Big Companies Like Fascism

Fascism is a political and economic system where big government and big business are intertwined, supporting each other to the detriment of the rest of society. Historically fascism has featured charismatic leaders, nationalism, and (to put it mildly) intolerance, as well as extremely effective government propaganda (for example Mussolini didn't actually make the trains run on time). The political aspects of fascism are well known; less well known are the business aspects.

Large corporations like fascism because government rules and regulations can be used to increase their economic dominance. Sometimes it's explicit, in the case of cable television monopolies, and sometimes it's implicit, in the case of licensing requirements that make it more expensive for new competitors to form. Sometimes it's both, in the case of factory regulations that contain grandfather clauses exempting existing facilities.

Nationalism in the general population appeals to businesses because it can be used to promote import tariffs and subsidies of local businesses.

Intolerance in the general population appeals to businesses because it distracts. If Joe Average blames a specific person or group for the current economic slump he's not paying attention.

Whenever you see a big company lobbying for increased regulation, realize that it's not out of any sense of goodness or moral duty. Companies lobby for regulations because they think they will profit. It's not bad for companies to seek profit (profit is why they exist), but their focus on profit gives them tunnel vision. They don't see (and when they do, they don't care about) the negative effects on society of tilting a level playing field in their favor.

Houses Should Depreciate

Conventional wisdom says that houses increase in value over time, but this is an oversimplification. Houses last for a long time, but at best they should hold their value. New technologies are periodically invented that become standard on new houses but are difficult to retrofit into old houses. Over long periods of time, even solidly built houses wear out.

Land increases and decreases in value according to supply, demand and external factors. Someone builds a park nearby, it goes up. Someone builds a pig farm nearby, it goes down. Jobs are created nearby, it goes up. Jobs leave, it goes down.

Inflation increases the apparent value of houses, but not enough to explain what we observe, unless official inflation rates are understated (not an implausible assertion).

A housing bubble (like the recent one) can be considered a kind of inflation. Low interest rates and increased mortgage availability allowed people to afford to spend more on houses, and they competed with each other, driving prices up. Now that we have too many houses, lots of foreclosures and a recession (which occurred in that order) prices are dropping.

Manufactured housing depreciates. It is often cheaper and less sturdy, but it doesn't have to be. A "Katrina House" can be just as strong as a conventional house. What's the difference?

These explanations are unsatisfying. Something's missing. Is it psychology--we think housing appreciates, so our expectation creates the reality? Are people richer than they were 30 years ago?