend the problem doesn’t exist and have been doing a great job of diverting attention to issues of far lesser importance (e.g. drug legalisation, lockout laws, gender politics). Until the majority of the community wake up and realise that, despite promises at election time, no major party intends to change the status quo, Australia and other countries will continue down this path until society is radically different than what we see today.

  8. Michael Petraeus says

    This is just a load of claptrap. I can’t stand when people look at figures (often, in reality, poorly put together in the first place) and make sweeping generalizations.

    What does it mean the younger generations will not have it as good as their predecessors exactly?

    Of course living standards PROGRESSED at a faster pace when the world was rebuilding from the ashes of World War 2. Why is there an expectation that the pace of change should remain constant?

    Sure children born in 1940 enjoyed higher incomes – they were born during the war and their parents struggled through the Great Depression and two World Wars. In the meanwhile they turned 20 in the 1960s, with at least a decade of booming economy ahead, before it stagnated a bit during the 70s oil crises.

    As for living standards – the youngest generation is born into the world of internet, smartphones, computers, shopping malls and ubiquitous air travel on the cheap. Safe and sophisticated cars, good or great public transportation and much lower crime.

    How exactly is that being worse off than before?

    Parents of today’s 20 or 30 year olds didn’t spend time dicking around on Facebook with an iPhone in hand or chugging another venti Pumpkin Spiced Latte at one of a gazillion of Starbucks’. Their access to knowledge was limited to digging through tons of books at libraries not entering a query into Google.

    So how are the youngsters worse off exactly?

    And what does this alleged “living in poverty” even mean, when vast majority of the so-called poor have a place to live in, a computer, a phone, access to internet and household amenities?

    This is not poverty – this is entitlement. And that is the real problem.

    • Peter from Oz says

      Michaeal P,

      That is a gem of a comment.
      On reading the article I thoght the same as you. The writer is using one of two rubrics to compare generations, but is missing many others.
      There are some good points in the article. The growth of regulation and government has in fact made things more expensive
      But I would suggest that one of the biggest problems is the leftward shift in the educational establsihment. They have taught a generation of students that it is better to be a whining wage slave than be an industrious, commercially-minded person who realises that wealth is made by adding value not by merely turning up at work and whinging about the boss.

      • Sassy corporate twitter brands are my waifu says

        Totally agree with Peter and Michael. Neoliberalism is amazing. It offers a kaleidoscope of new things to shove into my gut or butt. Tacos and dildos delivered by apps for the great glory of the GDP.

        • Peter from Oz says

          List of terms that make no sense and add not a whit to any conversation: neoliberalism, islamophobic and racist

    • Roger Armstrong says

      Agree, every generation is likely to be better off than the last one, or at least starts life that way. The young today do have the disadvantage of having difficulty of buying their first house, possibly exacerbated by their expectations of the quality and location that is “suitable”, but have many advantages in terms of the general purchasing power of their likely salaries and the societal and knowledge infrastructure built up by earlier generations. Win some, lose some, but the biggest problem may be that they are being encouraged to feel like victims because of the losing side of this equation, and maybe in perverse ways by the growth in what many call the “global warming religion” that takes away hope and makes them make sub optimal life choices.

    • Slim says

      What is more important to a good life: facebook, iPhones, and Starbuck’s or affordable housing, college, and healthcare? Millenials have the former, older generation had the latter. Most of the things you describe as being better are luxuries, but what good are luxuries when you can’t get the basics?

  9. Richard says

    Not every accumulation of wealth is feudalism or oligarchy. You sound like a sign-waving Bernie supporter.

    Do people want single family homes? Sure. But they want money more. And they don’t want to commute 90 minutes to earn it.

    San Francisco, New York, Seattle, LA. Working in the tech sector in these places is where people will earn more money than their parents. Salaries are huge there, and because everyone wants to work there, prices for everything, (including housing) have skyrocketed). If they built suburbs deep outside the cities (which they are doing), they get progressively less enticing as the commute is longer and away from the interesting areas.

    This is more supply and demand of good careers rather than environmental liberal conspiracies.

    • Lert345 says

      yes, let’s all get jobs in the tech sector programming each other’s computers.

  10. Cynical Old Biologist says

    It is not planning and regulations that have led to the massive growth in property prices but, rather, the opening up of the housing markets to investment. Massive money generation by central banks and the provision of this via banks at very low interest rates (particularly after 2008 as an attempt to counter the Global Financial Crisis but also during the early 2000s in the USA of course that led up to that crisis) and a lack of productive investment options has led to growth of property values through speculation in residential housing. And as people who actually needed somewhere to live could afford less and less they were forced to buy apartments rather than houses. In Australia, the property bubble was also promoted by massive immigration as well as allowing foreign investors, particularly Chinese trying to get their money out of China, to buy apartments. Look at how many of the apartments in the new towers are purchased but remain empty!

    And if you want to know why people in China might want to invest their money outside of that country (other than uncertainty about future government actions) then just look at the quality of construction of the three year old housing in this video: https://www.youtube.com/watch?v=XopSDJq6w8E

    • E. Olson says

      COB – I was waiting for someone to bring up the obvious drivers of inflated housing prices. Chinese investors and other rich foreign investors aren’t buying homes in Thunder Bay Canada, Topeka Kansas, or Darwin Australia, they are buying in the flagship cities with nice weather and/or major cultural attractions, and big international airports such as New York, San Fran, Vancouver, Sydney, London. Throw in near 0% interest rates and even modestly wealthy people can afford a mortgage for a lot more house as well, which bids up prices in attractive communities with good employment opportunities, nice weather, and cultural attractions. And when cities start to grow and housing prices go up politicians always make things worse by putting in/keeping rent controls, enacting “smart growth” policies and environmental/safety regulations, and raising taxes, which restrict reasonably priced new housing construction and further inflate prices.

      If anyone want to truly reduce housing costs, there are several ways to do it. First, restrict foreign ownership and investment in housing. Second, raise interest rates on mortgages / lose the deductible mortgage interest (especially on investment houses). Third, deregulate the housing market and invest in good roads for commuting. Fourth, move to a cheaper place which are readily available outside the flagship markets. The real estate industry, environmentalists, and many current home owners in inflated markets will of course fight tooth and nail any attempts to enact the first 3 options.

      • Jay Salhi says

        “And when cities start to grow and housing prices go up politicians always make things worse by putting in/keeping rent controls, enacting “smart growth” policies and environmental/safety regulations, and raising taxes, which restrict reasonably priced new housing construction and further inflate prices.”

        Zoning restrictions of all kinds are the biggest factor driving prices up because they restrict supply. San Francisco has the highest prices because the zoning laws make it next to impossible to build new housing. Other flagship cities have similar problems.

        • Ooogala Boogala says

          Total garbage. Other than bulldozing Golden Gate Park, where exactly is there space in SF to build a bunch of new single family homes (which is what the article is lionizing)? Zoning has nothing to do with SF’s housing “shortage.” Indeed, there is no shortage. The simple fact is this: San Francisco is already full.

          It’s all just a basic supply and demand problem. People can move to South Dakota and buy cheap houses all day long because no one wants to live there (and there is tons of land to build more single family houses if they run out). SF? Not so much.

          If the economy really worked the way this article imagines it does, then different jurisdictions in the U.S. would compete in a race to the bottom to have totally zoning free jurisdictions where people could build whatever they want, wherever they want. But what you get when you do that is an extremely undesirable place (much of Houston is like this, and yes, it’s cheaper than SF, but it’s also . . . well, Houston. Ditto many of the abominations that pass for cities in places like China).

          I’m not saying there aren’t lots of things screwing young people and probably making it impossible for them to live as well as previous generations, but this article is all wrong about what those things are.

      • David of Kirkland says

        Or just allow for building all new properties and stop saying they cannot. More housing will reduce pricing no matter what. And if Chinese want to give us money to own property and pay taxes without living in them, that’s their choice. But for every such home, if you build another, you’ve got more taxes and more homes at lower prices.

      • Sneed Urn says

        @E. Olson You bring up some interesting points about reducing housing costs. It is curious that you restrict your opposition to foreign investor ownership of housing. In the US a giant swath of homes formerly owned by actual homeowners are now owned by a few large corporate investors. That by itself represented a huge transfer of wealth from the middle class to the financial elite. (after the 2008 crash)

        I happen to agree with your general notion that keeping the housing market strictly among individual and family buyers for their personal (non-rentier) use would open up the supply dramatically and thus exert a downward pressure on prices.

        It is impossible to imagine how Raising mortgage interest rates and losing the interest deduction would Increase home ownership unless that were applied ONLY to Investment Buyers.

        DeRegulating the market is the opposite of what you just suggested.

        In capitalism, Deregulation allows the monopoly and oligopoly power of wealth. Those things are (peacefully) unassailable without the power of democracy or more generally of government. Without regulation the “markets” would be far worse.

        It is important not to conflate issues and forces in society. The actual drivers of the move to cities is a combination: Big Ag technology requiring radically fewer Ag workers along with keeping Ag wages below “free market”, the concurrent rise of Other available work centered in Urban areas, The very real costs of commuting. Then the obvious supply and demand forces do work to drive prices up. Environmental regulation, not so much. It is a factor no doubt but hardly the main one.

        Moving to outlying areas will work only when jobs are available there.

  11. Shamrock says

    A solution to these problems in Oz, USA and Canada is to encourage people to live in new areas.

    In Ontario for example, Toronto is very expensive. Why not move the provincial government which resides in Toronto to a new city. Many of the workers would relocate along with supporting businesses to service the workers reducing the price pressure in Toronto.

    We live in an internet age where people can often work from home so people do not need to live near the center of big cities as much.

    • 370H55V says

      Surprised that I had to drill down this far to find this suggestion. As the article points out, only 0.3% of Australia is urbanized. And while I agree with Stewie Griffith above that annual net immigration of 400,000 is quite alarming enough (for cultural, rather than economic or environmental reasons), with 25 million people, Australia is less than 1/10 the population of the USA in an area of comparable size. Australia has plenty of room, and not all in the outback, for expansion. The question is whether or not it has the will to use it.

      • Stewie Griffith says

        @370H55V yes Australia has similar land size to the US, however, without bulldozing our remaining native rain forests and wetlands, the total amount of high quality agricultural land is around the size of NZ. If you include marginal agricultural land with insecure access to water, then it is around the size of two NZ’s – the rest is desert.

        I grew up in the “outback” part of the marginal land around twice the size of NZ. We use to receive less than 6 inches of rain a year.

        Already both or major cities, Sydney and Melbourne are threatened with insecure water supplies and are having to build massive and expensive (not to mention environmentally destructive) desalination plants, which substantially increase the cost of water for the existing population, simply to accommodate more people.

        Finally to Shamrocks point, pouring people into our cities, simply to force out the existing population is still immoral and amounts to forcefully separating the people from both the social capital that they and their parents have worked and sacrificed together to build, and amounts to a form of cultural genocide as their cultural centre points are smothered with competing people and cultures, who under the guise of Multiculturalism, are under no obligation to integrate or assimilate into the underlying Australian culture.

        • Shamrock says

          Stewie
          “pouring people into our cities, simply to force out the existing population is still immoral…”
          Agreed. But with most western governments (excluding some European countries like Poland, Hungary, Cech Republic and Slovakia) promoting massive immigration, creating new cities is a viable option in parts of Canada given that restricting immigration is currently a no go.

          Ireland, for example, has a population of under 5 million. The current government has an official policy that it wants to increase Ireland’s population by 1 million by 2040. Given Ireland’s birth rate is at approximately replacement level, it will mean immigration will be required to make up the numbers. Most immigrants will head to Dublin which simply can’t manage, so new cities would help.
          Keeping western culture alive is not what woke governments want. Diversity is the preferred option.

  12. “It is not planning and regulations that have led to the massive growth in property prices but, rather, the opening up of the housing markets to investment. ”

    In the UK at least it is very clear that the problem is one of supply being very out of step with demand. In areas with good employment prospects and choices house supply is massively lower than demand. More houses are needed because of population growth and more significantly more single occupation.

    On the supply side I am sure regulation has an impact with planning restrictions but there seems to be a complete market failure with low levels of house building by a relatively small number of house building companies who have large ‘banks’ of pre-approved land that can be used for house building. If you were cynical you coudl observe that there is a huge and increasing premium above the house build cost paid which is driven by scarcity so building lots of houses is against the interests of the house building companies. Given the scarcity of houses and high demand hous ebuilders tend to build more expensive houses which have a better margin because they can sell all they build anyway so by doing this they maximise profit.

    The main government response ot ever increasing house prices is to give financial assistance to first time buyers of houses which simply increases the price of such houses.

    The high unfulfilled demand for housing has created an opportunity for thse with access to capital and what houses are available are frequently bought as investments with housing demand driving rents high. This does drive house prices upwards but isn’t the main driveer but is a symptom of the mismatch between demand and supply.

    What is needed is a lot more houses and given the market is not operating normally with high prices not causing high build rates it needs some intervention to build a lot more homes. Historically this was done by local government but since the early 80s this has been heavily discouraged by central government.

    The outlook in the forseeable future is more of the same.

  13. Michael says

    great insights
    the secret seems to be in how to decentralize. (the author states that even in UK only 8% of land is urbanized.)
    will the fast rail, cheap airfares and optic fibre connections to far flung places make the cities obsolete. why spend 3 hours a day commuting when you can get to work in 10 minutes. If i want to see a fabulous opera i fly down and stay the night. still cheaper than trying to buy or rent in Sydney.

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  16. mitchellporter says

    I’m a Gen-X Australian who has been a below-the-poverty-line renter my whole adult life. The ups and downs of politics and economics were something to which I was relatively oblivious until recent years. So I don’t really know about this world of aspirational home owners that is now in decline, let alone the world of the powerbrokers for whom macroeconomics and demographics are bread and butter. At best I can say that I was living the life of the deracinated digital millennial, a decade before it became the norm.

    Nonetheless, I would like to be able to learn from what I am reading here, and to interpret it correctly, especially as it pertains to Australia. The article’s author, Joel Kotkin, particularly attributes “the end of aspiration” to “the green agenda”. People are renting apartments rather than buying houses, because the “[urban] planning clerisy” are opposed to suburban sprawl. Kotkin also notes the phenomenon of ageing boomers treating real estate as a financial asset, thus favoring policies which keep it expensive and thus, incidentally, out of reach of the younger generations.

    Meanwhile, in the comments, we have a few people talking about population growth and mass immigration, and in the Australian context, “Stewie Griffith” particularly calls attention to the billionaire property developer Harry Triguboff. Triguboff turns out to have been an important person, child of a merchant family of Russian Jews living in interwar China, who made it to Australia after the war and, closing the circle, eventually made his greatest fortune selling Australian apartments to Chinese investors. In interviews, Triguboff boasts of his political access and says Australia should increase its population to 150 million, something which most Australians would vehemently oppose.

    It turns out that Joel Kotkin wrote a book in 2010, “The Next Hundred Million: America in 2050”. And at his website there is an essay, “Understanding the Appeal of Democratic Socialism Key to Defeating It”, where he remarks, “My maternal grandfather, a union window washer, spoke openly of the class struggle as if he was still in Russia”.

    I am not sure what to make of all this, but let me tentatively try opposing Tribugoff to Kotkin. Kotkin is some kind of urban studies academic, Tribugoff is an actual billionaire developer who built thousands of apartments, so one may consider them as avatars of theory and practice respectively. They have points of agreement and points of disagreement. They agree on massive population increase. They disagree on how all these people should live – Tribugoff got them renting apartments, Kotkin wants them living in their own homes.

    I think, overall, they are on the same team – at least from the perspective of the ordinary person. The ordinary person, in America and Australia, feels no need for another hundred million people to move into the country. That is the outlook of oligarchs who expect their wealth to expand in proportion to a country’s population, because every extra resident is a potential extra customer; or the outlook of ideologues who think population growth is the key to economic growth, or that open borders is the key to curing world poverty (hello Caplan and Weinersmith, whose book “Open Borders” was released this weekend).

    May I suggest that Kotkin and Triguboff can resolve their conflict by opposing further mass immigration? Then we can avoid neofeudalism, satisfying Kotkin, but Triguboff will still have something to build, namely houses for all the people who formerly lived in apartments… Although in the case of Australia, I don’t know if we can avoid a future influx of tens of millions more, surrounded as we are by countries with more than 100 million residents. Perhaps the next Triguboff is an ethnic Chinese from southeast Asia, now working in a Canberra think tank, who will cede northern Australia to Indonesia during the world famine of 2035… Or maybe the AI singularity will arrive in time to spare us such difficult choices, and we’ll all get to the live in the solar-system civilization of Musk and Bezos instead.

    • P Burgos says

      @ mitchell porter

      Attitudes in the US towards mass immigration are multitudinous and conflicted.Trump has actually convinced a majority of Americans that it would be better to have more immigration, not less, than we currently have, which isn’t surprising given that everything he touches starts to smell like swamp water. People in the US also want the government to not make any cuts to Medicare or Social Security, and they seem to want the government to spend even more money on the military. They also want the government to lower taxes. As you should be able to infer, that means huge government deficits and a ballooning national debt, given that Medicare, Social Security, and military spending make at least a majority of the Federal budget, if not an even higher proportion.

      Folks also want housing to be more affordable in all of the most desirable areas (which tend to be in places that have few opportunities for greenfield development due to mountains and oceans), and they also want the value of their own homes to only go ever go up. They also don’t want a national ID card (probably necessary for controlling the borders when most illegal immigrants enter with a visa and then just don’t leave), and seem not to care much about implementing a system where employers have to verify that someone has a right to work in the country before employing them.

      All of this is to say that politicians and other power elites in the US have to someone manage the country with a populace that really only wants a world with no trade-offs between competing goods, and hates anyone who is honest that you cannot eat your cake and have it too. Business leaders can get away with some honesty, as they answer to their board of directors, but politicians don’t really have much choice but to lie if they want to be elected or re-elected (Trump being the apogee of this so far in the US). But what are politicians supposed to do? Even Trump seems to recognize that actually deporting all of the illegal immigrants in the US, or even making a serious dent in it, would harm the economy enough that voters would start to lose their jobs as the economy contracts. Of course, Trump will never admit this is why he has been a dilletante in actually bargaining and obtaining the things the country needs to keep illegal immigrants from staying in the country. But you can see it in his actions and the cool reception of immigration hardliners in congress to Trump’s border wall circus, which is excellent political theater, but not likely to be effective in reducing illegal immigration (which is why the immigration hardliners in congress don’t care whether or not it gets built).

      Australia seems different, in that it doesn’t have a lot of illegal immigrants compared to the US, and so it could simply reduce the number of incoming immigrants. I don’t know what trade-offs it would face by doing so.

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  18. Wow! great post, The Property (Aljurf Villas) remains central to financial security: Homes today account for roughly two-thirds of the wealth of middle-income Americans; home owners have a median net worth more than 40 times that of renters.

    • David of Kirkland says

      That suggests, though, that to take advantage of their wealth (they will already pay higher real estate taxes which in the US tend to be based on unrealized profits/losses on estimated values, the only such tax not based on money you have), they must sell their home in the community the built over a lifetime and move to a foreign place.

  19. The long term problem with suburbs is financial,

    Marohn primarily takes issue with the financial structure of the suburbs. The amount of tax revenue their low-density setup generates, he says, doesn’t come close to paying for the cost of maintaining the vast and costly infrastructure systems, so the only way to keep the machine going is to keep adding and growing. “The public yield from the suburban development pattern is ridiculously low,” he says. One of the most popular articles on the Strong Towns Web site is a five-part series Marohn wrote likening American suburban development to a giant Ponzi scheme.

    http://time.com/3031079/suburbs-will-die-sprawl/

  20. scribblerg says

    Very interesting and well though out essay. This is the kind of content I hope for from Quillette. I’m sometimes critical of the author’s and work presented here, so I should note when it’s “on” for me,

    I think the author presents a fatal materialism in his analysis. I’ll point out two developments that he doesn’t touch and I think they are much more important drivers:

    The collapse of “family values” in the West. The young people the author seems to be advocating for do not have the same template for life that previous generations were handed. The women delay marriage and childbearing for 10 years+ and instead are having “their wild years” in their 20s. The young men in this world learn either that they are not hot enough to be playthings during this phase for many women (young hot guys live in paradise today in terms of no-commitment sex), or to be playboys. They are not “dating” in search of a wife or a husband until much later.

    This shift in priorities by young people should shock exactly nobody. The feminist agenda, put on steroids by the Marxists and Postmodernists, gave us this rapid degeneration of family values. You might think that this is all good – but don’t be shocked when family formation is denigrated that people don’t pursue the material goals that come along with starting a family.

    Aspiration and the West – Western civilization as characterized by Enlighten values put tremendous focus on the individual. Our personal struggles with virtue and “success” in a society as middle class people was central for us. Our entire culture applauded the individual and celebrated his struggle to “succeed”. This “heroes” journey is central to Western culture in terms of literature and other art. But in the past 100 years? All of this has been smashed, the individual’s success has been reduced to racism or greed etc.

    Last. The author seems uniquely sympathetic to the current generation’s struggle, neglecting to notice the previous generations struggle against the Great Depression, WWII, the Cold War – like we had challenges too. What we didn’t have was whiny essayists giving us excuses to bingewatch another TV show on Netflix versus getting up off our asses. My generation was told and we were to believe that we could make something of ourselves if we were willing to work at it and were resilient.

    Values and culture are upstream from politics and economics. The author somehow misses that. I wonder why?

  21. Robert Craigen says

    “home ownership among older millennials (25-34) had dropped by 18 percent from 45.4 percent in 2000 to 37 percent in 2016”

    Hmmm, this is worded a bit funny here. On the face of it this is just over 8 percent. Apparently (and this will not occur to many readers) the author means a drop from 45.4% of a population to 37% is a drop of over 18% of those (45.4%) who initially owned homes.

    I wish people would work to avoid articulating demographic changes in terms of percentages of percentages because of the ambiguity.

  22. Theres nothing baby boomers love more than pulling the ladder up after them.

    • Farris says

      @MB
      Millennials invested their homeowners deposits in tattoos.

    • scribblerg says

      Your interegenerational hate makes you worse than any “boomer”. I see this from lots of young people today, and it’s pathetic, it makes you look horrible.

    • David of Kirkland says

      Only in a free world. In a coerced world of power, life is what you can eke out based on the ever changing rules and regulations that protect the status quo over all new people and ideas. And bad governing has resulted in many deaths of “others” without regard to their actions. Tyranny constrains your life to match the central plan.

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  24. According to JK and T. Picketty, the boomers have sucked up the wealth and assets, and the millenials are expecting an inheritance to be a major part of their future wealth. However, since the boomer’s property (homes and real estate) are a demand-based asset for pricing and millenials are not buying starter properties (either because of supply inadequacy or personal wealth), exactly how are these boomer properties going to maintain their value? Eventually in 10 or 30 years when the inhabitants die or desire to sell who is going to bid-up the pricing for these vacant properties?

    Asset pricing is driven on the margins, as soon as there are 10% more properties than there are buyers, these asset prices will tank. Especially any properties in low-demand areas or with a maintenance and upkeep deficit.

    • Craig Willms says

      I think Picketty and company are off by a generation. The World War II generation via pensions, home values, low healthcare costs and SS (in the U.S. anyway) sucked up the wealth.

      My generation saw the end of pensions replaced by the bait and switch of 401Ks and the raising of retirement age to 67. Add the housing crash of 2009 (which is just now recovered).and sky high healthcare costs and it’s the baby-boomers that are getting screwed. If we have anything it’s because we worked our asses off to achieve it.

      My in-laws, both retired public employees, never paid a dime from their paycheck for healthcare or their pensions. They collected SS for 30+ years and are sitting on nearly a million in the bank.

      • JWatts says

        I don’t think your timeline is realistic. SS hasn’t fundamentally changed for Baby Boomers. The change to 67 primarily effects Gen X’rs. The WW 2 generation had much smaller homes than the Baby Boomers. Sure health care was cheaper, but it’s been on an upward spiral for 50 years.

        “If we have anything it’s because we worked our asses off to achieve it.”

        Everybody does. That’s not specific to Baby Boomers.

        “My in-laws, both retired public employees, …”

        That’s just a case of being public employees.

        “My generation saw the end of pensions replaced by the bait and switch of 401Ks”

        This is true, but it’s not a bait and switch. And clearly GenX’rs and Millenials aren’t getting pensions either.

      • scribblerg says

        Ya, who knew that being a govt employee would be a rise to the top. Many collect several govt checks and live very high income retirements. With today’s rates of return. the amount of capital a private person needs to generate a low risk income is ridiculously high.

        Everyone decries low savings rates. Nobody decries low interest rates…

        Wanna really throw up in your mouth? Look at public sector pension “DROP” plans that are allowing street cops to build up 6 and 7 figure additional for retirement, on top of the pensions.

  25. David Turnbull says

    “Even in the relatively crowded United Kingdom, only six percent of the land is urbanized, while barely three percent of the US and 2.1 percent in Canada is urbanized”

    This is a purposefully misleading statement. What is important is how much of the ‘urbanizable’ land is urban. I would argue that in those three countries we are rapidly approaching that point unless you feel that farmland should all be converted into housing developments.

  26. Tom Bombadil says

    Housing is more expensive because more people desire housing in a the smaller spaces in and around urban areas, including nearby suburbs.
    When agriculture and more rural areas were a greater desire, property values were affordable. Demand has shifted and the desired properties have increased due to the demand.
    Is there a hope for the small towns? Will the notions of small towns being backward diminish with greater remote access to work? I live in a smallish growing agricultural town and work remotely. We have decent entertainment (though growing) and a modest hip population, but there are many groups that get together for intellectual and connecting activities in person — a sort of Inklings.

    I think one part of the solutions is to embrace smaller cities and towns and those suburbs around them. Turn them into the community you want. It is very rewarding.

  27. Farris says

    In my region of the country housing tends to follow the following trend:
    People move from the city for better schools and lower property taxes. Politicians do not like to raise property taxes so they have the tax assessor re-assess values. The values like global warming temperature adjustments are always adjusted upwards, increasing the corresponding tax. When the housing bubble collapsed and values fell no one’s property value was adjusted downwards. Eventually the neighborhoods outside the city grow. The city responds by annexing these neighborhoods which results in a doubling of the property taxes with little change in services. In my case a doubling of my property taxes bought me one more day of garbage pick up and switched me from rural utility service to city utility service. Eventually the pattern will repeat.

  28. Skepticus Prime says

    I don’t see the connection to environmentalism. I understand zoning drives up prices in a local market, but those aren’t environmental in nature.Much zoning is anti-environmental.

  29. What the dumb stupid center right polititians (namely the right honorable British conservative party) don’t get is, without home owner there’s no future for civilized right wing political parties.

  30. Shawn T says

    I think much of the “disparity” lies in definition. Growing up, my parents owned a home. They sacrificed much to do so. They both worked. They drove modestly priced used cars. We ate at home, with a trip to a restaurant once per pay period. They each packed a linch every day. We had one TV. One phone line. We did road trips for vacations with a camper. Our wardrobes were modest, with little designer clothing. 2 pairs of shoes for us boys (nice and daily). We barbequed and spent time outdoors. We had a very muddle class life and it was good. Today, middle class must include: the house, new cars, dining out 3 or 4 times per week, computers, internet, cable television, a TV in every room, cell phones for each family member, weekly trips to the theater, streaming services, multiple pairs of pricey casual shoes, designer clothing ($80 for men’s jeans!), annual vacations, kids in expensive organized sports with specialized equipment, going out to lunch for work most days and on and on. Trim everything (not even eliminate, just moderate) after house in that list and a house is every bit as affordable today as it was then. We’ve also re-defined poor as being everything in that list except a house. Taxpayers provide the house and food so those in poverty can get everything else. Ask your grandparents what poor looked like when they were young and compare to poor now. My parents and grandparents grew up poor, but they also had good lives with more fond memories than bad. Poor does not equal miserable. We need to stop telling our children and people in general that if they don’t go to college, don’t clear six figures or don’t have everything many other people may have that they are doomed to misery. A rich, rewarding life is possible for anyone and what people own or buy does not gurantee one.

    • Lightning Rose says

      Shawn T, can I upvote that, like 100 times? I’m absolutely convinced that the combination of unrealistic expectations of life, sense of entitlement and over-complexity of everything is driving the greater half of our “affluent” population totally and completely bonkers. I see it every day . . .

    • P Burgos says

      @Shawn T

      Do you live in Britain or the US?

      The problem isn’t just finding adequate, affordable housing, but also finding adequate, affordable housing in neighborhoods that aren’t crime ridden and have schools where the number of disruptive children with problematic behavior is pretty low. Some of those sorts of neighborhoods do exist in the US, but mostly they exist in cities with the least amount of job and income growth, making it a hard and risky trade-off for people to make.

  31. I’m getting tired of reading so many articles in Quillette whose authors use the terms “the West”, “the Western world” as perfectly well-defined terms such as “circle” or “cube”. Presumably, it is a set of countries or regions outside of which people live miserably, with no hope for the future, shackled to the ground by “tyrannical dictators”, and who “have no freedom” (whatever the heck that means).

    What is this set, exactly? Is it the NATO countries? NATO-minus-Turkey? Is it something this side of a non-specified north-to-south line between countries belonging to antagonizing political or military alliances?

    Or is it countries where, we are told, “the rule of law” and “western values” are respected? If so, are Honduras, El Salvador, Colombia, etc. part of this “Western world”, but not “socialist Venezuela”? All of these are some of the most violent countries in the world, with plenty of poverty and crime impunity and extremely low education levels. Obviously, only the good examples are mentioned when ‘intellectuals’ discuss the ‘Western word’.

    Why is, for instance, Russia, with all its Christian history and literary and scientific traditions, daily orchestra performances across its territory of “Western” composers, its museum collections, architecture, and generally rich culture, not part of “the West”? “Because Putin”? Is Surinam, on the other hand, part of “the West”? Paraguay, Republica Dominacana?

    These “intellectuals” who are so keen on tossing about the term “Western world” should do well to start taking their holidays in places other than France and Spain.

    • V 2.0 says

      Ditto for ‘The Elite’. It’s starting to sound very similar to the constant fretting about the ‘1%’. Who are these individuals? Are they all in on the conspiracy? Do they hold secret meetings to plan how to keep ‘the people’ down? Or is this just the usual interaction of normal, self-interested humans with predictable consequences (some good, some not so)?

  32. Kevin Herman says

    “The drive against bourgeois aspirations underpins an emerging neo-feudal system in which people remain renters for life, enjoying their video games or houseplants.”

    This line will keep a smile on my face all day. In addtion to those two things I would like to add small pets of various types that the owner will describe as there “children”. If the local pub down the street will allow it they’ll bring them there in a baby stroller for happy hour with other adult children.

  33. What these millennials want to be are ‘Eloi’, they’d use the name in a certain masochistic pride pride I am sure, if they were educated enough to have read widely and aware of the term at all………..

  34. Matthew Downhour says

    Land values are a real problem (and zoning is huge cause of them), but the reason for the zoning is mostly to protect upper middle class land values by limiting density.

    The solution is not to try to make land less valuable – the real value of land will always rise with the productivity of its residents – but to distributed the revenue it earns more equitably. Tax land at its rental value (roughly 5%, give or take), and stop taxing the value of the buildings on it. Distribute your land tax to city services and a ‘land dividend’ to residents. The quantity of land, being fixed, can’t decrease in response to the taxation, but when you stop taxing buildings, watch how quickly more and higher quality buildings get built – parking garages instead of parking lots, multi-story shopping centers instead of sprawling box stores, houses instead of trailers.

  35. Shamrock says

    I believe there are two additional factors driving up prices. One is the very low interest rates the western world has seen over the last nearly 20 years.

    The second is people years ago would start with a small entry level house and then as they earned more money would move up. Now many people want to skip a few steps.

    Combine the two and many buyers especially first timers are looking at the maximum mortgage they can get and then buying the most expensive house they can afford. Low interest rates mean the maximum mortgage is large and so more money chasing housing drives up the cost.

    Trying to help by, for example, making interest deductible, will mean people can afford more and further drive up prices.

    My solutions would be to ban non residents and citizens from buying residential real estate and lowering immigration to replacement levels.

  36. El Uro says

    Elites already found solution – reallocation of production to the third world, UBI as a way for pauperization of the middle class and replacement of a native population by migrants – they are cheaper.

  37. We look at a particular time period – post WWII to the mid 1970s – as the basis of our expectations of upward mobility. But, in the context of history 30 years is a drop in the ocean. The U.S. enjoyed over 50% of the world’s industrial capacity, as a result of the devastation of Europe. Things were bound to regress to the mean.
    Not saying that automation and outsourcing haven’t had a large effect; however, they have also made manufactured goods much cheaper than they otherwise would be.

  38. Lert345 says

    I can say from my view in New York that another large contributor to the problem is that builders can’t make a profit building affordable housing. So all new construction in NYC proper and suburbs is for the high end. Often an average size home is torn down and a humongous house erected in its place. These Hummer Houses loom over the surrounding houses, looking quite out of place and ridiculous. But they always find buyers.

    One report pointed out that a large percentage of Manhattan condos are not primary residences. They are just places for people to park money.

  39. Lightning Rose says

    When you talk about “each generation exceeding their parents'” as the American Dream, please remember that the Horatio Alger myth that spawned that was just that–a myth! In the late 19th century, the US was what we today would consider a “developing” country–moving by rapid adoption of emerging technology from from subsistence agriculture where most people were dirt poor or just above that to urbanized, industrialized, sanitized and ultimately automated life. Just about where China is today. You hear admiring stories about those who were wildly successful, but not about the hundreds of thousands who DIED LIKE FLIES and just as nameless in the tenement slums while building the railroads, bridges, skyscrapers, canals and dams we so admire today. To the robber barons whose feudal empires their labor fuelled, they were no more than interchangeable parts and were treated likewise.

    In that environment (include immigration!) yes, of COURSE you’re going to easily exceed your parents’ standard of living because they didn’t have much to begin with–and your grandparents had less. Your great-grandparents likely barely stayed alive. It’s pretty obvious that in the post-industrial, globally outsourced “information” economy such a rise could not continue forever.

    Perhaps we should be talking instead about a New American Dream for a new age; quality rather than quantity, experiences rather than things, authenticity rather than momentary, plasticized “status.” Peace of mind rather than living a “lifestyle” you can’t write checks for. Anybody?

  40. The Bystander says

    These policies are widely supported among planners, academics, and the media; in virtually all countries, the cognitive elites congregate in elite urban centres.

    And funnily enough, the vast majority of these ‘elites’ still choose to live in large suburban houses. They might not be on the city fringe, but they’re far enough away from the CBD apartments to enjoy all the comforts of suburban living while insisting that everyone who can’t afford to join them ‘obviously’ want to live in shoebox sharehouses.

  41. Simon says

    The author demonstrates a very poor understanding of the Australian housing situation. The impression is given that its simply a matter of ‘developing the suburbs’ – if only it were so. Australia runs a relentlessly high immigration program and consequently, our population growth rate is more than double the UK and US. In my home city of Melbourne, the growth rate is closer to 2.2%. This, for a developed city, is extraordinary. Very well, the author seems to be claiming, sprawl outwards. Then what? There’s no public transport in these greenfield areas and no hope of building it in time. Very well, simply build a LA style freeway system so that these millions of people (along with 1.5 tonne/10 square meters of steel and glass) can get to their service economy jobs. No thanks. Lazy analysis. The author is far too busy playing class warfare than trying to solve the problems outlined above.

    • P Burgos says

      @ Simon

      A growth rate of 2.2% a year for a city is high, but that kind of growth isn’t unusual for a US city. Over seven years, that would be a population increase of 16.5%. From 2010-2017, Austin TX had 22% population growth (1.7 to 2.1 million people), Houston had a 16% growth rate (5.9 to 6.9 million people), Raleigh, NC had a 17.4% growth rate (frustrating that they don’t give combined numbers for the entire metro including Durham and Chapel-Hill, which itself is growing only slightly more slowly than Wake County), and of course there is Dallas, which only grew by 14.7% during that time period, but that was enough to add more than half a million residents. I believe that Calgary and Edmonton in Canada are also growing in the 2% to 2.5% range.

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  43. TvE says

    Seems like Henry George is becoming more and more relevant.

  44. NateWhilk says

    In the USA, one big problem is student debt, the source of which is the predatory tuitions of colleges. Somehow this is never mentioned.

    The problem is made even worse because the colleges give degrees from the worthless “studies” departments.

  45. mishka says

    Brilliant article.. my partner and I both in our early/mid twenties and from regional NSW moved to sydney for uni and work, and want so much to be able buy a home together in regional NSW.. I have actually been looking for an article or coverage on this.. because media seem to just portray young people in Sydney as not interested in owning property, when in fact it is the opposite, we all want so much a secure future, but this seems almost impossible.. and those few smaller cities and towns outside of Sydney are now also too expensive to live in (as they are also our home towns and have been gentrified) .. I honestly don’t know what is going to happen

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  48. Geary Johansen says

    Having worked in the past as a manufacturing superuser for a company which supplies to the building trade, I can tell you that the situation is far worse than anyone thinks.

    For a start, the housing market never really worked the way that markets are supposed to, in terms of the way the laws of supply and demand would normally dictate. There was always an element of cost PULL to it, because as soon as the value of homes rises so does the value of land- and a deregulatory approach will only ever partially mitigate the problem because of desirability of locations and the tendency of markets to protect existing land investments by buying up newly re-zoned land.

    Fundamentally, a significant problem is that, in many regions, large builders of residential housing effectively bifurcated their businesses into land speculation or land banking and home building years ago. Then they leveraged. In addition, there may be some truth in the suggest that collectively the largest firms got together to ensure that demand would always outstrip supply, and thus increase profits in both parts of their businesses, but I couldn’t possibly comment. Besides, it wouldn’t really matter now- because, even if governments could somehow deregulate and provide incentives to build more houses, the building supply chain has already shrunk to the point that it would be very difficult to meet demand, let alone exceed it. Also, governments can’t really use taxes or planning to coerce increased supply, because they know full well just how precarious developers have made their business models- and they don’t want to risk collapsing existing capacity.

    Plus, there’s China. Not only have Chinese foreign investments distorted global property values in cities (which may well be ending, at least on an institutional level), but they also poured more concrete in the last decade, than the US consumed in the past century. Even if China may be beginning to invest at home, and through their belt and road initiative, I don’t think that the aggregation of capital into land can really be stopped.

    What we really need is a new toolbox. Some sort of hybrid of deregulation, land banking taxes, penny-pocket splitting of affordable home funding to incentivise home building more rationally, along with developers vetoes on luxury housing and major commercial projects, contingent upon house building. The problem is that most policy-makers and politicians are insufficiently nuanced and too in love with the big idea, to develop an iterative, market-sensitive approach. I don’t know. It really is a mess.

    In the meantime, vote for politicians who prefer engineering solutions to climate change, buy aggregates, hedge with gold and wait for the yield curve to invert.

  49. M. L. Anderegg says

    Two additional factors were not mentioned. The first is the egocentrism that permeates the millennial generation. Some call it an entitlement mentality. The rampant belief that they should have what they want when the want it reveals their inability or unwillingness to wait for and work toward long term goals. This single factor has lured them into massive debt for inconsequential wants many of which will be out of vogue before the debt that secured them is paid.
    The second is the severe deficits in common sense /logical thinking skills. Instead of thinking for themselves, they surrender to “group think” either from lack of effort or lack of skill. They are driven by peer pressure and social bullying.

    • Sneed Urn says

      Kids these days! All egocentric Libertarians…no, wait, uh egocentric socialists. Misinformed that education is the ticket to better life prospects they make the hard choice of education debt that previous generations didn’t have to make, only to find the debt difficult to surmount with 40 years of suppressed wages. The bums.

    • Christian says

      Wow what a nuanced answer you got there Anderegg……

  50. Malek al Kuffar says

    Across the Western world, my foot! Typical example of clueless generalization. Home ownership rates vary enormously fom country to country, since they depend tightly on the economic policies pursued by each country’s government over many decades. In Germany few people own their own homes, for example, whereas in Spain the great majority do.

  51. Sneed Urn says

    This article conflates phenomena is a negatively useful way. I agree there is a nascent neofeudalist system visible from here. What is that neofeudalism? It is the past, present, and continued accrual of the wealth and income from increased productivity to the financial elite and not more broadly to the middle and lower classes. As the financial elite continue to own more and everyone else own less, that trend will lead to a scenario in which the financial elite effectively own everything that matters, including All your information, and you just live here at their pleasure. That is the ideology of Libertarianism that has overtaken the formerly conservative Republican party through the assiduous efforts and especially the wealth of the Koch Machine and like minded financial elites. Most advocates of Libertarian (what we will very loosely call) “philosophy” who are not themselves in the financial elite seem Not to understand what they are proposing in Real terms. They are seemingly oblivious to the crushing power of wealth. Bizarrely, they want to remove all constraints on that power. Apparently driven by some romantic fantasy of Adam Smith’s fantasy of “free markets” and a fundamental misapprehension of humans as atomic rather than social animals. The only peaceful constraint on the power of wealth is the power of government. The hope is that government is some form of democracy that puts citizens interests ahead of those of the financial elite.

    Environmentalists are Not the cause of Urban density and the resultant housing challenges. Nor are Urban planners. To cast them as in cahoots with the financial elite overlords is stupider than retarded. There are fundamental technological advances (in agriculture and technology) that, without contravening policy, Inexorably lead to Urban density and the increasing demise of rural small towns. Piketty suggests that and he is certainly not alone on that. Apparently the author missed that part. Those are the drivers of Urban housing shortages and Rural decline. Both environmentalists and urban planners work to mitigate the problems of this migration and of population growth more generally.

    This technological change along with no mitigating policy has also Required immigration as a lower wage class to do agricultural work. We would either pay substantially more for food or not eat, without immigrants doing below market wage work. I’m using below market wage very loosely to suggest that immigrants are easier to take advantage of by employers, especially when there is a substantial illegal immigrant sector.

    Mitigating Policy that would affect both immigration and housing prices could be created but it would cause a disruption in Food prices. But it would put food prices where they actually should be by accounting for the real costs of externalization. I think the economic flow would actually adjust fairly quickly. Policy that raises Ag wages and wages of other rural work would bring more citizens to rural areas. Especially if FCC policy in the US were changed to drive (allow even) municipally owned fiber networks to get broadband internet to rural areas, where both amazingly and unsurprisingly due to monopolies, it doesn’t exist.

    The tone and implied derision of “green” and sustainable” pissed me off so you better get this fucking straight. (I know, Ooooh, tough guy) There are all kinds of existential environmental and biological threats looming, not least of which is climate change. Denigrating the critically important work of climate and and biological and environmental scientists is dangerously anti-intellectual. Denigrating the efforts of those who are working to put That science to use in policy is anti-intellectual. The inciting issue of this article IS actually about sustainability. So mocking the idea in service to – what exactly is unclear – undermines the legitimacy of the authors complaint. You may not like the style of some “green” and “sustainability” advocates (a view I sometimes share) but that style is not the issue. I suggest, as a matter of intellect if nothing else, that far more people get far more informed on the state of all branches of science and technology and especially biological sciences. Track it. Track developments. It is valuable to know and should better inform these discussions.

  52. Rupert Loo says

    The piece laments the extra cost of “planning regulations,” yet gives no specific details about what these are or why they would add $100,000 to the cost of each house.

    What, specifically, are these regulations? Why do some people support them? What is their side of the story? Don’t expect me to rally against the “elites” with you without the full story.

  53. Alain aka Trickster says

    Smoke and mirrors… Feudalism really? This is the kind of gross manipulation consisting of using a charged word to elicit attention and constructing a simplistic theory based on ignorance. To equate Feudalism with our present situation in developed countries is laughable. To quote Thomas Picketty as an economic authority is ridiculous: he is the counseling thinker of socialist candidate of the last presidential french election ending with a resounding defeat leaving the socialist party in shambles.
    Anyone can manipulate statistics out of context to construct a new improved théorie to displaced an old one. My advice to the légions of strategic thinkers is: get out in the real world and work with your hands to achieve visible results and contribute to the well being of your immediate community.

  54. Cathy O. says

    I disagree with the assertion this writer makes that owning property, specifically a residence, is the main path to building wealth. There are other even more lucrative paths to take.

    Owning a house is not necessarily a great investment. First, most people don’t own their homes, their bankers do. Unless, they’ve paid cash, most people take out large mortgages after putting up 5%-20% equity. It can take years and years to pay off a mortgage, which includes interest payments. The first 7-10 years of payments are heavily tilted towards paying the loan, not building equity. Most people move within 7 years and repeat the entire process. You only build equity if the value of your home increases and you’re able to realize that increase when you sell. If you look at the data, on average, most people are lucky if their home value keeps up with the rate of inflation. This means that if they sell their home at a value that has kept pace with inflation during the time they’ve lived in the home, they can safely say that they lived rent-free. That’s a good outcome. But it’s hardly a path to wealth.

    Instead, what if they had rented a home and invested the down payment and the interest payments in a low-cost stock index fund over a time period of many years? They would have earned returns on U.S. stocks on average of 10% compounded annually – a much higher return beyond inflation. Yes, stocks are more volatile, but this volatility smooths out over time. And as we saw with the housing crash in 2008, housing values don’t always go up. In fact, they are much more volatile in high-demand locations like San Francisco, LA, New York, and in their counterparts around the world.

    The other problem with home ownership is that reduces mobility. You can’t move on demand because you have to sell your house, which is illiquid. Mobility is key to building wealth. You have to go where the opportunity is.

    In short, to build wealth, home ownership should be evaluated like any other investment opportunity. There may other investments that are better than a residence. It’s also important to consider the opportunity cost of reduced mobility when owning a home.

    • Sneed Urn says

      @Cathy O. While owning a home may not be the best possible investment it can be a good one. The logic for a certain set of people is that they have to pay for housing no matter what. Renting is money thrown out the door. Owning controls the level of rent, can accrue value in the right market and can gain equity from money that would otherwise be completely lost. If you do finally pay off a house your living expenses then drop dramatically. That Never happens in a rent only lifestyle.

      Some quick math suggests that a 10% return compounded over 30 years yields about 17.5 times the original investment. That multiplied by a $20,000 down payment yields about $349,000. Enough to buy a decent house in some markets and not remotely close in others.

      Housing markets vary wildly so this might great in a very low priced housing market with low growth potential. But you can do much better in in other markets. Then there are the tax benefits to consider which favor buying I believe.

      Mobility is anathema to many people. People develop community ties they are drawn to preserve. And moving itself is expensive.

  55. The points the author made about rentiers and tenants is well made, but let’s face it: feudalism never really went away in the Anglosphere. The basis of property ownership is fee simple, so even property “owners” (including me) are in practical terms tenants; the rentier is the state, collecting rent in the form of property taxes. Nock covered this topic well in Our Enemy, the State.

  56. meerkat says

    One question I’d like to see answered, (though maybe it already has) is why jobs keep getting created in big cities where the cost of employing people is so much higher and why this process never seems to stop. Especially when a huge percentage of high-paying, high-prestige, cognitively-demanding jobs could easily be done by telecommuting. At some point don’t employers have to say to themselves “Gee, our profits would be better if we opened our new office in suburban Iowa, so let’s do that!” But strangely enough this point hasn’t been reached in places like Silicon Valley or Toronto. I mean, high-tech/finance of all areas are where location should matter least. Something like 80% of the jobs created in Ontario during the last decade have been created in the Greater Toronto Area(and another 10% in Ottawa).

    My guess would be that it has to do with married couples requiring two incomes, which means a family needs to live in a place where both spouses can find employment in their chosen field. All else being equal, the chances of finding this are greatest in big cities. The other possibility is that the people who really run society(executives and maybe people with the most in-demand technical skills) love being able to leverage competing offers of employment. If all the jobs are created in a few places, this means they can jump from one job to the next without worrying about the inconvenience of moving. So companies and rank-and-file employees swallow the extra costs. But what costs! Shoebox apartments? Watching your life slip away on the Don Valley Parkway?

    The other main problem is that many of these cities have restrictive land-use regulations that prioritize single-family homes in areas where higher density now makes more sense(and I’m sure Joel Kotkin would disagree with me). In Toronto and Vancouver, this creates a class of winners who can afford to live close to where they work, and everyone else who has to deal with terrible commutes, often exacerbated by the NIMBYism of city-dwellers who dig in their heels and use the media they dominate to scuttle any transport infrastructure that might make commuting more bearable.

    Traditionally, if you wanted more room, or a larger, single-family home, you had to move farther from the downtown core. In Toronto, that’s how wealthy not-quite-downtown neighbourhoods like Forest Hill and Chaplin Estates developed. In return for more room, you had to commute further to work. That was the trade-off people made, and they accepted it. That lack of current trade off is what infuriates me about the modern detached-home city-dweller. These people get to have it both ways. They get to enjoy the 20th-century version of the Western Dream(detached or semidetached house with plenty of room, a yard, and maybe even a driveway if you’re lucky), while also enjoying the 21st-century version of the Western Dream(good public transit, short commute, shi-shi pop-up restaurants that flit in and out of existence like a super-heavy atom in a particle accelerator). But just like those atoms, they come at a price, paid in large part by worker drones. One of the main rationales for the zoning restrictions is the preservation of architectural heritage, but in most of these neighbourhoods, the traditional homes are being slowly replaced by modern monstrosities with maximum square-footage.

    End all zoning laws that distinguish between different types of dwellings. If a neighbourhood is zoned residential, then it can contain a small cottage or a 50-storey skyscraper. If you want to live in a single-family detached home on prime real-estate, you’re free to do so, but you’d better be willing to pay the taxes that a residential skyscraper would generate! Set the wealthy against one another! At first they’ll all publicly claim they’ll never sell out, but once the first sells, the neighbours will unload their property in an instant, knowing that their cozy ‘hood will soon be a construction zone. It’ll be amazing. Enterprising TV executives can even create millionaire blockbusting reality shows!

    Let the market do its work and usher in the era of capitalist Khrushchyovkas for the masses! Seattle, your zoning laws are counter-revolutionary!

  57. Jean-Pierre Rupp says

    I value mobility and nimbleness over stability. I can react to market conditions and opportunities faster than if I had a mortgage and a house. I do not see a house as an investment, but a burden. Although I am not claiming to know what others my age think (37-years-old), I am pretty sure that I’m not alone. Do most people my age really prefer living in suburbs in detached houses and have three-hour commutes? In my worthless opinion we are probably seeing a trend towards minimalism that is could be caused by the relative high financial security of the modern developed world, which allows for lifestyles not entirely focused on wealth accumulation. If you are not afraid that in the future you’ll be poor and hungry, perhaps you’ll follow your unprofitable dreams rather than optimising income and assets.

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  61. This fucking k*ke writes a novella of gibberish which is every which way to avoid saying “immigration” and the role his accursed race has played in destroying the West.

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