Re:On Cultures That Build
by pdonis on Friday June 19, 2020 @02:47PM
(#23577638)
> The problem in the west is that the majority of lending goes into asset purchases (buying existing wealth) instead of new production.
I'm not sure I agree with this. A lot of lending is for mortgages, and a lot of those go into new construction, not purchases of existing buildings. In my area, there is a ton of vacant office space that has been built over the past decade or so because of the availability of cheap loans for new construction. The problem is that it was new construction that was not needed--hence the buildings are still sitting vacant years after completion.
In other words, I think the problem is not that lending is being done for asset purchases instead of new production, but that lending is being done for the wrong new production--producing things that nobody wants instead of things people do want. That misallocates resources and creates shortages of things that are actually wanted. Imagine if all the resources that went into building those vacant office buildings had gone into making PPE for disease protection instead.
I'm not sure I agree with this. A lot of lending is for mortgages, and a lot of those go into new construction, not purchases of existing buildings. In my area, there is a ton of vacant office space that has been built over the past decade or so because of the availability of cheap loans for new construction. The problem is that it was new construction that was not needed--hence the buildings are still sitting vacant years after completion.
In other words, I think the problem is not that lending is being done for asset purchases instead of new production, but that lending is being done for the wrong new production--producing things that nobody wants instead of things people do want. That misallocates resources and creates shortages of things that are actually wanted. Imagine if all the resources that went into building those vacant office buildings had gone into making PPE for disease protection instead.