Unemployment is at 9% and has been high for years. The housing market is being made on oversupply of existing homes and decreasing prices. The relationship is clear. The situation, as a monolithic market, will remain in this dynamic until unemployment drops into the 5% range.
Anything over 6% unemployment constitutes a rolling recession. The term has been used before. A rolling recession is no more than creative destruction at work. So the net effect of the last 4 years is a severe general recession followed by a rolling recession. This, given the technology being implemented, could last the next ten years.
While the pattern is a natural innovation cycle, I cannot help but think that it is being made worse by the pyramidal effect of the machinations of Fannie Mae and Freddy Mac in the housing market. I cannot prove that but I have a sneaking hunch that it's true.
Be well and do good.
Wednesday, May 4, 2011
Sunday, May 1, 2011
Real Estate Deconstructed
In an earlier blog I said that the real estate market was like an art auction. What did I mean by this? The driving force behind real estate is that everybody's got to live somewhere, but we often forget that there are three socioeconomic systems at work in this society, the value added socioeconomy, the found money economy, and pure transfer of wealth.
We have to account for where the money is coming from that buys the property. Like bonds, that money can be rated. The value added socioeconomy, business as we normally think of it, is AAA. That socioeconomy is growing steadily but wages are stagnant and productivity increases promise fewer people with more money. Disposable income is static. The found money socioeconomy, what I call Macau culture, is BBB. That socioeconomy is not doing well as participants in the value added socioeconomy are being more careful with their disposable income. Pure transfer of wealth is BBB-, junk. The limits of how much wealth can be transferred have been reached and the mood of the country is hovering near 'Devil take the hindmost'.
Art is dear and is promoted, not sold, to bidders. As the real estate market resolves the excesses of Fannie Mae and Freddy Mac, this will be exactly the same scenario in that market, custom homes of some aesthetic value in value added, tract homes of some personality in found money, and various forms of homeless shelters in transfer of wealth.
Be well and do good.
We have to account for where the money is coming from that buys the property. Like bonds, that money can be rated. The value added socioeconomy, business as we normally think of it, is AAA. That socioeconomy is growing steadily but wages are stagnant and productivity increases promise fewer people with more money. Disposable income is static. The found money socioeconomy, what I call Macau culture, is BBB. That socioeconomy is not doing well as participants in the value added socioeconomy are being more careful with their disposable income. Pure transfer of wealth is BBB-, junk. The limits of how much wealth can be transferred have been reached and the mood of the country is hovering near 'Devil take the hindmost'.
Art is dear and is promoted, not sold, to bidders. As the real estate market resolves the excesses of Fannie Mae and Freddy Mac, this will be exactly the same scenario in that market, custom homes of some aesthetic value in value added, tract homes of some personality in found money, and various forms of homeless shelters in transfer of wealth.
Be well and do good.
Wednesday, April 27, 2011
The Innovation Cycle
The Schumpeterian cycle, the innovation cycle, consists of innovative industrial processes that in simple terms destroy jobs and occupations and replace those jobs and occupations with different ones.
The fundamental failure of interpretation of Schumpeter's work as documented in the historical record of industrialism is the notion that pervades theories of entrepreneurship that innovation creates more jobs. There is no theoretical basis for this idea. Innovation creates different jobs not necessarily more jobs. We may actually find this out over the next ten years.
Certainly increased productivity means more profits which imply more discretionary income which can lead to increased consumption and more jobs. The question possibly being answered is whether there is a direct correlation between increased profits, discretionary spending, consumption, and jobs. The contraindications are reinvestment as indicated in a very robust stock market, a slightly lagging retail market which is tending to move upscale, and online retailing which is technologically, not labor, intensive.
If we are at a tipping point in the innovation cycle, jobs and occupations will not be replaced. This question and its answer should be the focus of of our attention over the next ten years and if a tipping point is indicated then our focus must be on the kind of society in which we wish to live.
Be well and do good.
The fundamental failure of interpretation of Schumpeter's work as documented in the historical record of industrialism is the notion that pervades theories of entrepreneurship that innovation creates more jobs. There is no theoretical basis for this idea. Innovation creates different jobs not necessarily more jobs. We may actually find this out over the next ten years.
Certainly increased productivity means more profits which imply more discretionary income which can lead to increased consumption and more jobs. The question possibly being answered is whether there is a direct correlation between increased profits, discretionary spending, consumption, and jobs. The contraindications are reinvestment as indicated in a very robust stock market, a slightly lagging retail market which is tending to move upscale, and online retailing which is technologically, not labor, intensive.
If we are at a tipping point in the innovation cycle, jobs and occupations will not be replaced. This question and its answer should be the focus of of our attention over the next ten years and if a tipping point is indicated then our focus must be on the kind of society in which we wish to live.
Be well and do good.
Saturday, April 23, 2011
Real Estate, Post-Industrialism, and the Schumpeterian Cycle
First of all, real estate is not an 'industry' as the word is understood in the value-added socioeconomy. Real estate is an art auction where true art is dear and bids entertained and no more an industry than Dali at his marketing best. It is, simply put, how industrialism shares the wealth and that is all it is.
People who are participating in the value-added socioeconomy need a roof over their heads certainly. That is a part of Maslow's hierarchy of needs, but the real estate market, for all its fundamental neccessity, is derivative of and incidental to the operations of that economy. Real estate is how industrialism shares the wealth and that is that.
Post-Industrialism, the most ill-thought and technologically delirious philosophy ever created, is the model that informs these late stages of modernism and affects, or infects, current models of postmodernism. It is no more than an abstract conservation of a theme park society without a thought given, at all, absolutely, to where one gets the money to pay for all those wonderful rides.The Schumpeterian cycle is the cycle of innovation and creative destruction that has been well documented in the history of industrialism. We are in a massive one of those cycles which promises productivity increases of 6% to 7%. We are also at the limits of incidental transfer of wealth, the magic hand of Post-Industrialism. There is a natural Schumpeterian limit on how much wealth can be transferred without impeding innovation.
We are going to learn some very hard lessons over the next ten years as unemployment hovers near 7%, the housing market remains moribund, and productivity soars. It is in the American character to learn hard lessons. It is the way of pragmatism. At some point we are going to have to recognize that society can only endure so much innovation without serious damage to the social fabric, that the innocent number used to represent the unemployment rate also represents human beings' lives being destroyed, that Post-Industrialism is no more than a blinding visit from Prometheus, filling our hearts with blind, and groundless, hope and that speculating in real estate is like speculating in art.
Be well and do good.
People who are participating in the value-added socioeconomy need a roof over their heads certainly. That is a part of Maslow's hierarchy of needs, but the real estate market, for all its fundamental neccessity, is derivative of and incidental to the operations of that economy. Real estate is how industrialism shares the wealth and that is that.
Post-Industrialism, the most ill-thought and technologically delirious philosophy ever created, is the model that informs these late stages of modernism and affects, or infects, current models of postmodernism. It is no more than an abstract conservation of a theme park society without a thought given, at all, absolutely, to where one gets the money to pay for all those wonderful rides.The Schumpeterian cycle is the cycle of innovation and creative destruction that has been well documented in the history of industrialism. We are in a massive one of those cycles which promises productivity increases of 6% to 7%. We are also at the limits of incidental transfer of wealth, the magic hand of Post-Industrialism. There is a natural Schumpeterian limit on how much wealth can be transferred without impeding innovation.
We are going to learn some very hard lessons over the next ten years as unemployment hovers near 7%, the housing market remains moribund, and productivity soars. It is in the American character to learn hard lessons. It is the way of pragmatism. At some point we are going to have to recognize that society can only endure so much innovation without serious damage to the social fabric, that the innocent number used to represent the unemployment rate also represents human beings' lives being destroyed, that Post-Industrialism is no more than a blinding visit from Prometheus, filling our hearts with blind, and groundless, hope and that speculating in real estate is like speculating in art.
Be well and do good.
Sunday, April 3, 2011
Psychological Spaces, Self-Realization, and Self-Esteem
A psychological space is the cognitive and emotional space which generates and is generated by our behavior. It is the abstract context of our lives much as the corresponding physical space we behave in is the 'real' context of our lives. The object of the behavioral exercise can be summed up in a nice dinner with friends. One eats, one talks, and one gains a sense of oneself. Certainly we do vastly different things, but they serve absolutely the end of a dinner with friends. To this point, within the context of postmodernism, there is no problem with this radical characterization of the problem of existence. However, human beings, being insecure in a hostile universe, must ask the question - what about legitimacy? That question jumps from postmodernism to pragmatism. Pragmatism says your psychological space is legitimate if your behavior is successful. What determines success? In America, from the beginning, success is understood as serving an enduring Interest as a market function to the benefit of oneself and one's society, which is no more than a socially valuable exercise in self-realization. That brings us to self-esteem. Can one be successful and have low self-esteem? I have known many such people and in every instance the low self-esteem was externally driven by conditioning, both incidental and deliberate. It is much easier to persuade someone to act against their interests if their self-esteem is low. Be well and do good.
Wednesday, March 30, 2011
Postmodernism and Romanticism
What is Romanicism? It is quite simply the denial of the superiority of Reason. I am a NeoKantian postmodernist. That makes me by definition, a Romantic. I believe that there are defining conceptual arguments contained in the brain at birth. Kant called these arguments, forms. These forms define our existence. To my mind, there are definitely three of these: God, game, and language. All of these preexist experience. I would entertain the notion that Love is a form but I'm not certain of it. The key to a form is that one cannot 'know' it. Therefore, if I am correct, one cannot know God, but one still must behave to His standards. That's difficult. Perhaps occult phenomena are simply a manifestation of God and a confirmation that one's brain is wired correctly. I would also entertain that notion. Be well and do good.
Monday, March 28, 2011
Pragmatism and Postmodernism
Americans are pragmatic, not as devout practitioners of a philosophy, but rather as an aspect of a national personality. We do not love idea for the sake of idea. We love idea for the sake of utility. Plato might have written, 'The Republic'. We created one. We are pragmatists. Pragmatism does not hold dogmatic Truths, only tentative truth. What is is what works. It is a perfect fit for postmodernism. It is a fit so perfect that cultural postmodernism could be said to be an occult codification of pragmatism. There are many manifestations of postmodernism, philosophical, cultural, economic, and political. They differ from each other and internally are not the same for all people. There is no large Truth to them. We all have our personal myths, our truths, that drive our psychological spaces and so our behavior. Do occult phenomena exist? Postmodernism answers, if they do for you. Pragmatism answers, if they do for you and your behavior is successful for you. We cannot ask more of a philosophy than personal success. Be well and do good.
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