Re:The Shock of Sweden's Housing Market Is Hitting the Count...
by opportune on Wednesday November 15, 2017 @06:49PM
(#15709134)
Nice subreddit, I agree with a lot of what you write. In particular I wish more people were looser, as you seem to be, with the assumption that actors within an economy act rationally. It's impossible to act rationally given the huge amount of information asymmetry in the economy, and especially given that others' information asymmetry will cause the economy to not behave rationally regardless of whether you can make rational decisions on it.
It's also impossible to rationally determine whether an arbitrary law / policy change will pass at arbitrary point in the future. So with housing, because we aren't guaranteed that interest rates/zoning/taxes will behave predictably, we can't really rationally determine a "true" price for a house in a market where those may change
Re:The Shock of Sweden's Housing Market Is Hitting the Count...
by dredmorbius on Thursday November 16, 2017 @12:05AM
(#15710369)
Thanks.
Rational actor theory seems to be crumbling rapidly as behavioural economics progresses, so there's that.
The plenty and cheapness of good land, it has already been observed, are the principal causes of the rapid prosperity of new colonies. The engrossing of land, in effect, destroys this plenty and cheapness. The engrossing of uncultivated land, besides, is the greatest obstruction to its improvement. But the labour that is employed in the improvement and cultivation of land affords the greatest and most valuable produce to the society.
https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_...
It helps greatly to know that "engross" in this context means "to purchase or control large quantities".
Another realisation I've had is that the incentive amongst those who hold valuable assets is to see their value increased. This includes land, money, financial holdings, commodities, licences (think of taxi medallions or professional licenses), education, and the like.
And the means of increasing price generally involves restricting the supply, or throwing constraints on the production of more of a thing.
Where the underlying asset is itself directly productive or essential, this tends to be tremdously disruptive.
https://www.reddit.com/r/dredmorbius/comments/608w97/asset_p...