On GlobalizationIn response to comments about globalization ruining the U.S. standard of living. You need to find different examples if you want to talk about rent inflation. The problem with places like Silicon Valley is they've restricted land use so severely that there's nothing left to build on. That's jacked up the price of an acre of land to hundreds of thousands of dollars. So the rent increase doesn't reflect a simple devaluation of the dollar. It's that plus a real increase due to legal restrictions. Also the increased costs of permits, taxes, etc. I forget how much of the purchase price of a house is purely permits (and delays caused by permitting), but it's tens of thousands of dollars. The Santa Cruz planning department was said to be larger than the one for Los Angeles, and it took months to get a house plan through them. This is not the case in places like the Midwest. It would be interesting to compare rents in some place like Las Vegas which just annexed all the land it wanted for years when it grew. Or the empty parts of the west or upper Midwest. I wonder if they had rent increases above inflation? Cities should of course build high rises when they run out of land, but NIMBY politics prevent that here. And there's a general desire in California to have businesses (which generate sales tax revenue) rather than homes (which require services.) The ideal for a city planner is a business core served by a bedroom community somewhere else. Funny how often you get that exact situation! Some people think this is a Prop 13 side-effect. The rest of today's piece is the usual. Your background assumption is that the system "gives" people jobs. People create jobs by the exercise of their spending, and supply demand by the exercise of their skills. There are several root problems here, none of them "selfish rich people":
To focus this, think of the call centers. In 1970, it would have been insane to try doing a call center in India. The phone call would have cost several dollars a minute. The $5 an hour you would have saved in labor costs would have been overwhelmed by the $120 an hour you'd pay for phone charges. Now, the phone charge is like $0.02 a minute, or $1.20 an hour, and shifting that work to India makes economic sense. Second, in 1970, India would have refused the work, because of their socialist attitude towards inward investment (the same for China.) Now, they don't. And finally, India is now willing to train a person to sound very American and answer questions about products about as well as an American would (despite the stereotypes, this is definitely the case.) American high-school grads on the other hand, aren't any better than they were in 1970. Arguably worse if you get someone with an entitled attitude.
So like I said, none of this has to do with your usual bogeyman of
rich elites shafting the little guy. The economic/technological climate
has changed, and we are standing around like dinosaurs.
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