November 2, 2007

Greenspan's bubble and hidden inequality

There is always a lot of arguing back and forth over income inequality, but expenditure inequality is little discussed, even though it's just the flip side of the standard of living inequality coin. The recent housing bubble created much inequality of lifestyle, much of it almost random in occurrence. Consider two couples who live side by side in one of the parts of the country with much housing inflation in this decade. The two 38 year olds at 106 Elm St. bought their house in 2000. Right now they are touring Tuscany. The two 32 year olds at 112 Elm St. bought the house next door in 2006. They are presently touring their local Aldi's supermarket looking for deals on canned beans so they they can keep paying their mortgage.

When the first family thinks of their good fortune, they are apt to chalk it up to their brilliant nose for the market. But they didn't exactly buy Wal-Mart stock in 1972. They just happened to reach the point in their lives when middle class American couples buy a house when it happened to be when all the smart money was going into Cisco Systems, not something boring like houses. So, houses were reasonably affordable. Their neighbors, those morons, reached that point six years later, when everybody knew that houses always rose in price so even if you overpaid you could always refinance.

It's interesting that their is almost no political outcry over this form of inequality. You might think that its randomness would make it seem more unfair, but randomness saps political salience. I noticed this years ago with diseases when I had non-Hodgkins lymphoma. An illness that hits a coherent group of people, such as AIDS, will get far more political attention and federal research money than one that hits people almost completely at random, such as lymphoma.

Similarly, while we hear constantly about past race discrimination, we almost never hear about past discrimination against lefthanders (e.g., Ronald Reagan, like many natural lefthanders of his generation, was forced to write right-handed. Nor do we ever hear about the heroic activists who changed social attitudes toward lefthanders. Why not? Lefties just are not a coherent group of people.

My published articles are archived at -- Steve Sailer


drava vizstrak said...

'Lefties just are not a coherent group of people.'

you describe art and science of victimology. united states culture is
competition of victimologies. but we are brain-tattoed with
certain victimologies only. while others disappear down the
'memory hole'. what we have today is grudge
culture. possible leading to civil war.

recent armenian genocide was interesting dustup in a
'great american victimology competition'.

mnuez said...

Excellent point.

We similarly hear about the manifold difficulties that black Americans have (in large part owing to their average lesser economic abilities) and those difficulties are steadilly addressed and quite often (as with affirmative action) REdressed.

Whites with lesser economic abilities however (whether brought on through nature, nurture or both) have none of the advantages that they would have had were they the exact same person - but of a different skin color.

I, for one, consider this unimagineably tragic.


Glaivester said...

Fortunately enough, we have one presidential candidate who speaks out against this sort of inequality - or at least against the monetary policies that create it - Ron Paul.

Martin Peters said...

Are ugly people a coherent group? Who speaks in their name?

Ron Guhname said...

That's right Steve--we left-handed folks have been oppressed longer than anyone, and we still have no voice. You damn bigots with your right-handed scissors and golf clubs. We've had enough. We lefties have nothing to lose but our chains. Unite!

dumb-dumb said...

Some of this stuff regresses to the mean, particularly with economic cycles.

College graduates during the Japanese bubble were spoiled with a choice of five jobs, but five to ten years later they they had a hard time dealing with any job that was left, since things moved downhill so much since they started. Later graduates did OK...

All the people pulling huge amounts of equity out are screwed as prices drop and they find themselves further upside down than folks who bought considerably later than they did...

David said...

The favorites get the grease. Favorites of the ruling group (which itself stands first in line).

Making a hue and cry about "justice" is just one way the above is done.

"Injustice" in the shape of "inequity" is ubiquitous; it's the human condition. Easy to tap as a rationale.

Seeing whose injustice is recognized and whose ain't reveals the interests (and identity) of a ruling group.

Mark said...

Their neighbors, those morons, reached that point six years later, when everybody knew that houses always rose in price so even if you overpaid you could always refinance.

They're suffering from the instinct to follow the herd. People educated in history and common sense know that bubbles happen, and that nothing can grow forever.

It reminds me of an article Andrew Tobias wrote about the idiot who caught Mark McGuire's homerun record ball - only to give it "back" to the millionaire McGuire! He had the right to keep the ball, but he followed the herd moralizing that somehow McGuire was morally entitled to it. Instead of selling it for a million or so on Ebay he got a free minivan - yeehaw.

[The] recent armenian genocide was interesting dustup in a
'great american victimology competition'.

Oh, spare me. The House resolution was about one thing - sabotaging the war effort by hurting our relations with Turkey, not placating the all-powerful Armenian lobby.

I know of lots of victim cultures - blacks, Hispanics, gays, Jews (laughably), Chinese & Indians (also laughably). But Armenians ain't one of them.

All we're talking about is a resolution recognizing the factual occurence of the Turkish effort to extinguish the Armenian people.

Douglas Knight said...

AIDS & breast cancer are the only diseases with disproportionate NIH funding, I'm told.

jerzy cow said...

Ron Paul's signature economic policy, the gold standard, shows he is a crackpot. You might as well argue that computers should go back to using vacuum tubes.

Anyway, to answer the question, the reason is that in California, like almost everywhere else, people who are long-time homeowners are vastly more likely to vote than any other group.

The #1 issue for long-term homeowners in California is for the ability for them to use their houses as ATM machines be preserved, and to keep their neighborhood from getting more densely populated.

If that is a problem for non-home-owners who don't like the fact that the state's economic policies mean a starter house in a good neighborhood costs $800,000, well move to Arizona if you don't like it.

Anonymous said...

When will you bigots learn? It's sinistral. Not "southpaw",not "lefty".

Anonymous said...

Lefties, maybe Reagan overcame his natural tendencies to being a gauche, sinister and Jacobin, but hey, righties are the 'logical' people., lefties *are* incoherent compared to righties. Don't you people get that! :)