by Charles Hugh Smith
Of Two Minds
Unleash the powers of unlimited credit and excess capital on a limited, essential resource such as shelter and this is what we end up with: artificial scarcity, rent-serfs and half-vacant neighborhoods owned by absentee landlords.
Ideologies sound wonderful in the abstract, but run aground in the granular real world. The dominate ideology in the world today isn’t a political ideology, it’s the ideology of the market: in this ideology, the market is presented as the ideal problem-solving mechanism, as the interplay of supply and demand and the free flow of capital and labor will automatically fill unmet demand with new supply and provide competition that increases quality and reduces costs.
Let’s consider how the market functions in the real-world U.S. housing market. Take a mixed-use neighborhood of single-family homes with a scattering of low-rise rental buildings. It’s desirable but still affordable to buyers and renters alike.