I was reading an article that mentioned that investing into housing is "morally wrong" and I agree.
In an ideal world, we wouldn't create a system where it is possible to make money from buying and renting houses, especially to the detriment of others. But, unfortunately, we don't live in an ideal world where resources are where they are needed, and everyone has enough. Instead, we live in a world where not only is our sense of success tied to what we own, but in order to live, we need to have money, and there is no "safe amount" to have, so the mechanism encourages making as much as possible.
People aren't immoral, the system is.
Investors are just doing what the algorithms of society tell them to do, which is to make as much money as possible. And, while many cite greed as the driving force, I don't think that is the case for the majority of people. Instead, they are just fulfilling other parts of their social programming, like being able to provide for their children and their future, have nice things, and leave behind some kind of legacy of themselves. They are looking to leave their mark on the world, and feel successful whilst making it.
Are you any different?
Unlikely. Even if you don't own one house at all and are living in a cardboard box on the streets, given the means and opportunity, you'd do the same, because that is what the system demands. You don't have to act that way and chase those things, but the environment is set up to want it as a need, even if it isn't needed at all.
We love games, and the economy is gamified.
There is little difference between the millionaire property investor, and the beggar in the street - they both want money to live. However, what they need to live is relative to their means. One can live off scraps, but given the means of the millionaire, would they keep eating out of bins?
It is easy to judge those with a lot, because they have a lot. However, they are as much a product of the system as those with very little. Are the poor morally superior because the role they played left them poor? Are the rich superior because the role they played left them wealthy? When both are in the same game, success at the game has nothing to do with morality. The moral choice would to not play an immoral game, right?
Give me all your wealth, and stop playing.
How moral are you?
The problem when it comes to the make as much money as possible equation, is that it is ultimately going to take resources that other people are going to want or need. There might be enough resources on earth for everyone to live comfortably, but the game is not about living comfortably like others, it is about Beating others at the game. And, the marker of the game is wealth. So to beat others, you have to be wealthier than others, and that means that any mechanism that increases wealth, is open to exploit.
"Exploit" is not a dirty word here,
Exploit
verb
3rd person present: exploits
/ɪkˈsplɔɪt,ɛkˈsplɔɪt/
- make full use of and derive benefit from (a resource).
Aren't we encouraged to make full use and derive benefit from our resources? When it comes to the resource of money, making full use of it means to make more of it - to grow the amount. Investing into housing, is one of those ways, as are stocks, as are casinos. It is just that types of usage have different risk-return models.
The thing is though, that no matter what we each believe to be morally right or wrong, people are people and will act on the incentive that offer a return that they feel is important to them. Again, this means that there is no difference between someone charging high rent, and someone giving to charity, because they are each acting on what incentivises them as an individual. They are still doing it for a type of return.
Some people give to charity to avoid the feeling of guilt.
Does that make them a good person?
Some people invest so they can give more to charity.
Does that make them a bad person?
As I see it, the entire economy is misaligned to building a healthy human society. If it was aligned, we wouldn't have businesses with products that harm us, and the most valuable businesses would be those that make the most positive impact on human wellbeing. But, that isn't the case, with the most valuable companies generally those who do the most damage to society, in one way or another. This is because while we are happy to talk about morality of investors and the wealthy, we aren't willing to shine a light on what we demand from the economy, which are goods and services that make us feel good, or help us avoid feeling bad. We don't consume what is best for society, we buy what we want, even if we have to go into debt to do so.
That is our level of morality.
We are all products of the economic environment. Addicts.
Taraz
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What we're seeing in housing, stock markets, etc. is the consequence of a massively distorted economy. Assets are appreciating in marge part because our money is losing far more value than CPI statistics suggest. Those with money want assets. Those of us with neither money nor assets suffer.
Housing in particular has been an industry that was already being massively leveraged and manipulated for a good 30 years or so here in the US. Interest rate policy was to keep rates low specifically to prop up home prices and encourage borrowing to keep money flowing in a neo-Keynesian model of circulation as the statistic for productivity. It discouraged real saving and long-term investment, meaning the real wealth to sustain those low rates was eroding away. But it's gone on for so long that the current system is perceived as the status quo.
I disagree with the statement that investing into housing is "morally wrong." In a healthy market economy, people invest to build up what consumers demand. The root problem here is mcmansions, money supply inflation inflation, tax policies, zoning laws, and a lack of real investment opportunities in productive ventures. We're in a silent stagflation no government economist is willing to acknowledge, and "market failure" is the only excuse they have to offer.
Distorted in so many ways.
And the "status quo" doesn't take as long to settle into anymore. It is like people get used to the "new normal" in a matter of weeks, and the new normal is progressively getting worse.
I get it. I see it morally wrong from the perspective of a healthy society. But, society is driven by the economy now, so that is what it is. From the perspective of what we have, it is the smart play, and morals don't come into it.
I see this as the key failing of the economy. What gets invested into is what makes money, and what makes money is generally not productive for humanity. It isn't even trying to be productive for humanity.
Funny isn't it? The market never fails - it just tracks demand and supply. We don't demand for wellbeing, we demand for instant gratification. The companies that provide even the most transitory pleasure, are the ones that make the most money. And that money has to go somewhere, so it goes into investments that generate more money. It doesn't matter what mechanism, but people are looking for the highest return, given their risk tolerance.
The market is not about morality. It is a out supply and demand. But politics distorts both sides of the equation, and people who claim to have certain moral positions on things like health and housing are acting in ways contrary to their proclaimed intentions.
Inflation distorts our time preference and removes the reward normally offered by low time preference savers and investors. Stock market and real estate bubbles are among the direct consequences. People respond to incentives and signals, but everything governments have been doing to "guide" the market has created perverse incentives and bad signals.
in response to these bad outcomes, those who benefit and suffer both seek political protection, resulting in even more of the central planning and centralized power which creates the destabilization in the first place, and freedom is the scapegoat.
Think about it in terms of a tribe or community. It is still about supply and demand, isn't it? The problem is, we have created a society where many needs go unmet, while the desires of some are overfilled.
And many people have replaced real tribe/community connections with things like nationalism and partisanship. Instead of seeking consent, they demand power to coerce and control. Compulsion is not cooperation, but political language and the mythology of democracy muddy the waters.
For, me that's one of the great ills of capitalism. Those who survive financially do so at the detriment of others. The best way to resolve this issue of the inequitable distribution of wealth is for the government to find an effective means of redistribution, and I don't think taxes are effective enough. In my opinion, the poor's mostly involved in economically immoral activities because they have to survive, while most of those with wealth do so because of greed.
Maybe, maybe not. I think both are just doing what they believe they are entitled to do. Essentially, both are greedy, because they feel entitled. Or, both aren't.
Redistribution through government doesn't work. What really needs to happen imo is that people need to demand differently. Demand and consume for wellbeing, not for entertainment. Pay companies that increase wellbeing, not entertain us to avoid having to deal with real life.
The consumer creates the demand. We need to demand better.
Not sure we would be having this discussion 20 years ago. Nowadays, everyone's talking about inflation because it's visible in consumer prices, but there's been massive inflation in real estate since 2008, which has greatly benefited the people who already owned real estate, and people who had other types of capital they could borrow against (pretty much for free because of low interest rates) and buy real estate.
I think it's kinda normal to want to own real estate (yes, also as a product of our society), just like it should be considered normal to pay rent to somebody because you don't want or can't afford to buy a property
Well, I would be - but many probably not. Most people only think once they are in pain, rather than thinking so they don't end up in pain.
It is normal, in the economy we have created. But the economy is designed for wealth generation, until it consumes itself.
I never thought that investing in housing is bad. Maybe investing in good stocks is bad too. How will the system work if the rich don't get richer? Maybe it will be a different system and it will be in the distant future.
Same thing, isn't it? Just a different vehicle.
It can't happen in the current economy. So, we should think, what happens when one person owns everything?
The ethical aspects of gathering wealth are complicated and closely linked to what society expects. To create a more just world, I think we must question these standards and think about what real success means beyond just making money.
Which brings into question all the things we do with our resources that are counter to improving human wellbeing. Spending on war, pharma to maintain illness, supporting smoking - whatever it is.
Some people give to charity so they can get a bigger tax break... 😀
For sure. Another mechanism of wealth creation!
Housing is a fundamental human right. Exploiting the hardships of housing and profiting from it is simply unacceptable. The system is certainly pushing people in this direction. The system should be able to intervene when necessary. For example, a heavier tax burden should be imposed on those who own more than one home in the same city. This would reduce housing prices, even if only slightly, and enable those who don't have homes to afford them.
Perhaps what should happen is a flat income tax for everyone, but investment tax should be at the very least as high as income tax, if not higher. There should be more incentive to make money from work and spend money, then to get passive income.
Investing is a good thing, speculation is worse. Investing is usually long term and results on creation of wealth and many positive aspects as side effects.
Yes, the resources might benefit society if they were allocated by AI instead, but this would not be a good thing necessarily as it would stop stimulating humans and our creativity and would inevitably lead to a decline of humanity...
Imagine a star trek world - no need for investing there. It was all about improving wellbeing. It doesn't work in practice in the economy we have though - or the human mindset.
The problem isn’t really with people, it’s with the system. Rich or poor, everyone is just playing by the rules that already exist. So maybe it’s not about judging who has money or not but about a system that rewards taking advantage instead of helping society.
The challenge is that the economy needs to be set up for wellbeing, but that will disrupt the current economy drastically, which is set up for wealth generation at the cost of wellbeing.
The system has been designed to push everyone to chase wealth, not morality. People aren’t inherently greedy, they’re just following the rules laid out for them. It’s the game that’s broken, not the players although some are very greedy but still for most it's the game
Ergh this is the absolute worst. Everyone wanting endless investment properties for the delusion of endless growth was already making it hard for us to buy when we were buying and we didn't want to add to that problem, but the way it's currently looking it's either add to that problem or have a terrible retirement. Our only other option is to win lotto. We freaking hate it.
this was the third viable option but yeh
You are right; people will always find money to get what they want. Even by creating debt.
But I know an example of the richest person who used public transportation. Everything is determined by the value system...