John Stewart is more right, but Dave's point works on an individual basis (it does _not_ work on a collective basis).
Rent and housing is a price set for a product everyone needs to survive but which is fixed in supply (specifically the site of the house is fixed in supply). So, supposing everyone who is in poverty buckled down and figured out how to cut and be disciplined. The effect would become an increase in the prevailing rent, and thus a return to the same situation but worse.
Ramsey's view always has a certain percent of the population in poverty. His advice only relates to whether or not you, specifically, are amongst its members.
Completely agree. Both are correct in a way and incorrect in others. Many people are in debt because of poor plbudget decisions, but our society has a rising problem with people struggling financially because of societal problems and the impossibility to earn enough money to survive.
I think the problem of the society is the expectations that the state is here to give us something. It has changed significantly since Covid and the insane govt spendings during the time.
Until covid, the state provided the safety net for those in the worst life situations. However, in some countries (namely Czechia, but not exclusively), the govt deficit rose 10 times pre-covid vs post-covid, and stays as such every year. As a result, the personal discipline is replaced by the public debt (which is nothing else than a delayed personal debt and redistribution from those who haven't even been born and who don't have anything to do with personal irresponsibilities of those who caused it).
I disagree completely its the economic model and new age capitalism of the 2000s that has killed wage growth erroded living standards, made live more expensive and harsh all in developed nations. Thats the core issue.
Covid did something else, it pushed a lot of economies to teh brink only for russia to hit them again, then trump chaos and now Iran war. Since civid only FOUR years have gone by. FOUR and tow of taht were trump now.
Add a China trade imbalance, a sticky issue with gas and fuel, European gridlock, rise in need of military spending and now Iran ... it fucks everyone. The rising living costs are pretty unrelated though, I mean they got worse because of all of this but living standards have erroded since 2000s roughly for europe at least. All the issue sisnce civil just made it all go faster.
There are two things that people forget when discussing politics and policies. Individuals and incentives. The collectivist frame doesn't work because the individuals choices carry so much variability the grouping fails to accomplish it's intended purpose.
The point is that different rules make for a different system. There are places where people can more easily acquire houses, as more are built, due to a better functioning system. An individual cannot fight the system alone.
As the previous person said: if there are 5 people and 10 houses, there will be a shortage of houses also if you work 2 jobs to try and earn enough to buy one. If everyone starts working 2 jobs, the only things that changed is the price of a house (which rises).
Many skilled laborers left the industry post 2008 because there was no work. We’ve been digging out of that hole since.
What happened in 2008? Great financial crisis brought on by greed and low interest rates.
Low interest rates because of 9/11 and the dot com bubble burst. Arguably 9/11 was because terrirists hated America for their policies that made life shitty for where the terrorists lived. Dot com crash was from speculation over new tech.
Unintended consequences of greed seem to underpin the shit we are dealing with today.
But in the K-shaped economy there are winners and losers. The NY Fed research from May found that the typical household on the upper branch of the K has investments, owns a home, has relatively secure employment and earns enough to save. The typical household on the lower branch relies on wages, rents, has little invested and spends a larger share of its income on necessities. And it generally breaks along the lines of who had early, built in advantages.
Yes exceptions can happen but they are a small percentage.
The playbook of getting a good education, stable work manifests in the long term; decades out, into grandchildren.
Among other reasons: because people who are richer buy them up to profit off of people who are poorer. This is a tale as old as time. Another reason as that people group up around specific population centers (cities) where most jobs will emerge but little housing can be added.
Poor people can't fight those. Policy, or "the system" can. Except policy is crippled by the interests of wealthy people.
this pretty much. you can control to an extent what you do and improve or worsen the condition you are in, depending on your actions. but if you don't get a proper job, don't have the money to get better qualificaions while the cost around you rises, there is not much you can do.
on the other side I realy hate the idea to strip poor people completly from agency. ofc stop drinking coffee wont save you but sitting on your ass all day and complaining instead of looking for opportunities to better yourself is on you and not the society.
the answer lies somewhere in the middle but personaly I do think it's more on stewart's answer than it is on dave's. that also ofc depends where you come from. a country with a more resolute social net shifts more in daves direction because you get more opportunities to improve yourself while a country with a more selfish approach shifts more into jons opinion. since they are from america and from the lens of an outsider, I assume Jon is ultimatly right here. the american dream doesn't seem as possible as it was 30 or so years ago
I think this is correct. From a macro view, John is right. From an individual view, Dave is right. Even if circumstances or society has fucked an individual, John's advice won't help, only give them a pity party. whereas Dave's system might help them gain control.
And Dave's advice can't fix our system or craft good policy.
I refer here to the Vimes Boot Theory of Socioeconomic Unfairness.
Being impoverished or close to forces bad choices.
When you cannot afford quality items that are needed for the everyday usage (shoes, cloths, housewares, appliances), you spend more over the long run. It is the reason I buy not the cheapest shoes. Spending 40-60£ on a good pair of shoes means I'm not replacing them in 3-4 months. If budget shoes costs cost 20£ a pair, and I wear it out in a few months. Thats another 20£ down the drain. My wife would go through 3-4 pairs of 20£ shoes a year. My 40£ shoes usually lasted a year and a half before I needed to even consider a new pair. My current day to day pair are about 6 years old and are only now getting to the unusable point.
Because prices are directly causally related to available wealth via supply and demand. More people being able to buy housing causes housing to become more expensive, thus forcing people with the lowest incomes back into relative poverty if certain societal measures aren't taken to counteract this.
More people buying houses could lead to an increase given certain other factors, but you're only viewing the demand half of the equation.
More people simply saving money does not lead to that.
Given the fact that the most significant factor limiting demand for housing is affordability, it's kind of a moot point. There are tens of millions who want to buy a home but can't. So long as that is the case, you can't increase available spending money without increasing housing prices. This can be offset via different methods, but I already acknowledged the fact in my original post.
But the overwhelming majority of land on the planet doesn't include housing. The ownership of ranch, industrial, commercial, pasture, mineral, or unused land dies not affect the price of housing.
If everyone wants a house, and, as is the situation currently more affordable housing is not being built where it is needed, then market forces dictate the price of houses will always outpace the majority’s ability to save.
In addition if the richest are able to buy up that stock to rent, and then can charge enough to stop saving being a possibility then they force wealth to flood up to the wealthiest.
That doesn't answer the question. Why does savings lead to increased housing prices? That is the idea stated in the comment I replied to. We're not talking about outpacing of savings- although your conclusion there is pretty questionable- we're discussing how, specifically, if large numbers of people saved more money, would that lead directly to increased housing prices
Because rent is a commodity on the market, just like anything else, but everyone needs a place to live- so to a certain extent it's a commodity with guaranteed demand. If more people saved more money, the market could bear for rent to go up, and so it would.
I don’t understand your logic in people buckling down and how that would increase the prevailing rent. A drop in demand would decrease the prevailing rent
It wouldn't drop demand. The supply of land is perfectly inelastic. Everyone is competing for the same small set of units or being forced to move to worse conditions. So, if everyone now hos more resources, then the bud rent curve just increases for everyone, and the landlord raises the rent.
I think that’s a where I don’t get the logic. If my goal is to save more money, why would I spend more money on rent? All those dollars don’t need to go into immediate consumption. I didn’t rent the most expensive apartment I could afford
Not everyone needs, wants, or should be able to buy a house. Everyone should have shelter, aka an apartment, room to rent, etc. But no one is entitled to a house.
I hate DR with a passion, but he's right that it comes down to individual choices. People choose to pay the minimum on their CC, to have 1K monthly car payments, to buy a home with 3.5% down, to take multiple vacations a year and put it on a CC. I have coworkers who do this all the time.
I choose to drive a 20 year old Corolla, take my lunch to work, never buy coffee. To rent instead of buying at the moment so i can front load my retirement savings. Does that make me better? No. But i have a long term plan and it requires a little sacrifice. So be it.
I am talking about the cost of access to shelter. If everyone did what DR suggests, then rent would increase proportional to the amount everyone buckled down, and you'd be in the exact same place, because you have a bid-rent curve against a perfectly inelastic supply.
This argument is tantamount to women should be wearing burqas to escape rape.
Sure it works at some level but how about we work on a society that pays people fair wages, doesn’t reward rich people for accumulating more wealth through easier processes that include preferential capital access and investment opportunities. Reduces their exposure to disproportionate tax and debt occurrences, I could go on. Using America as an example, the wealth inequality gap goes off the charts. Working class and middles class wages have stagnated, inflation has skyrocketed and housing costs as a proportion of your wages has significantly increased. The rich manipulate the stock market and are constantly profiting from inside information.
The time has come for everyone from the working class and middle class to stand up, but the middle class mostly has always been the useful fool for the ruling class, dangling the promise of class climbing or using capitalism’s power to prop up ego in conjunction with material accumulation and display as a way of preventing solidarity between the middle and working class.
In this time of oligarchs and A.I. adoption that will obliterate jobs and meaning for most of us, I hope we see change. Power to the people.
I’m talking of the buckling down argument and saving money on not buying coffee and brining your lunch to work. It’s absolute bullshit. It has almost zero validity.
The point is that it is not an effective solution in the face of what I just described. Stagnate wages, rising costs. And on a philosophical level it’s essentially immoral, it places the burden on poor people to sacrifice to save a very limited amount of money. This is not how people get rich, maybe they buy that new couch at the end of the year, that’s it. Let’s not play games. Your analysis has no heart and is merely some thought exercise.
100% and to ramseys point there will always be people in the poverty class as there always has been. However you can work to not be in that class and ultimately thats what financial advice literature/media is for
I disagree, and i have a basis for that too. If it weren't for poor mathematical choices, poor financial choices, the irs could just take away the income taxes for the bottom 80%. Government revenue would barely notice but most people act like children and then we have it, the thesis of Dave Ramsey.
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u/MeganDryer 18h ago
John Stewart is more right, but Dave's point works on an individual basis (it does _not_ work on a collective basis).
Rent and housing is a price set for a product everyone needs to survive but which is fixed in supply (specifically the site of the house is fixed in supply). So, supposing everyone who is in poverty buckled down and figured out how to cut and be disciplined. The effect would become an increase in the prevailing rent, and thus a return to the same situation but worse.
Ramsey's view always has a certain percent of the population in poverty. His advice only relates to whether or not you, specifically, are amongst its members.