Real Estate Saves Capitalism Then Bursts – China Next?

Real Estate Saves Capitalism Then Bursts – China Next?


PAUL JAY: Welcome to The Real News Network.
I’m Paul Jay in New York City. A real estate bubble bursts, a stock market crashes, and
the economy spirals into recession. Two thousand and eight? Uh-uh. Nineteen twenty-nine, although
I suppose you could say Depression rather than recession. But the role of real estate
in increasing and intensifying the crisis and triggering economic crisis is nothing
new. Now joining us to talk about how that’s affecting our life today is David Harvey.
David is a distinguished professor at the City University of New York, director of the
Center for Place, Culture and Politics, and the author of numerous books, including The
Enigma of Captial and the Crisis of Capitalism. Thanks for joining us. DAVID HARVEY: Thank you. JAY: So talk about this issue of urbanization,
real estate speculation, and crisis. HARVEY: It does two things. One is the speculative
bubbles, which you mentioned, historically have been always extremely important. In the
19th century, it was the railroads that led it all. And in the 20th century, it was more
sort of real estate and commercial property development that led it all. But the other
interesting thing about it is that real estate development has been one of the ways out of
crisis. That is, if you look at what happened in this country after World War II, one of
the major things that happened was suburbanization of the United States, vast investment in housing.
The rate of housing construction doubled compared to what was going on in the 1930s and the
1920s. And a vast amount of capital was absorbed, general employment absorbed in suburbanization.
So real estate rescues capitalism. But the thing about real estate is it takes a long
time to find out whether it’s really, you know, worth anything or not. And it’s always
speculative. And so you find that actually it rescues capitalism, but then people say,
hey, this is a great thing, and it becomes a kind of Ponzi scheme, and in the end it
bursts. And that’s what we went through just recently. JAY: Yeah. These cities have departments of
urban planning, but often the planning has more to do with how to create a bubble than
it has to do with–maybe it’s not coming from the city hall urban planning department, but
in terms of the real estate industry, it’s more about how to manipulate the prices for–. HARVEY: [crosstalk] even worse than that,
it’s more about the finance and the financiers. I mean, if you look in this country and you
look at these institutions like Fannie Mae and Freddie Mac, which are the mortgage institutions,
they played a crucial role in developing the bubble in the 1990s onwards. And, actually,
the bubble we’ve just seen burst actually really took off in the Clinton years, with
Fannie Mae beginning to say, we’re running out of demand, how are we going to get demand.
I mean, they lend money to developers, and then they say, we’ve got to lend money to
buy the stuff. And now they couldn’t find people to lend it to who are good credit risks,
so they started going down further and further and further in this sort of [crosstalk] JAY: Of course, nobody wants to look at the
possibility that maybe wages should go up instead of artificially create credit for
people [crosstalk] perish that thought. HARVEY: Although, since wages didn’t go up,
the other way in which people got money, of course, was to do the sort of refinancing.
So they actually treated the rising property prices as an ATM machine to take more money
out. JAY: So, then, why is and how does real estate
play such a fundamental role in the triggering of crisis? HARVEY: Because–think of it this way. You
know, capitalists start the day with a certain amount of money. They go into the market and
they buy labor power and means of production, and they put it to work and they make a commodity.
And then they sell the commodity for more money at the end of the day. And then the
big question arises: what do you do with more money at the end of the day? Well, let’s suppose
you’re making shoes. Well, you can expand the production of shoes, and so you keep on
making more shoes. But at some point or other, the market for shoes disappears. So you’re
then stuck there with money–. JAY: Or you’re saturated. HARVEY: You’re saturated. JAY: You can’t grow any more. HARVEY: You can’t grow any more. So you then
say: where can I put the money? You know. And somebody kind of says, well, you know,
in ten years’ time, this area over here will be a great place, provided we build it right,
and all this kind of stuff. So people start to sort of take their money and put it into
real estate development and real estate speculation, which is always a long-term development. I
mean, it takes, you know, three or four years at minimum to sort of get this thing underway,
and it’s usually 10 or 15 years before you know whether you’ve really made money out
of it. So it’s always a long-term thing. During that time before you know whether you’ve got
any money out of it or not, a lot of money’s being used up, you’re buying materials, and
you’re buying the bricks and all this kind of stuff, and you’re employing labor and all
this kind of stuff, so the economy is booming along because of all that employment, and
you still don’t know whether it’s going to be successful or not. JAY: [crosstalk] be any demand for it. HARVEY: Any demand for it at the end of the
day. Well, then the question of demand comes up. Now, who provides the demand? Well, the
consumer does, but the consumer says, I can’t buy it all on my own; I need a finance company
to give me a mortgage to buy it. And then that depends on the conditions of is it easy
to get a mortgage, is it hard to get a mortgage. And once upon a time, of course, it was very
hard to get a mortgage if you’re African-American, or it’s very hard to get a mortgage in certain
areas of town. In the 1930s, it was extremely difficult to get a mortgage for longer than
about three years. So you reform the mortgage institutions. So you set up these institutions
in the 1930s so you can get a 30-year mortgage, which is completely different. And then, after
World War II, you start to say, well, there’s a GI Bill and there’s all these other things,
and oh, we’re going to have this interest rate deduction on your income tax, all this
kind of stuff. So you start to favor mortgage finance. So you start to subsidize it so more
and more people take on mortgages. But they’re taking on mortgages ’cause the banks have
money to lend. So the banks are providing money for the development and money. They’re
supplying money–they’re giving money for the supply and they’re giving money for the
demand. And at some point or other, then the question is: where is the demand? JAY: Where is there demand that isn’t based
on debt? HARVEY: That isn’t–yeah. So you really start
to push that. Now, in the 1990s what began to happen–and this began under Clinton–was
you started to say, look, there are a lot of people out there who want to join the American
dream, and everybody’s American dream is to be a homeowner. You know. And so, you know,
we’ve got to incorporate everybody in. So let’s get immigrant groups, let’s get African
Americans, let’s start to make it easier for them to get mortgages. And at that point,
some of the charlatans come in and say, yes, okay, we can start to do this. And so they
start to come up with this subprime thing. And, of course, the subprime thing doesn’t
work. And we already see by the end of the 1990s that a lot of that subprime stuff is
not working. And it should have been obvious that there was going to be a problem with
that. But then there’s a little hiccup around, you know, 1998 to 2000 in the market. And
then, after about 2001, suddenly the whole thing takes off big-time and organizations
like Countrywide lend millions and millions of–actually, trillions of dollars [incompr.]
mortgage. And then they pass it over to these institutions like Fannie Mae or Freddie Mac,
or they package them into these CDOs and sell them off to everybody else, saying these investments
are our safest houses. You know. And of course everybody says, well, of course, houses. Safe,
of course, yes. [crosstalk] JAY: Especially in California. How could real
estate ever crash in California? HARVEY: How could it ever crash? Yes. But
then of course what turned out was, you know, that you were going into a market that really
didn’t exist. And it became a fiction. It became a total fiction. And that was what
crashed. And that is what’s very difficult to see reviving right now. In fact, the rate
of house building right now is back where it was before 1940. In 1940, the rate of home
ownership in the United States was about 40 percent of the population. By 1960, it was
up to 60 percent. In 2004, it was close to 70 percent. Now it’s coming back down, ’cause,
you know, obviously, people just move, can’t do that anymore. So what you see is this urbanization’s
track development around San Diego and Las Vegas, all this kind of stuff, condominiums
in Florida, all being built to meet a market which is a fictitious market. And then, of
course, it goes bang. But this is again not [incompr.] happened the first time. And we
have very short memories in this country. For instance, there was the savings and loan
crisis in the late 1980s, early 1990s, and it was something like 1,300 institutions went
under. It cost, you know, something like $200 billion for the feds at that time, you know,
and $200 billion was rather more than it–$200 billion to bail out the savings and loan.
So we’ve seen this crisis with us before. The same thing happened back in 1973. We’ve
seen a crisis of this before. And, interestingly, if you look globally, the end of the Japanese
boom in 1990 came with the crash of land prices. The Swedes had to nationalize their banks
in 1992 because of a crash in housing prices. And so you see this going on all the time.
But right now what’s rescuing–this is what’s really interesting–what’s rescuing global
capitalism right now is urbanization in China. Almost 50 percent of the world’s output of
steel is going into urbanization in China right now. They’re building high-speed networks,
highways, high-speed train stuff, you know, mega-buildings. And, you know, you’ve seen
those things [crosstalk] JAY: And not yet clear that it isn’t a repetition
of what went on here. The state’s putting in tons of stimulus money, and they’re putting
mortgages out the window. HARVEY: Absolutely. And what we see now is
that actually there’s a suspicion that the banking system of China is on the rocks, and
they’ve got a lot of, quote, toxic assets there. So it’s a repetition. But on the other
hand, if that crashes, then all of those countries which are supplying the raw materials, like–Australia’s
doing very well, ’cause it’s supplying all these raw materials. JAY: And Canada. HARVEY: Canada’s doing very well. You know,
Chile’s doing very well. You know, so the boom in China–and China’s growing by about
10 percent a year–a little bit less now, but–. JAY: So much of that housing and infrastructure
spending. HARVEY: Absolutely. Absolutely. JAY: And not clear where the real demand is. HARVEY: Yes, right. And–you know, and I was
looking at this, you know, a few years ago, and I suddenly looked and I said, how many
airports have they built in this area, in the Pearl River Delta? Well, they built five
major international airports. And I happened to visit at the time, and I went to one of
them and I said, how come you’re going to survive? And they said, we’re going to be
the hub for the whole region. And I went to the next one, and they said, we’re going to
be the hub for [crosstalk] region. So they’re all going to be hubs. Like, and actually there
are some incredible things in China. There’s a huge–one of the biggest shopping malls
in the world stands kind of almost empty. It gets built, and then–. JAY: They have a whole model city there, actually.
They built all this–this model city, and then no one can afford to live there. HARVEY: Yes, ’cause nobody’s in it. No, nobody’s–well,
nobody’s in it. That’s right. No. So urbanization has this kind of very interesting relationship
with capitalist development and very interesting relationship with crisis formation. And I
would watch out right now for what’s going on in China in terms of the urbanization of
China, because they’ve still got a situation where only about 40 percent of the population
lives in cities, and they want to make it up to 70 or 80 percent. JAY: And I know I sound like a broken record,
but again it comes back to this issue. The real wages are stagnant or go down, and all
the measures they’re taking, either austerity measures or various other things that are
driving wages further down. HARVEY: Yeah. Well, Chinese aren’t. JAY: I’m talking here. HARVEY: Oh. Well, here, no, no. No, here [crosstalk] JAY: Like, here they’re trying–in China they’re
trying to do some measures to raise wages. HARVEY: They’re raising a little bit. But
here, no. But that comes back to the politics of the thing here. The politics of the thing
has nothing whatsoever to reviving the economy on behalf of the people. It has everything
to do to developing the economy in such a way that the, you know, people in the really
top income brackets are going to do very well. JAY: Thanks for joining us. And thank you
for joining us on The Real News Network.

73 Comments on "Real Estate Saves Capitalism Then Bursts – China Next?"


  1. @CaptainBluebear08
    Or go to his website where he has an entire course reading Marx's "Capital vol.1".
    He definitely is a refreshing counter-balance of economic thought.

    Reply

  2. Uprated, favorited and shared. This clip is so good, I had to keep pausing it and sliding back to re-listen to stuff. I urge you to do a segment on the depression of 1920-22. No one remembers it and it was as bad as '29. The bigs were allowed to fail and it was very painful but quickly over without any fiddling. Carry on.

    Reply

  3. Step 1, this guy proves China is surpassing USA.

    Step 2, Fear monger, calling for catastrophe on China. "OMG, they built a new mall and no one is in it" lol

    My proof your country is going to fail because my country failed, is fail lol

    Reply

  4. HOLY SHIT!!!!
    This next crash with China is going to make the other crash at the end of 2008
    look like children's birthday party. Buckle up!!!

    Reply

  5. David Harvey talks a lot of sense. His recent book "The Enigma of Capital and the Crises of Capitalism" is brilliant.

    His online (and free) course on Marx's Capital is also excellent if you are not familiar with Marx's work.

    Many thanks once again Paul Jay and TRNN.

    Reply

  6. Economics 101 led to the bailouts. There will always be a need for manufacturing and export. Even [email protected] America will still need goods.

    Yes, China will fail AFTER America and the European Union fail, but by then China would have been the world#1 economy.

    How come he doesn't talk about Europe begging for China influx of investment bailout?

    Reply

  7. you know, instead of speculating people can stop seeking cash-flow, stop using paper money, and just STORE money as gold, silver, long-lasting tangibles until they are needed. You can't force a market in 10 to 20 years to be what you want it to be but you can hold things which are in value under all conditions so that you are ready at the time to invest, spend, use no credit, create no bubble & not be lured into a bubble.

    Reply

  8. @xardas411 your location & cost of living is ALWAYS speculation. You can't be sure how/when your cost of living will be shoved up or down depending on local industry and you can't be sure how expensive it is to get to work in time + energy (or money if properly measured, which it isn't using paper money). You certainly need to speculate about your NEXT move to find work in another city. Nothing about real estate, even just a home, is devoid of speculation at any time

    Reply

  9. @Cookaloka the means of production are privately owned: no. We do not have that. We have corporate-government ownership which is Fascism, not Capitalism. We have capitalism nowhere but the illicit drug-market.

    Reply

  10. @malorkayel China built 4 entirely giant cities which are entirely empty. That's a sign of bubble-failure.

    Reply

  11. @StraussBR wrong: China can consume its own production affordably with no export market required. All exporting nations can, including my own, Canada. We don't need USA exports to live whatsoever. It's a slavery-myth to keep us American slaves via NAFTA.

    Reply

  12. @ytgv3fc7 capitalism will eventually evolve into fascism – it's inevitable, the accumulation of capital leads to an accumulation of power.

    Reply

  13. @malorkayel I'm not so sure China will fail, yes it will in our western-neoliberal-capitalist sense, but I have the suspicion that China will be able to go inward and return to it's Maoist roots with relatively ease.

    Reply

  14. @26Keano Capitalism has nothing to do with government intervention in the market. In fact, capitalism would fall apart in two seconds if government wasn't there propping it back up again.

    Reply

  15. "where is the demand that isn't based on debt"

    nowhere cause of how all the money is created out of debt!

    Reply

  16. @Cookaloka I disagree. We have Fascist Corporatism everywhere NOT free market capitalism.

    Reply

  17. @Cookaloka Yes and capitalism is adding to its impressive resume by pulling another few billion people out of poverty over the past few decades. Capitalism is everywhere because it works. But what about free markets? We have those NOWHERE. It has been demonstrated repeatedly by history that free people working in their own self interest produce by far the most wealth when property rights are respected and markets are as free as possible. Expanding inefficient government is not the solution.

    Reply

  18. The government controls,creates, and inflates housing bubbles and then somehow paradoxically when they fail it is capitalism's fault? Having the government dominate this industry is hardly capitalist, and should be left to the free market. The US has what 20 million vacant homes? They would not have been built without 0% interest rates and free money from the government. Real estate speculation is not saving global capitalism. That's silly.

    Reply

  19. Real capitalists would have rates set by the market and let most of these over-leveraged idiots fail. Individuals and corporations should be responsible for the bets that they make instead of being bailed out by the government. If the market were allowed to work interest rates would rise dramatically, less houses would be built, and the lenders would evaluate each project with greater scrutiny, funding only the best, lowest risk projects, removing the conditions for a bubble.

    Reply

  20. @Cookaloka Billions still starve yes, but look at the areas that have developed – they used to starve now they eat very well. One of my biggest motivations to become wealthy is so that I can help as many people as possible, I aim not to steal from the rich but to make everyone richer. Different goals you and I. And re your question about free markets, I believe that corporations should be completely responsible for their actions and that some regulations are needed (ie Glass-Steagall).

    Reply

  21. @capslockbandit
    You are operating within a system where you must realize. That well simply put not everyone can be rich. Not even a majority. That's the way people chose it to be especially in America. Where one party doesn't even want a stable middle class. It says a lot. Soo Essentially if you have millions then there must be others who have nothing. Currently we are middle class, and as such we are still quite fortunate, and a minority within our species because of it.

    Reply

  22. @capslockbandit
    most humans are poor, barefoot, and pregnant. Dying of preventable diseases due to the sick system we chose to keep. In a system where the US produces enough food to feed the world three times over. We choose a system that allows that food to rot as it isn't economic viable to give it away for free.Though corruption all over the world is to blame for the state of the world, but the system isn't innocent from it as the current status quo encourages corruption.

    Reply

  23. @capslockbandit
    with that being said. fly as high as you can, and pull as many people as you possibly can upward, and be ready to work hard to make a change in our society. This is also my long term plan if I ever get to gain wealth within my lifetime. I will be using to to leave this world better off than when I was born into it. 😀

    Reply

  24. @lordblazer But why bemoan the system that created all that wealth and food in the first place? It is better to help others from surplus than be a beggar yourself. No economic or political system is perfect, but the best we have discovered for creating wealth and raising the quality of life for the greatest number of people is the one almost everyone in these comments is pissing on. We both want the same thing, just very different ways of going about it.

    Reply

  25. @capslockbandit
    you missed my last message I typed to you please read that before typing. I am not only bemoaning. And I am not bemoaning or complaining. I am just stating the simple truth, and along with that I am stating in that truth we must elevate others as we rise, but eventually this system will collapse, and that is when we must work the hardest to ensure a better future. Wealth is indeed being concentrated into the hands of the few. history repeats. no complaining here. just truth.

    Reply

  26. @capslockbandit
    also how is stating these truths being a beggar. in essence it is time to change our economic system if this is the result of it. In fact it was changed in the 20th century for very similar reasons as it became glaringly obvious that wealth must be evenly distributed or economies and societies stay unstable. with that being said do what you can now to help, and as you move up continue to elevate others. I think you should save your "lecture" for some of the other posters here.

    Reply

  27. @lordblazer Thanks for the interesting replies. I think you are in error in assuming everyone cannot be rich. The majority of people alive today have infinitely more potential and wealth than any king of old. We are collectively much richer, and live better than 20 years ago. Technology funds this advancement (look at cell phones and computers) and free markets fund and produce the technology. I don't think this system will last 40 more years, but to make it we need freedom not redistribution.

    Reply

  28. @lordblazer The beggar line was purely anecdotal. I don't presume to lecture either, I wasn't even going to comment on this video, I just get shocked sometimes how wrong academics can be and the level of bias on this channel. The entire global system is going to change dramatically in our lifetimes, the time-frame depends on us. I want the sustainability and medical tech ASAP so I will work hard and invest in it. This planet can be paradise for all humans if we make it so.

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  29. @capslockbandit I dont think we are better of than 20 years ago. Born poor stays poor now. A significant part of the population is unemployed..esp young people. My parents could quit scool at 16 and start working, have an apartment, raise a family if they liked. There has been no big gains for a majority of the populations in the "free market" era since Reagan. Wealth is redistributed to a concentraded private power elite. Why is that ok but not redistribute down instead?

    Reply

  30. The vocal audio of your guest could have been a little better in this video. Just a heads up. Otherwise… keep up the good work. Cheers.

    Reply

  31. @daveruda It is okay because most (not all) of the rich that you hate got rich by helping others via their personal greed. Greed was their primary motivation, but this greed made them care about people they never would have before and made them work very hard to raise their standard of living. There was little coercion and force involved just free people contracting for mutual benefit, this is the opposite of the government stealing wealth and redistributing it as bureaucrats see fit.

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  32. @daveruda "I dont think we are better of than 20 years ago" Says the guy through his advanced computing technology that only would have been considered a ridiculous and impossible sci-fi pipe dream just 20 years ago. Billions pulled out of poverty and more every day. I don't even know how you can argue things are not better than 20 years ago when you live and are surrounded by the example.

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  33. Of course China's gonna go the way of Soviet Union, because socialism simply doesn't work.
    But let's not spoil host's dreams and blame capitalism for another communist failure.
    Thank God that Cuba and North Korea were more faithful to Marxist doctrine and are way better off than "heretic" China now!

    Reply

  34. David Harvey is great! His insight is extremely valuable. Although I don't agree with everything Marxists say, they do offer and interesting perspective in their critique of capitalism.

    Reply

  35. @nesNYC Fascist corporatism is the definition of Free market captialism. Free Market is a BS term.

    Reply

  36. @Cookaloka The difference between me and you is you read about communism and think it's cool, I've lived under it and know it's not.
    Maybe communism works in Fairyland, maybe it did miracles for Martians. On planet Earth, it's been tried for a century, with different nations that total one third of world population and half the land and resources. It produced over 100 million deaths. I believe the sample group for the experiment was enough for +medium IQ people to conclude it's a bad idea.

    Reply

  37. @LazarusCato left to itself it will but we can do more. By having only personal actions on the capitalist system, an intermediary of anti-fraud measures and finally a collectivist allocation on top of that, we can defeat the problem. This is the same as how cells can co-operate to make multi-cellular life yet there must be an immune system intermediary to ensure invaders & failures are destroyed. Accumulation is not the problem: fraud is. Accumulation on its own can be safe.

    Reply

  38. @capslockbandit "by pulling another few billion people out of poverty over the past few decades. "
    Fraud.
    Most of those people were not poor before, they were well taken care of in their needs then they were robbed BY capitalists.
    Ethiopia is a good example.

    Reply

  39. @lordblazer the USA does not even come close to feeding half the world if all the food it made was given away. No one ever at any time produces 3 times the world's food – that sham has been exposed 100 times by the UN.

    Reply

  40. @capslockbandit the military funded most of what's in your computing & cell phones, the market (not a free market) was secondary & controlled from day 1.

    Reply

  41. @ytgv3fc7 Yes but the market would have produced the same technology at a fraction of the cost. Just because the govt can commandeer billions and dump it on NASA or the military and then some some small percentage actually produces valuable tech does not mean it is the best choice for our society. Battleships are the perfect example, billions and the resources to construct them, now we have an armada. But this doesn't show anything about what we COULD have had or built instead, in its place.

    Reply

  42. @capslockbandit its not some fantasy world were a new computer equals better quality of life. History shows how some of them got rich by stabbing or scratching the right peoples backs. They used other peoples labour to get rich, they exploited and corrupted governments that install dictatorships and use military force to steal other peoples resocurces. Global poverty have improved mostly as a result of internal policies in China and increased elseware…dont protect someting this rotten!

    Reply

  43. @daveruda In the real world making ourselves collectively smarter with better computers and keeping us alive much longer with new and advancing medical technology and increasing our wealth is very important and has a profound impact on quality of life. Free education for everyone is available on the web. If you think this has no effect on the quality of life of the people of this planet you are very wrong. I own thousands of products in my house, 0 produced by the government.

    Reply

  44. @daveruda I have no delusions that there are corrupt and unethical capitalists but lumping them all together is fallacious and it is disingenuous to advocate the very behavior you are against as the solution, ie exploiting them and stealing by force. I will protect this "rotten" system, much like I do democracy because they are the least flawed systems we've discovered that benefit the greatest number of people.

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  45. @capslockbandit no, the market wouldn't have bothered to build it at any cost – the market was stable without those levels of innovation. The market doesn't seek automatic improvement & in some cases there has not been improvement either. Depends on the situation with computing. The market can easily seek to keep us all at barter-trades with no automation & decide that's stable. You can't decide, at any time, a market would do something better, cheaper or at all.

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  46. I visited the world's largest mall in China last week…the place is a ghost town and part of it is now being demolished. Other parts of the mall have water damage from shoddy construction.

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  47. He is missing the important points of where the banks get their money from to lend to developers and the consumers. In addition, how the banks benefits from creating thirty year mortgages and real estate scams. He mentions making homeownership easier for blacks and immigrants and fails to mention the real purpose for devising the sub prime mortgages. The focus is on the division between the wealthy and the working class consumers.

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  48. @cayetanoluis There are billions of examples of government inefficiency, as they are shielded from market signals (profits, losses). Markets are more efficient than governments because of this. When a gov't directs (ie redistributes) wealth into say military or medical research they may very well produce great advancements, but its value is eroded by taxation and government waste. Check out Moore's law, our technological advancement is not dependent on the govt at all.

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  49. @cayetanoluis Rather than let the government say "battleships or nothing" I would prefer the market choose, and let the best techs surface on merit, sans central planning. If the govt didn't tax us to design massive weapons of war its true the development of such projects would be slowed minus the stimulus of the govt. This is a good thing; you have more money in your pocket to direct more efficiently than bureaucrats to projects more valuable than weapons alone.

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  50. this is bullshit,people move in the range of options that they have,the options are made out of rulles that a gorvements sets(laws,policies)the job of the real estate is not to save the economy,real estate is just like other sectors of the economy,gorvements and banks are using it each for the same purpose cause the most common loan is to buy a house…again its the gorvement and the policies nothing more nothing less,thats the only problem…

    Reply

  51. @tooltalk You are exactly right. In this era of rampant creation of credit – by government – SOME cities, in the USA, Canada, and Germany, have managed to NOT have a house price bubble. This is because there is a "right to develop land" without regulatory obstruction and delays. These bubbles are caused by 2 factors – government expansion of credit combined with official "rationing" of the supply of urban land. David Harvey seems to not understand this.

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  52. @RedGaribaldi Karl Marx was right under conditions of urban land owning oligopolies. "Automobility", roads, and "freedom to build", was what broke this stranglehold and democratised property ownership. It is urban growth constraint – a government policy – that has caused rapid capital gains and wealth transfers and cyclical volatility to return. In China and India it is not "policy" per se, but corrupt officials. David Harvey does not understand this.

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  53. these Marxist breakdowns always float one level of abstraction above actually saying something concrete and interesting. It's like the Austrian lunatics, the conclusion comes first and the real world gets crammed into the theory

    Reply

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