McGraw-Hill Construction economist Cliff Brewis says, “It is difficult to foresee a long-term recovery (of the economy) without single-family (homes) doing very well. It is a bellwether of how the marketplace will do because if you are building homes, you are going to build schools; if you are building homes, you are going to build retail; and if you are building homes, you will build roads. It is an extremely important player in terms of overall economic performance for construction activity.”
So in the view of Mr. Brewis the entire U.S. economy depends upon more real estate being developed. Forget that the Fed’s low interest rate policy especially after 9/11 led to millions of redundant homes, shopping centers, office buildings, warehouse projects, schools and other government facilities being built. Not to mention local and state government budgets that expanded to spend the gusher of taxes and fees generated by real estate activity. For instance, a shocking number of building inspectors are still on the government payroll of at least one municipality I know of despite very few building permits being pulled and projects started. As Austrian Business Cycle Theory would dictate, a clearing of the malinvestments in higher order goods like real estate development is required to reallocate previously misdirected resources. That process has much further to go.
On the other hand, sellers of consumer goods are adjusting their business plans (putting more pressure on real estate development). Gap Inc and AnnTaylor Stores are shrinking their store footprints.
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Police should go around torching houses at random (tossing bricks through windows, if you will) so that prosperity will flow!
Ha!
Aren’t they thinking about doing something like this in places like Detroit (which should be razed, but not for reasons of facilitating economic activity)?
We can look at China where they built a ghost town for 100,000 people.Under the Keynesian model, this is economic growth. Common sense would indicate that this is just a glorified version of the Keynesian “hole in the ground”.
The economy depends upon building SOMETHING, not necessarily buildings. “Building” includes growing, catching, and digging. What is the alternative? An economy based upon repairing and serving?
If repairing and serving is all that is desired by consumers, then an economy based on it seems completely logical to me.
“What is the alternative?”
How about an economy based on real savings and investment? If that goes into “building,” however it may be defined; fine.
Take a cursory glance at your context clues, Billwald, and you’ll see what “building” is meant as here.
What utter nonsense–the idea that the economy is completely driven by a need for one particular thing to be built in higher quantities. It’s a pity that such thinking isn’t simply laughed out of existence.
maybe someone smarter than me can tell me why everything mainstream economists point to is to increase GDP? sure their is a coorelation between real growth and employment, but even putting my concerns about how the government measures indicators like GDP and employmnet, is GDP the end all to determine if we are improving our collective quality of living?
In a word: No. The Soviet Union consistently had high GDP numbers; enough for “mainstream” economist Paul Samuelson to praise their “economic development”.
GDP is a meaningless statistic: http://irishliberty.wordpress.com/2008/11/09/gdp-a-meaningless-statistic/
nice summary of gdp, h.r. – except that i think you’re too kind calling it meaningless; to the extent that its corroborates the governments policies, it’s actively destructive. so i think there is indeed a meaning, but the completely wrong one.
While GDP is often misused as a measure of wealth, it is in fact more a measure of economic activity. However not all economic activity is productive. It is well known that throwing a rock through your neighbors window will create economic activity, it does not produce productive activity
Governments like GDP because they tax economic activity and so the more activity, the more they can tax
reisman explodes the gdp cult
http://mises.org/daily/2878
matt,
sean corrigan also takes an axe to gdp
http://mises.org/daily/1042
The only footprint that isn’t shrinking right now is the bootprint of the government planted on the ppl’s @sses.
Wait ’til all these new payroll taxes, surtaxes, fair taxes and harmonized taxes get implemented in a last ditch attempt to save pension plans, medicare and bond ratings … and then count the number of newly constructed, single-family dwellings that are not made out of cardboard.
The entire economy depend in great part on the question of money.
Sure, that’s why socialists are building so much money. Guaranteed to lead everyone down the GDP road to prosperity (*cough*).
Now that I think of it, that might be French’s whole point: what people like that Brewis clown appear to want most is an increase in the construction of FRNs that will then act as incentives for all kinds of other “beneficial” construction.
If the healthcare “reform” passes, one thing we will need is more docs – and you can be sure the bill ensures that will never happen. Gee, let’s conduct a thought experiment whereby large numbers of new consumers are handed “tickets” that give them equal access to a given good but the supply of this good is held constant….hmmmm.
Physically building something? Sometimes.
Building character such as trustworthiness and an entrepreneurial spirit – always!
“A bellwether of how the marketplace will do.” In this case the ignorant use of the term bellwether may be apropos. A bellwether is a castrated male goat used to lead sheep to the slaughter.
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