tag:blogger.com,1999:blog-1141932539860553199.post8421703683970173327..comments2024-03-05T10:52:24.691+00:00Comments on Mark Wadsworth: Economic Myths: Interest rates and asset pricesMark Wadsworthhttp://www.blogger.com/profile/07733511175178098449noreply@blogger.comBlogger18125tag:blogger.com,1999:blog-1141932539860553199.post-57399835085319239522013-09-02T22:24:32.691+01:002013-09-02T22:24:32.691+01:00So the great advantage of the private sector is th...So the great advantage of the private sector is that it generates price signals and then you can stage massive State interventions when the private sector deliberately ignores them and screws up the economy.<br />BTW LVT is a type of nationalisation: nationalising the land rent rather than the land.Its supposed to be easier with none of that administrative hard work of actually owning it and assigning it.Of course there is the corker problem of why anybody would want to continue to own land with all the rent gone.Perhaps as Gesell said they'd want to dump it into nationalisers hands?But that option's off.Hey ho!DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-81573363769063634802013-09-02T16:16:48.733+01:002013-09-02T16:16:48.733+01:00Ooh, "austrians". Powerful stuff DBC. Yo...Ooh, "austrians". Powerful stuff DBC. You fix housing with LVT, which is a price-signal measure. And what that has to do with nationalising industries I have no idea, but whatever.Kjhttps://www.blogger.com/profile/13530243002915410700noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-34108454043266347642013-09-02T16:00:55.714+01:002013-09-02T16:00:55.714+01:00DBC, firstly that's being a bit rude to Kj, wh...DBC, firstly that's being a bit rude to Kj, who said no such thing, and secondly of course "price signals" are important.<br /><br />How do we know that large landowners and landlords are taking the piss? Because of the outrageous prices they charge. Those are our signals.<br /><br />The fact that supply or houses does not respond to demand (i.e. high prices) is down to the actions of the government (i.e. because it is too scared to implement LVT or at least build loads of social housing).<br /><br />As long as supply responds to demand, then prices stay the same but supply increases. As long as that happens, I see little need for state intervention.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-49428346310853590212013-09-02T15:01:21.256+01:002013-09-02T15:01:21.256+01:00@KJ
Price signals are useless, absent stringent i...@KJ <br />Price signals are useless, absent stringent intervention on rent seeking. All that is happening now in the UK ,is that developers and investors work out what price can be extorted for housing ,then control the build rate so the average price never drops.As so much of people's budgets and bank lending is committed to an inflated housing market ,we are well and truly screwed. Still its nice for the Austrian-minded that the price signal system is working perfectly.DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-27680916517010055652013-09-02T10:54:16.969+01:002013-09-02T10:54:16.969+01:00DBC: you could(and you have), say that about any b...DBC: you could(and you have), say that about any business at all, retailing, airlines, electricity, steel manufacturing, pubs, coal mining, am I forgetting something? That they should be subsidised if they are "important" and ownership concentration makes it look like it could become a monopoly. But the thing is we have very little knowledge about what we truly need and want, except price signals. And we need private ownership and markets to respond to those price-signals. And if you think that market-signals might as well work without private ownership, I´d go back to Bayard´s point, that it simply doesn´t happen that a public company adapts to price signals the way companies that can go bankrupt do.<br />And there is also something called rationing scarce resources. When we subsidise the use of scarce resources, we don´t conserve them. So we are in big trouble at a point in the future if we start to subsidise everything to increase wealth.Kjhttps://www.blogger.com/profile/13530243002915410700noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-25414778100504150772013-09-02T10:14:09.374+01:002013-09-02T10:14:09.374+01:00DBC: "Do you expect the courts, the fire brig...DBC: <i>"Do you expect the courts, the fire brigade,and the army to show a trading surplus every year?"</i><br /><br />No of course not and I have written many a post trying to point this out.<br /><br />I refer you to Bayard's reply re "public goods". You can't generalise about these things, some things are truly "public goods" like courts, fire brigade, army.<br /><br />Other stuff is "of general benefit to the public" like transport, electricity, but where do you draw the line between "public goods" and "subsidised industry"? <br /><br />I personally count public transport (and roads generally) as public goods and worthy of state subsidy, but not electricity.<br /><br />All "the state" had to do was set up the National Grid* and decide on a standard voltage and frequency, the rest sorted itself out.<br /><br />* Without compulsory purchase orders, the grid would never have happened.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-71654911952750112242013-09-02T09:46:58.407+01:002013-09-02T09:46:58.407+01:00DBCR, thanks, so it was land after all.DBCR, thanks, so it was land after all.Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-62064283104042678742013-09-02T09:45:17.737+01:002013-09-02T09:45:17.737+01:00"Do you expect the courts, the fire brigade,a..."Do you expect the courts, the fire brigade,and the army to show a trading surplus every year?"<br /><br />Well, no, but they are not nationalised industries. They never were private companies (apart from, possibly , the fire brigades) and always were amongst a list of things that the state does better than private enterprise. This is not true of most nationalised industries (e.g. BA, British Steel, the docks). Having worked in a business (not a nationalised industry) where it was known that there was always going to be someone to pick up the tab at the end of the day, I am convinced that it is a surefire recipe for unprofitability.Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-80047991004745457752013-09-02T08:48:05.101+01:002013-09-02T08:48:05.101+01:00My apologies.My comment above should have appeared...My apologies.My comment above should have appeared under "Monopolies, rents ,taxes"DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-55929593296590967042013-09-02T08:44:23.785+01:002013-09-02T08:44:23.785+01:00@MW Your comments on "Nationalisation and &qu...@MW Your comments on "Nationalisation and "subsidies for unviable industries" surely fall foul of the Thatcherite fallacy that every industry must balance its books or show a profit. She, in her mad way, banged on about the national economy being like the household accounts (which she, as a woman, was uniquely qualified to appreciate).In a large firm some departments are being subsidised by the people who provide the service or make the stuff.In a national economy subsidised energy and transport would serve the same function of increasing overall wealth.The national economy is an elaborate system of cross subsidies.Do you expect the courts, the fire brigade,and the army to show a trading surplus every year?DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-86092751059864051292013-09-02T08:27:16.989+01:002013-09-02T08:27:16.989+01:00@B The situation did n't arise when firms went...@B The situation did n't arise when firms went bankrupt but when they were ticking over, e.g Sears/True-form in 1953 "Sears operated the country's largest chain of footwearshops and Clore had spotted that these properties were not reflected in the share price" Geoffrey Owen, Corporate Governance in Britain: is incremental reform enough" on Net. Owen suggests that "Another stimulus to take-over activity was the 1948 Companies Act which obliged companies to make a fuller disclosure of their assets and properties." So Clore, who was not an asset stripper in the mould of the later Slater/ Walker (Walker became a Tory cabinet Minister!),was probably enabled by the Companies Act to work out where property values were not reflected in the share price.<br />Sears plc on Answers com is more punchy "The reason Clore wanted Sears had more to do with shops than shoes" .."From his property dealing experience ,he could see that the company shop sites were worth more than its directors realised."<br />The economic and social history of the UK over the last 60 years has been shaped by the lure for investment of landed property over the production of goods and services.The Conservative Party has been the real enemy of productive enterprise: it has never relinquished its identification with the landed interest.DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-1540792423892450612013-09-01T12:44:15.159+01:002013-09-01T12:44:15.159+01:00DBCR I was aware of asset stripping, but couldn...DBCR I was aware of asset stripping, but couldn't see how, if the minimum of the total share price was the worth, of the "underlying assets", the situation could arise where such a thing would be profitable. Or is it the site value that makes the difference?Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-21299662002614496502013-09-01T09:34:03.095+01:002013-09-01T09:34:03.095+01:00@B
Shares have ended up being worth less than the...@B <br />Shares have ended up being worth less than the underlying assets throughout the post war era: it was (is) the basis of asset stripping.Firm was n't making much employing people to make things = low share price.Shareholders get attractive offer (financed with debt),the workers get the sack and the "assets are realised"i.e. all the land and property is sold for residential or the factory gets converted into flats.That's the way the money goes ,pop goes the weasel.<br />One argument for LVT is that it stops landed assets inflating out of phase with productive assets so cuts asset stripping and keeps peo-ple in work.DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-14723223640159986632013-08-31T22:27:43.336+01:002013-08-31T22:27:43.336+01:00B: "How do shares in a company end up being w...B: <i>"How do shares in a company end up being worth less than the underlying assets, then?"</i><br /><br />Good answer by Kj.<br /><br />Private ownership of businesses = a good thing.<br /><br />But "shares" and "speculating in shares" (i.e. making bets about future interest rates and profits) = Bad Thing.<br /><br />But there is no need for private businesses to be divided into "shares" owned by "shareholders", there are lots of other forms of ownership (partnerships, building societies) which are privately owned without there being any shares.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-46990222464183148752013-08-31T21:32:26.552+01:002013-08-31T21:32:26.552+01:00B: debt, plus the stock market as it works don'...B: debt, plus the stock market as it works don't really put that much "stock" in the salvage value of assets, unless they are of a monopoly nature.Kjhttps://www.blogger.com/profile/13530243002915410700noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-76819111799579784632013-08-31T20:58:35.348+01:002013-08-31T20:58:35.348+01:00The financial industry has its own meaning for wor...The financial industry has its own meaning for words, so, for them "assets" also means stocks and land, just as "investor" also means gambler on "assets". So it's an obfuscation.<br /><br />"If there were no barriers to entry in any industry, then shares in companies would only be worth what the underlying "real assets" are worth"<br /><br />How do shares in a company end up being worth less than the underlying assets, then?Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-26682372663975719632013-08-31T20:15:36.008+01:002013-08-31T20:15:36.008+01:00Kj: "It's perfectly just and socially eff...Kj: <i>"It's perfectly just and socially efficient, to gain higher profits from first-mover advantages, trademarks/brands, efficiently organised labour etc."</i><br /><br />Agreed. <br /><br />But I was trying to keep the post simple.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-38272551116309990712013-08-31T19:23:30.116+01:002013-08-31T19:23:30.116+01:00I think there's still a need to differentiate ...I think there's still a need to differentiate the case the ownership of "real assets", the businesses that organise them, and land.<br />I still believe that there is such a thing as "monopoly"-income over above the return on tangible asset, that are not caused by some monopoly that is either static in supply (land), or state-enforced* (patents, copyrights). It's perfectly just and socially efficient, to gain higher profits from first-mover advantages, trademarks/brands, efficiently organised labour etc.. Even relatively low barriers of entry allows this from time to time, and so it should. Yes, the classic monopoly types incomes are ofcourse much larger in quantity, but the "good" forms of monopoly income is kind of what drives innovation, higher living standards and all that.<br /><br />And whatever you think about shares, if someone wants to offload this vain promise of future yield, and someone wants to buy it, that's sort of a issue of freedom.<br /><br />*yes I know trademark is state-enforced, but it's an anti-fraud measure, and unless given willy-nilly, perfectly just IMO.Kjhttps://www.blogger.com/profile/13530243002915410700noreply@blogger.com