Josh Barro, an economics columnist at the New York Times who used to be at Forbes, has written an interesting column on what the food marketplace would be like if we owned lifetime resaleable futures in our food instead of buying it weekly or daily. The incentives, he said, would be very different. Instead of wanting food prices to be lower, owners of food contracts of this sort would want food prices to be higher! And, according to public choice theory, which is basically the logical discovery that people act in terms of self interest in the political and public policy marketplace the same way they do in the economic marketplace, owners of these contracts would have incentives to restrict food production politically in order to increase the value of their contracts.
I must admit I think the column might have been even better if he’d used gasoline, rather than food, as an example.
There are plenty of good reasons to own rather than rent. To have a piece of ground [or for condo owners, air], that is really yours, that you can be responsible for, is not a bad desire.
[I will have to say here that owning a home in a condominium or HOA development is sort of like owning a franchise rather than an independent business. You can ‘own’ your own McDonalds, but they tell you exactly what to do; it’s a totally different world than if you founded your own Joe’s Burgers. Well, owning a home under an HOA is more like owning a McDonald’s franchise.]
It’s just the desire for a home as an ‘investment’ that is a dream that must inevitably undo itself. You want to be able to sell the home ultimately at a higher price than you bought it for. That is, you want to sell the home at a price that, when you bought it, you yourself couldn’t have afforded to pay! You’d better hope that there are people around who can afford to pay what you want to sell it for, when the time comes! And, if you have indeed succeeded in your objective, and your house, and most of the housing in the community, are now worth a lot more than when you bought it, you’re probably wondering why your 26 year old kids are still living with you – well, take a guess. They can’t afford the housing in the community. Think not of ‘those people’ when you are considering the housing policy of the community; think of your own children!