Buying vs Renting

Alex Tabarrok on the subject. This is an excerpt though it is most of the post. Click for the whole thing.

Housing is overrated as a financial investment. First, it’s not good to have a significant share of your wealth locked into a single asset. Diversification is better and it’s easier to diversify with stocks. Second, unless you are renting the basement, houses don’t pay dividends. Stocks do. You can hope that your house will accumulate in value but don’t count on it. Indeed, you should expect that as an investment your house will appreciate less than does the stock market. You didn’t expect to get a great investment and a place to live in the meantime did you? TANSTAAFL.
Another problem with houses is that home ownership locks people to location making it harder to move for jobs. The problem is especially severe because no one likes to sell at a “loss” even when it is rational to do so. So when jobs disappear and home prices fall instead of moving, people hold on for too long just hoping that things will get better. It’s troubling that both across states in the United States and across countries higher home ownership predicts higher unemployment rates. See Does High Home-Ownership Impair the Labor Market?So why do so many people buy houses? Houses are lovely if you enjoy interior decorating, backyard barbecues and talking to your neighbors. Houses today also come bundled with a significant side asset – access to so-called public schools. One argument for school vouchers, by the way, which isn’t emphasized as much as it should be, is that vouchers would break the strong connection between where you live and what schools you attend. Poor people would have a better chance at attending good schools if schools and housing weren’t bundled together so closely

Be naive! Buy Local!

Efficient Market Hypothesis at work (BSBTE)

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Copyright and Disney (BSBTE)

It is known as the Mickey Mouse Curve.

Explained at TechDirt, with a quick look at the some consequences.

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The great equalizer (BSBTE)

In short, what would likely most impress a visitor from the past about Bill Gates’s life are precisely those modern advantages that are not unique to Bill Gates – advantages now enjoyed by nearly all Americans.

As quoted in Cafe Hayek.

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Yes Minister: hospital jobs (BSBTE)

On YouTube, here.

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Protectionism: Politics or Economics? (BSBTE)

Well, guess.

Via Cafe Hayek, on Freedom to Choose.

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Piketty on US Inequality (BSBTE)

As explained in Reason.com:

Piketty is being celebrated for supposedly demonstrating that the deep structures of capitalism tend toward ever-greater inequality. But in the United States—the most unequal of all the advanced economies—the main explanation offered for the growing gap between rich and poor is that 100,000 or so corporate managers are being overpaid. What’s getting all the attention is Piketty’s depiction of rising inequality as the tragic flaw at the heart of the entire capitalist economic system. But what’s really going on, at least according to Piketty, is a comparatively narrow and shallow problem of corporate governance.

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Voting Schmoting (BSBTE)

We have said it before, and Gordon Tullock says it again.

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I’ll have a large slice of employment, please (BSBTE)

Thomas Dalrymple responds to Paul Krugman Slice of Labour.

He concludes:

Mr Krugman’s argument is not the argument in favor of labor market rigidity as above, however. He is what one might call a slice-of-cake man, where an economy is a cake to be sliced rather than a dynamic organism to be nurtured, and where supply and demand can be managed without reference to price. There may be cruder economic ideas, but I don’t know what they are. He is also, of course, a proponent of ever-greater government stimuli to the economy. In this article, he quotes John Maynard Keynes on the dangerous influence of ideas. I wish he had quoted Keynes’ eloquent words on the effects, social, psychological and economic, on the debauchment of the currency.

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Anecdotal Evidence (BSBTE)

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Miss America is killing us by steam (BSBTE)

Because correlation – causation, right?

Endless fun to be had at the Spurious Correlations website.

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First Paycheck – more than money (BSBTE)

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The Adventures of Fallacy Man (BSBTE)

Wherever someone is illogical… he will be there!

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Decision Making (BSBTE)

What I think whenever I watch a singing talent show.

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First Shopaholic (BSBTE)

I learned from the podcast Good Job Brain about Mary Todd’s Lincoln incessant shopping. She was almost like an older-day’s Kardashian, with the press following her from shop to shop.

In fact, she was so addicted to going shopping that she used some of taxpayer money out to buy things with at shops. She also thought that a good use of the federal funds would to be to redecorate the White House using it. She brought the idea of redecorating forward to congress, who approved and gave a $20,000 limit.

Which she exceeded.

Apparently much of her spending was kept form her husband, and stories say she sold off White House manure – purchased as fertilizer – to help her repay some of her outstanding debts.

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The saddest sentence you will read this week (BSBTE)

Re-posting form Rebecca’s personal blog:

“Prison was the first time in her life she had experienced reasonably consistent and decent treatment”

From the article Some to Misery Are Born.

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People helping people (BSBTE)

Paraphrasing Penn Teller: “When somebody tells me 1 out of every 5 people lives in poverty, I think that poor person has a whole 4 people to help him out. That’s good.”

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Ocean’s New Book (BSBTE)

On this fine Friday, I add a shameless plug of Ocean’s latest publishing adventure.

Ocean runs the translation agency Acahi, working with a network of freelance translators. Freelance work in general is as exciting as it is intimidating, and in translations more so than in some fields, as you truly are on your own. Where do you start? How do you connect with the proper networks? How do you stand out? And logistics: connecting, communicating and most important of all: getting paid.

Well Acahi is here to help with their new book How to be a successful freelance translator: make translations work for you (see what he did there?)

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Understanding communism (BSBTE)

In the kitchen:

Setting: I am cleaning out our food shelves

Me: I’m going to put the coffee salt and pasta all on the lower shelf since it is what we use the most. I’ll put bread crumbs and flour above.

G: hmmm

Me: …?

G: flour and pasta should be kept together

Me: *sigh* this is the difference between a communist and a free marketeer. A communist rules by ideology, regardless of whether the enforcement is welcome, sensical or beneficial. A free marketeer adapts his approach to human nature and positive outcomes.

G: so I am a communist?

Me: kitchen communist

G: *starts to pour water on my head*

Me: as a free marketeer I probably believe in private gun ownership…

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