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Comment by hn_user2 | Hacker News Reader

Rising rents and harder to get home loans do sound like the primary cause.

That being said, I also believe there is not quite the same urgency to leave home for current young adults. Just from personal observation they don't necessarily see increasing their expenses just to be more independent as worthwhile. Same goes with getting a driver license and a car.

I don't think it's necessarily being lazy, I think they might rightly see that building up all these expenses just to be independent is a bit overkill.

Mix this with people in general getting married later and I find it quite natural that more people are living at home.

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I sort of agree with you, but I don't think you completely understand the problem. Yes, it doesn't really "matter" if people are living with their parents or on their own. The problem is what this shift signals.

People are not much different than they were 50 years ago. If it took just as much resources to live on your own 50 years ago as today, there would "not be the same urgency to leave home." Of course no one wants to leave home if it's going to cost them 40% of their take home pay, but if it only costs them 10-20% of their pay, I really doubt you will see a ton of millenials that don't care about living at home.

This shift in housing signals a dearth of resources available to the current generation. Do we think that's a good thing? A bad thing? Or is it completely neutral? Does it have implications elsewhere for our economy? These are the things that are actually important.

Or is this a signal that the broad and rapid American growth in the middle of the 20th century was anomalous, not a baseline?

It might not be a "dearth of resources" but a return to the true long-term norm.

It wasnt anomalous, we were pretty much the only country not bombed to pieces and had an infrastructure to build upon while most countries were simply rebuilding.

Given a large enough time horizon, the only "baseline" lifestyle is subsistence agriculture.

I think it's probably sensible to start after the industrial revolution.

The broad, rapid American growth has a lot to do with the fact that Europe and the Far East was in complete ruins after WWII and the US was in the immediate position to rebuild Europe.

Remember, right before the mid century prosperity, we were in a massive depression caused by the "Roaring 20s" which was fueled by another smoldering Europe.

The time period before WWI; the late 1800s and early 1900s were pretty bleak. Before that, the North was fairly prosperous but the South was under reconstruction, so that region was pretty bleak as well.

Of course, there is plenty of wealth to go around today, it's just concentrated due to a war on the middle class by industry, aided by goverment, dating back to at least Reagan.

The time period from 1890 to 1929 experienced steady growth in the U.S. [1]

The Roaring 20s was not the cause of the Great Depression. The Great Depression was caused by a variety of factors, primarily unsustainable debt issuance and overproduction in the agricultural sector. Other important factors include crushing wartime debts owed by European nations to American creditors (vastly harming exports), a liquidity crunch and massive deflation due to adherence to the gold standard, and uncertainty by Capital resulting in a lack of expansion.[2]

1. https://en.wikipedia.org/wiki/Economic_history_of_the_United...

2. https://en.wikipedia.org/wiki/Causes_of_the_Great_Depression

I always thought that the 'Roaring 20s' were caused by 'unsustainable debt issuance'. You seem to not connect the two... can you elaborate?

It's a common misconception that the stock speculation bought on leverage was the cause of the depression. Indeed, margin calls caused automatic stock sales to cover the leverage, forcing stock prices down.

However, the cascade of bank failures occurred due to due to defaulting agricultural loans. The loans' refinancing requests were suddenly refused when European powers pulled currency out of U.S. banks in order to pay their war debts and reparations.

The stock market crash was not the cause of the depression; just one of many larger factors that precipitated it.

I didn't distinguish between borrowing for stocks and borrowing for agriculture. I see both as elements of the unsustainable debt buildup. I view the stock market crash as a symptom of the unsustainable debt, not as a cause.

Let me clarify. The primary debt issuance was debt taken by people doing stock market speculation. The joke at the time was that if your shoe shine boy was asking you about stocks, something weird is about to happen.

The agriultural overproduction was a result of the drop in market prices for goods, so the farmers ramped up production to make up for it, ignoring good farming practices, notably proper tilling and crop / land rotation which resulted in the deterioration of the top soil (dust bowl).

All of this happened in the Roaring 20s.

As far as before the 20s, you had WWI and the industry kings manipulating the markets. They were doing fine, but the people working under them weren't. This was the era of industrialization, child labor and The Jungle. It was wonderful if you were an industry titan, but bleak for most everyone else.

Anyway, my point being, the great prosperity we experienced after WWII was more of an anomaly that anything else. I believe it was sustainable through smart regulation and government investment among other things, but interests have been working hard to bring us back to where we were before.

The stock market in the 1920s held far less importance then than it does today. At that time, very few people had access to the stock market. The shoe shine boy anecdote is mythology.

It is true that margin calls cascaded to obliterate billions of dollars of value, but the investors impacted were mostly trading firms, banks, and capitalists. Joe sixpack had no exposure to it since there was no such thing as a market-backed pension fund (who even had pensions back then?) and 401(k).

Corporate earnings did not drop significantly during and months after the crash. Production and consumption were not affected.

The primary reason for bank failures in the following year were from agricultural defaults. The small, regional banks were the first to fall, not the big city banks.

I don't contest any of your points except "The roaring 20s caused the Great Depression." The economic growth in the 1920s was steady and mostly not speculative. The stock market was speculative but Finance was a much smaller part of the economy at that time. An avalanche of other factors were the causes.

I have no firm opinion regarding post-WW2 growth as anomalous. I think that the idea has merit. The scope of my argument is limited to 1890-1933.

And the cause of rising rents and harder to get loans is a rise in home prices. Yet when we hear news reports about rising housing costs, we say that the housing market is "recovering" as though it's somehow a good thing.

Perhaps we should rethink our nationwide policies of raising housing costs.

We have policies that favor home owners because, 1) older people are more likely to own homes and they vote at higher rates, and 2) politicians love property tax revenue. If you don't vote and you don't fill their coffers, you're invisible to politicians.

And there is a generation of people ready with hammers to knock down that wall of equity so they can afford to live. Right now we're in the negotiating phase. Wait for the right politician.

The occupy movement should have occupied all vacant buildings, a lot of which were effectively owned by banks, and demanded the return of squatters rights.

Next time, get it right

In the video, they mention that the job growth isn't evenly distributed; it's really only happening on the coastal business hot spots, where real estate was already insane, so that portion of the recovery doesn't help at all with housing.

Consequently, is the implication that the rest of the country isn't recovering nearly as well as the average is reporting? Housing might not be shooting up in the rest of the country, but wages and job opportunities are not great, either.

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