And why hasn't this gradual erosion of return potential been more apparent, to all who observe the marketplace? For one thing, it's still easy to get sidetracked (just as Piketty has) by those elusive profits which remain possible at the margins. Much of today's returns are a far cry from the arbitraged returns of yesteryear, just the same. It's taking me a while to digest Piketty's arguments plus I've started rereading his book. But a number of "housing as wealth" issues are - fortunately - becoming more clear.
In my last post I spoke of a oblique form of monetary flow, which has resulted from increasingly direct input into today's wealth formations, on the part of government. Perhaps government's contribution doesn't seem significant? If only the ultimate price for said input hadn't been the leisure time option, which some folk might have otherwise wanted. Enforced housing definition does not provide enough leeway in housing choice sets, whatever one's income may be. And for smaller incomes, this is where inequalities hurt most.
It's not clear whether Piketty realizes the degree to which governments already control and benefit from housing as a primary form of capital. Especially given the fact that Piketty's graphs also indicate where much of today's wealth exists: firmly attached to the ground. Another problem with housing as wealth, is that much of this wealth formation no longer has a chance to produce significant private value, i.e. home as producer of marketplace options. Instead, much of the value in home formations is presently derived as public value in terms of taxation.
Central to housing wealth, is the fact that consumer requirements became the primary means for all concerned, of locking in the most desirable human capital potential in the twentieth century. This occurred in lieu of what might have been a broader application of skills sets and knowledge use, in the marketplace. Of course on the part of public and private interests, it's a strategy which makes sense. The problem is that this strategy has left an incomplete marketplace, which has as much to do with the inequalities of the present, as anything that can be imagined.
The problem for all concerned is that neither the wealth of housing or any hidden corporate wealth supposedly available for capture, can tend to the underlying issue of an incomplete marketplace. That can only be done by allowing innovation, and arranging time use capacities for services in the same logistical space, in order to provide equality of opportunity. It's much easier to achieve equality of opportunity than equality of outcome, because we all know how much time we have at our disposal. On the other hand, no one knows in advance how the vagaries of resources separate from time, might play out.
In a recent Liberty Unbound book review, Leland Yeager concludes his thoughts regarding Piketty with these words:
...I warn libertarians: don't risk a boomerang effect by unfairly dismissing his work as a mere ideological tract. It is indeed a work of genuine scholarship. Dealing with its challenge can strengthen the libertarian case.Piketty's book serves as a reminder that we do have common cause in addressing inequalities, for any number of reasons. Certainly, it helps to get the facts straight, as Matt Rognlie attempted to do in his own review. After all, the problem of diminishing returns to capital is something that needs to be thoroughly examined, for the role it also plays in inequality. Inequalities are indeed confusing, for they are never quite what they seem.
No comments:
Post a Comment