EhForumUser @ EhForumUser @lemmy.ca

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2 yr. ago

That was just a line to keep the proles subservient and waiting.

Huh? The trickle down line comes from comedian Will Rogers who was making a joke about how President Hoover, who was an engineer, was accustomed to water trickling down, but that he didn't realize money trickles up.

It was a line to serve the exact opposite – to tell the 'proles' that the economic plan was fundamentally flawed.

As in, you’ve profited from the sale of every car you’ve owned?

I profited from owning productive capital. You know, an investment!

I don’t think most people would want to own a car

I certainly wouldn't. I don't like owning a car. But it has been hard to turn down the return on investment potential. Where else were you going to get those kinds of returns?

In the past, that is. I haven't bought a car recently. With the price of vehicles today, it's not clear if there is still much ROI to be had – it seems pencils have been sharpened pretty sharp. But I'm not looking for one right now either so I haven't crunched the numbers very hard.

I also don’t think many regular consumers are buying cars for some chance to profit from the sale of them afterwards.

I wouldn't think so either. If they are looking for a bank account that returns some interest, they're more likely to go to a bank. But if they're looking for an investment, cars have been pretty good (maybe no longer; we shall see).

The original poster seemed to have a problem with people being able to recoup and profit from the sale of their home.

The original poster seemed to have complained about government involvement distorting the market. I'm not sure that's quite the same thing.

The difference between a money pit (i.e. a car) and an investment (i.e. a home) is that you can get the money back that you invested + extra if you are lucky.

Every car I've ever owned returned all the money back that I invested and then some. Why the hell would you buy one otherwise? They also depreciated, but that doesn't matter when the gross investment returns are greater than the depreciation cost.

The comparison between cars and homes is silly and we can end it here.

They are not comparable in every way, but with respect to depreciation, the reason they both depreciate is the same: They both deteriorate over time and with use. Depreciation measures the cost of that decay. The original context was specific about it referring to the deprecation aspects.

We’ve also established that a home that’s been maintained and updated should not only hold its original value, but be worth more than it cost.

I'm not sure that is established. It is established that it is technically possible for that to be true if new homes prices are rising in kind. That has definitely been the case over the past decade, or even the past few decades.

But over the long history? Traditionally, homes in good condition have only kept pace with inflation. Historically, if you bought a home for $100,000 then you should be able to sell it for $100,000 (we'll assuming inflation is zero to keep things simple) a decade later, assuming you've kept it in the same condition. Great.

But let's say you had to put $25,000 into upkeep during that decade. So your original cost was actually $125,000. You had to eat $25,000 in depreciation costs when you sold it for only $100,000. Had you done nothing, letting it rot over those 10 years, then the house would only sell for $75,000. You also had to eat $25,000 in deprecation costs. It's the same either way.

I still don’t understand what the argument is.

I didn't see an argument. What are you referring to?

I can’t see anyone wanting to spend tens of thousands of dollars keeping their Toyota Corolla running for generations.

They just might if a 2023 Toyota Corolla was effectively the same as a 1823 Toyota Corolla, differing little beyond coming in a more appealing colour of paint. Only needing to spend tens of thousands of dollars to have a new car would be a good deal.

That doesn't happen because of the technical innovation happing in cars. Restoring your 1823 Corolla to new condition is nothing like a 2023 Corolla. It will still get you around, but with no cabin, air conditioning, power steering, radio, slower speeds, etc. who would want it? We already discussed this.

the person I was replying to makes it seem like a house’s value should always be in decline.

They are always in decline. You can spend more to buy the depreciation out when you restore it, or you can let it slip and spend that when you sell it, but the decline happens either way. There is no avoiding it.

Well, there is one way to avoid it: If the cost of new housing goes up sufficiently, it will drag the used market it with it. That could see an appreciation in value even with some wear and tear. In fact, we saw exactly that happen in the used car market recently when the "chip shortage" sent the new car market sky high. People were selling their used cars for more than what they were new.

We’ve never had as many working age people as we do today

In absolute numbers that is true, but the workforce has declined relative to the size of the population. If there are two people and one of them is in the workforce, that might be okay. If the population then grows to 100 people and now two people are in the workforce, you've doubled the workforce!, but you're bound to have a bad time.

The questions are “why can’t we attract workers into X fields”

Because the workforce has shrunk, relative to the need for workers. A larger population needs more productive capacity.

but more national, question of “why does a worker, that produces more than ever, have less purchasing power than ever?”

Because we reached peak worker productivity a long, long time ago. Overall productivity is up only because capital has picked up the slack.

Funny thing is, once upon a time we encouraged our youth into university research labs to develop new capital which they could capitalize on, promising a higher income on the back of the productivity of the capital. Curiously, we heard the university part, and we heard the higher income part, but glazed over the rest. For some reason that message turned into people thinking they should go to university to get a job where they can be no more productive than any other person has ever been. And, unsurprisingly, incomes have held stagnant for that segment of the population, to which they now act like we have no idea what's going on...

And the remaining lifetime of a home kept in good condition could be many generations.

Kept in good condition is the key. If you keep a car in good condition, it can last many generations too.

In fact, homes can often be renovated to extend their original life far beyond even a few lifetimes.

Same goes for cars, of course. There is a whole automotive industry around taking beat up old cars and restoring them to pristine condition. And, indeed, many of those cars can sell for way beyond their original price.

Right, so it wouldn’t be depreciated like a car

Right, it would deprecate because houses deteriorate. If you keep your house in good condition, it's just you paying the deprecation cost up front when you restore it rather than taking the hit with the next guy in line. The math works out the same either way. The depreciation doesn't go away.

It’s rare to see just a home (without the land) being sold.

Less common, but not unheard of. It happens often enough that there was once a Canadian TV series about moving houses.

In your example, the homes are still the same value, only the land changes the sale amount.

Exactly. Their values are evaluated independently of each other. The house can depreciate and the land can appreciate.

A car and a home are two very different things, so they can’t be compared here.

With respect to depreciation they are quite comparable. Deprecation is just the reflection of the remaining lifetime value of something.

Depreciation just tends to be more obvious in cars, because:

1. Cars have pushed the technical advancement envelope a lot faster than houses. A 20 year old house still feels like something that was built recently. A 20 year old car feels like it was built by a much earlier civilization. This keeps greeter interest in having the absolute latest model in cars.
2. Because of #1, people are more likely to recondition a home back to new condition. If a support structure in a house is seeing signs of rot, you are bound to fix it. If a car's frame starts to rust through, you're apt to throw the car away and get a new one.

I’ve yet to see a home in good condition that’s worth less than the amount it was purchased for.

A home in good condition has approximately the same remaining lifetime value as a new home, so that stands to reason. Not to mention that with ever more stringent building codes, new construction cost has gone up, up, up. The used market always follows the new market.

Even the land your home is on increases in value over time

Land does, but that's independent of the home. I mean, they are usually sold together, but the buyer will determine their utility value independently. Two identical houses will not fetch the same price if one of them sits on more desirable land.

Everyone says every organization lacks workers. Film at 11.

My entire life we talked about how this was going to happen when the boomers retire. With the average boomer turning 65 within the past couple of years, that time has come. And now all of a sudden we're surprised and unprepared?

It appears the average Singaporean home was $1.2MM in March, $1.6MM in June, and $2MM as of a week ago. I'm surprised he hasn't adopted it already!

Housing is only a safe investment if it keeps its occupants productive (e.g. allows one to take a job by living nearby). The job market is strong right now, but we'll see how safe those investments are when that starts to turn...

But, if you truly believe what you say, why aren't you buying one of those $100,000 homes in Newfoundland? Anyone can afford that. If the government is going to protect you, how can you lose?

A home is meant to be a depreciating asset like a car is.

It is. Granted, it has become crazy expensive to buy a new home, so the used market has risen to compensate. Actually, we've seen the same thing happen in cars recently. New cars have become crazy expensive, so the used car market has gone up in price too.

But that's outside of investing. Nothing says depreciating capital cannot be an investment. Consider a widget that cost $100 to buy and after one year is completely worn out and worth $0. But that widget during its useful life produced trinkets that you were able to sell for a profit of $120. There you go, a 20% return on investment, even though the capital is now worth nothing.

Cars and houses will always fundamentally be investments as long as they remain useful tools of production.

Even bananas and cucumbers and things that don’t need plastic?

Cucumbers, like many other foods, are wrapped in plastic because they last longer that way. Less spoilage comes with many obvious benefits, like not needing to produce/transport as many, which reduces greenhouse gas emissions. Of course, nothing in life comes free of tradeoffs. Pick your poison.

I don't think I've ever seen a plastic wrapped banana in the store, but it is documented that wrapping bananas in plastic also slows their rate of decay, so no doubt the calculus leans towards plastic in some situations as well.

We chose to live in a capitalist system. Inflation, amongst other issues, is a problem with this system.

Inflation is merely observance of people believing that a currency has become less valuable than in the past. In what way is that a problem of capitalism? Currency is not a feature of capitalism, nor is assigning value to something a feature of capitalism.

Perhaps you mistyped 'currency' when you wrote 'capitalist'? Autocorrect can be a harsh mistress. It is true that we live in a currency system.

Yes, of course. Canada and its provinces stand as a democracy. The population at large are in charge. They can do whatever they want. The only thing that can get in their way is themselves.

And that population has tested the electoral reform waters numerous times, especially provincially where referendums have been hosted on multiple occasions to gauge opinion, but interest in change has struggled to present itself.

we decide we like a party leader, we elect them

Maybe, if they are in your riding. The average riding has ~100,000 people, and there are only so many parties, so only a small percentage of the population ever have the opportunity to elect a party leader.

In a few countries the politicians are in control, but most countries put the control of the hands of the populace. The politicians are hired only as employees to carry out the wishes of the populace. Canada is one such country. As always, it's not the employee's fault when someone goes wrong, it's management's fault. And, indeed, management trying to pass the buck to the lowly employee is a sure sign of bad management. Hiring another worker to act under the same bad management will yield the same results. In fact, you know this to be true because we in Canada replace the workers every approximately four years, yet keep seeing the same problems over and over. The only solution is for management to get their shit together – but are they capable?

we buy plenty of canned and boxed food without being able to see the food itself

It is quite true that the upstream doesn't demand plastic for plastic's sake, it demands plastic only when it provides a real utility. Granted, even cans are typically lined in plastic and boxes often contain plastic bags to allow the product to remain self-stable and fresh. If the customer can't see the product, they expect some guarantees about its quality, and plastic can help with that.

They have downstream control, but not upstream control. It is the upstream that is demanding plastic packaging here, particularly plastics which have transparency. For some reason they want to be able to see the food before buying it.