A Failed Social Model: Providing Basic Goods Through Crushing Consumer Debt » New Deal 2.0
We have been living in a society where debts, rather than rights, have been the major means for accessing basic social goods like housing, education, and health care. That social model was built around the assumption that while real incomes stagnated and the state did not directly provide many basic goods through universal entitlements, cheap credit would do the trick instead.
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And in the case of housing, I think many more people will opt for being permanent renters rather than borrow hundreds of thousands of dollars to purchase an asset that doesn't appreciate and is very costly to maintain--whether you do it individually or collectively, with CID housing.
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from the article:
"It is frequently observed that the growth of finance sucked up the math and physics geniuses, who might have contributed something lasting to society, into hedge funds and investment banks to ruinous effect."
According to Vivek Wadhwa at Tech Crunch earlier this year, "Friends Don’t Let Friends Get Into Finance":
I was shocked—and upset—when the majority of my students became investment bankers or management consultants after they graduated. Hardly any became engineers. Why would they, when they had huge student loans, and Goldman Sachs was offering them twice as much as engineering companies did?
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An analysis of MIT’s graduate-employment data shows that the financial sector increased its hiring from 18 percent of its graduates in 2003 to 25 percent in 2006. So not only are the investment banks siphoning off hundreds of billions of dollars from our economy with financial gimmicks like CDOs; they are using our best engineering graduates to help them do it. This is the talent that our country has invested so much resource in producing.
When most sectors of the economy grow, new companies are created. The authors found, however, that the finance sector is not driving firm formation; it is cannibalizing entrepreneurship in the U.S. economy by offering wage and skill premiums to individuals who might otherwise have started companies. It is also causing far greater volatility among publicly traded firms and a reduction in the quality of businesses started.
In a review of "Physics of the Future", Glenn Reynolds wrote:
The most disturbing passage in "Physics of the Future" doesn't concern the future; it's about the present. In that passage, Mr. Kaku recounts a lunchtime conversation with physicist Freeman Dyson at Princeton. Mr. Dyson described growing up in the late days of the British Empire and seeing that most of his smartest classmates were not—as prior generations had been—interested in developing new forms of electrical and chemical plants, but rather in massaging and managing other people's money. The result was a loss of England's science and engineering base.
Now, Mr. Dyson said, he was seeing the phenomenon for the second time in his life, in America. Mr. Kaku, summarizing the scientist's message: "The brightest minds at Princeton were no longer tackling the difficult problems in physics and mathematics but were being drawn into careers like investment banking. Again, he thought, this might be a sign of decay, when the leaders of a society can no longer support the inventions and technology that made their society great."
So capitalism rewards the manipulation of money more than it does innovation. Other than anyone who has ever seen the movie "Pretty Woman," who could have predicted that?
And in the case of housing, I think many more people will opt for being permanent renters rather than borrow hundreds of thousands of dollars to purchase an asset that doesn't appreciate and is very costly to maintain--whether you do it individually or collectively, with CID housing.
Amen...except that CID housing isn't collective unless you are talking about condos. HOA burdened housing is not "collective". There are no "common areas" - only areas marketed as such.
Look at the policies CAI has promoted: giving board unlimited power over your property, prohibiting owners from renting their own property by board fiat, unlimited assessments, etc., etc. CAI's most active members are nothing more than egregious debt collectors. They spend their time trying to create financial hardship and "debt" despite providing nothing of value and then to use your homestead as security for collecting it.
Capitalism is great in theory. It's just that people aren't good enough for it.
Groovy. Smashing, Yay, capitalism.
"CAI's most active members are nothing more than egregious debt collectors. They spend their time trying to create financial hardship and 'debt' despite providing nothing of value and then to use your homestead as security for collecting it."
It's called capitalism. It's the free market.
continuing with the theme regarding the financial industry vs. innovation above:
Steve Denning, a regular contributor to Forbes, noted earlier this year that "Oil traders still outpace suregeons":
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"Wall Street traders still earn much more than brain surgeons. An oil trader with 10 years in the business is likely to earn at least $1 million this year, while a neurosurgeon with similar time on the job makes less than $600,000, recruiters estimated."
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It hasn’t always been this way. Cassidy notes that from around 1940 to 1980 things were different.
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The case for bankers, if any, rests on the argument that their activities grow the economic pie. However, most of the income comes from extracting rents in a zero-sum game.
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"Finance used to be a handmaiden to industry. Now industry has become the play thing of finance."
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