Something strange happens when people get wealthy and advanced enough. Cost of living rises, workload increases, it becomes unaffordable to have kids. 30 years later, everything is empty.

Places like Australia have plenty of land but, nah, everyone wants to live urban where housing prices are insane or inherited.

Food costs often go down in developed countries, cheaper than developing ones. Maybe they're so low that they can't afford to become farmers anymore? Not enough people buy corn and corn price is so cheap that it gets made into HFCS. But if you can't mass produce cheap corn, you're screwed and get a desk job.

So we have the service economy. Everyone sells services to one another, works from home, makes tons of money. Madrid has top-tier designers, chefs, doctors, moneylenders, nearly every kind of service. All the piles of money in a concentrated place like Madrid makes the whole place overpriced. If you happen to be the best tuna butcher in Western Europe, there's a limited number of places you can work, but many of these specialist jobs are also wfh.

Is there a hack to this though? Can our top tier Spanish pixel artist sell her services to someone in suburban Canada?

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squishington 4 hours ago | parent [-]

I grew up in regional Australia. All of my friends from there moved to the city because they wanted careers. Myself included. My friend who stayed there still works in farming and lives just above the poverty line, and can't compete for a rental so he lives in a shack in a paddock. House prices there also became ridiculous after the pandemic.

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spwa4 2 hours ago | parent [-]

Indeed. This is policy. House prices rising generates a lot of money for the government for a lot of reasons so they try to stimulate it, so they can spend more "with less taxing". The biggest factor here is the central bank lending to banks lending you mortgages (so the high house prices effectively become a tax. You will pay either through loan repayment or rental), the second factor is "seignorage" on the total value the central bank loans out (the government can spend effectively 4% of total money lent out loan for free, more if they also cause inflation)

Governments do this in all sorts of ways, including the big one: making this the only real risk-free but effective way to save up and have a bigger pension at retirement (so any change to this system will take a LOT of money out of the pockets of old people, who often can't replace it anymore)

But if you made mortgages either have real risk for banks or stopped funding them through central bank loans ... house prices will crash down. And having inflation is simply a choice. We could choose otherwise.

The problem with changing this is that it will require a permanent reduction in government spending or a permanent (big) raise in tax. Both are non-starters.

What this does over time is it makes labor that has low productivity, such as farming, less and less realistic if you want a decent life. It is a ratchet that forces the population to make more and more money over time ... or face destitution. It's been an extremely powerful way for countries to get rich.

	▲	squishington 2 hours ago \| parent [-]
		I think the benefits will be short lived. The long term outcome is a new class division (asset inheritors versus pure wage earners with no inheritance). This is a terrible outcome for society. I'm not convinced high house prices generated a lot of wealth for governments. Government debt is higher than previous decades, and government asset ownership is lower. I think this has been a bad strategy.