Financial Times: People turn socialist when they can’t afford an apartment

“Quantitative easing was the father of millennial socialism” by David McWilliams, an Irish professor (Financial Times), says that the bailouts following the Collapse of 2008 helped out older property owners, by reflating the prices of the stuff that they had unwisely purchased, on the backs of millennials.

He notes that “the worst of investments are often taken in the best of times.” (Maybe good to point out to anyone with money or income considering getting married and living in one of the U.S. states that provides for winner-take-all divorce litigation!)

He notes that average hourly earnings have gone up 22 percent in the past 9 years while property prices are up 55 percent in Houston, 67 percent in LA, and 96 percent in San Francisco: “The young are locked out.”

(The article says that 79 percent of the same folks who can’t afford apartments also think that “immigrants strengthen the US”. Certainly every landlord would agree that more demand is a good thing, but why are landless peasants happy to see another caravan of housing-seekers arrive?)

Why are people so obsessed with wealth inequality these days? The author says that “wealth inequality was not the unintended consequence, but the objective, of [quantitative easing] policy.”

The close:

For the purist, capitalism without default is a bit like Catholicism without hell. … what if the day of reckoning was only postponed? What if a policy designed to protect the balance sheets of the wealthy has unleashed forces that may lead to the mass appropriation of those assets in the years ahead?

Appropriation? Could it happen here? Elizabeth Warren has proposed to take wealth gradually, via a 2 percent tax on rich bastards (over $50 million in wealth). If they try to escape by renouncing their U.S. citizenship, she’ll hit them with a 40 percent exit tax. (Slate) Not too scary to the merely comfortable, right? Remember that income tax started out in 1913 between 1 and 6 percent and it was limited to those with incomes over $103,000 in today’s mini-dollars ($4,000/year for a married couple at the time). Once the structure is in place, the rates and thresholds can be tweaked as necessary.

14 thoughts on “Financial Times: People turn socialist when they can’t afford an apartment

  1. People like Elizabeth Warren never talk about elevating those in need, only taking down those with success. The democrat party ceases to exist without turmoil and things to protest. Capitalism is the problem in their mind, yet they never articulate a solution. Just constant turmoil. We need to look at results, love him or hate him, you can’t reasonably deny that jobs and unemployment are better than they’ve been in over a decade under Trump’s watch.

    • 1) Better than the previous decade leaves a lot of room for the economy to still be underperforming.

      2) Any given president is only barely, marginally responsible for the economy of their time even in a second term, let alone the first two years of their first term.

    • People like Elizabeth Warren never talk about elevating those in need, only taking down those with success.

      That’s not true. She’s put forward plans to address day care and student loan debt. She’s also proposed German-style co-determination and more vigorous antitrust enforcement. The latter was common in the ’50s and ’60s, the golden age of the American economy.

      Also, if so many rich people got so rich due to Big Government quantitative easing, they really shouldn’t complain about a wealth tax that takes back some of that wealth.

      It’s also worth mentioning, once again, that if you want to find the richest people in America, the two places that first come to mind are Silicon Valley, an industry built on corporate welfare, and Wall Street, an industry which requires bailouts roughly once a decade.

    • “People like Elizabeth Warren never talk about elevating those in need” – That’s just a flat out lie.

      “Capitalism is the problem in their mind” – another lie, *unfettered* Capitalism is the problem, and lots of solutions are articulated – ie social safety nets, regulations, etc.

    • Vince: “That’s not true”. How about, “That’s not correct.”

      Bazaar: “That’s a lie”. How about, “That’s not correct” or “You’re mistaken.”

      Where do you guys get your rhetoric from? The mainstream media? Try to be more civil.

      Thanks.

    • “The democrat party ceases to exist without turmoil and things to protest.”

      Calling out a lie is uncivil, but statements like the above are not.

      Cheers!

    • I’m getting a kick out the it’s a “lie” comments, not it’s not. But what really intrigues me is the “unfettered capitalism” comment. Didn’t we just live through 8 years of “fettered capitalism” with Obama? No thanks. I’m also curious as to who gets to “fetter” capitalism, politicians, focus groups? How does that work exactly?

    • Pauls, traditionally the U.S. has used democracy to elect representatives that get together to make these decisions. For example the U.S. recently elected Trump as president, who is fettering capitalism via various trade wars ( don’t worry if that sounds scary, they’re easy to win ).

  2. Quantitative easing doubles salaries in job centers & erases student loan debt, so millenials have the least debt burden while old timers lose their savings. You’re not supposed to be interested in quantitative easing. You’re just supposed to think about social justice.

  3. Elizabeth Warren did nothing to help the student debt problem, she just proposed making the interest rates a little lower. If she proposed making student debt dischargeable by bankruptcy, like every other loan, that would have made some difference.

  4. The FT has degenerated into a pretty poor newspaper. I subscribed for about 20 years because it was relevant to my work and enjoyed the weekend edition but this year i let my subscription lapse. Rather than focus on Europe, it seemed that large portion of each issue was devoted to the evils of Donald Trump or the evils of Brexit or the unfairness of life. For that kind of stuff why not stick to the NYT, which costs a lot less and at least reviews restaurants I might actually go to. It also struck me that their opinion pieces were the sort of thing one could find on the internet for free. Their electronic version is pitiful and their customer service is just awful. My guess is that the FT does not have the resources to compete in the digital age so it has to publish mediocre commentators and windbag professors yaking about how unfair life is and windbag EU/IMF/World Bank officials and a minute by minute account of the latest goings on at Davos. I bet it will go the way of the Dodo sooner or later.

  5. 1) Student loan debt. This was not a problem until when we were told collage is a must if you want to move up in life and government started to pure billions into the program. The end result? Millions of families and student sent off their kids to collages only to return back home with debt that will now take them as much as a life time to pay back.

    2) Teenagers moving out on their own. While in collage and after collage, teenagers are now living on their own (yes some are coming back to live in the “basement” with their parents). With student loan and rent to pay, not to mention, car payment, et. al. this puts those kids in a tight spot living pay-check-to-pay-check not only not able to pay back student loan, but cannot save at all.

    3) Trying to keep up with the Jones’s life style. Teenagers and families are measuring their life style by how much their friends and neighbors have and do. They want the latest and better stuff to make them stand out and they want it now not tomorrow.

    4) Our policies are not helping. Our government, instead of enacting and teaching responsibility, it is enacting and teaching easy life style as if there is no tomorrow.

    So yes, people turn “socialist” when they no longer know how to take care of themselves and they will ask for more free hand-outs. As a result the gap between the have’s and have’s not grows to the point they start to hate the have’s banning them for keeping the have’s not in at the bottom of the pile.

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