The Real Estate Ecocycle
our children cannot live anywhere / why? / because they can't afford to pay the rent
April Fools! Chris Rufo is not running for president. But please subscribe. You don’t need a paid subscription to get started, just click the button.
We lead with a Tweet:
The financial motivation for that company is tax evasion. There is a lot of profit to be made these days in cheating on your taxes.
However, the broader question of home ownership: how should it work? is an interesting one. the Newslettr doesn’t have all the answers. We don’t even have all the questions. We do have enough questions to fill out a column this week. This week, we will be discussing some of those questions.
but first, the week’s news.
Go forth and prosper: A research paper from July 2021 on improvements on human performance in the game of Go1 after the development of AlphaGo. The paper is fine, but you can get everything you need from the charts and graphs.
Test for Success: On Monday, the Massachvsetts2 Institvte of Technology announced that it would re-instate its SAT/ACT admissions requirement that was suspended due to COVID. The arguments against a standardized test requirement are so thoroughly beaten into the ground that we doubt anyone will seriously object.
The Fading Empire: After HRH Prince William and Princess Catherine did a tour of Central America and the Caribbean, both Jamaica and Belize announced they were likely becoming republics. The gossip press has the spin that will&kate were so unpopular in their “slavery apology tour” that the countries suddenly decided to get rid of the monarchy. At least it wasn’t Prince Harry …
The Azores: news from Portugal, as a large seismic event appears possible in the Azores. Sky News has more:
A Portuguese volcanic island shaken by thousands of small earthquakes could witness an eruption like that of Spain's La Palma, which destroyed thousands of properties over 85 days, experts have warned.
The island of Sao Jorge, in the Azores in the mid-Atlantic, has been hit by more than 20,000 small earthquakes, which reached a magnitude of up to 3.3, in the past 11 days.
A Shameful War: the Newslettr continues to minimally cover3 the war in Ukraine. There is so much propaganda in the news that we would prefer to wait it out. However, one propaganda tweet from the Russian “Ministry of Foreign Affairs” is so perfectly tone-deaf we will amplify it. Apparently, according to Russian propaganda4, the “shameful war” is the war against Soviet monuments, not the actual war conducted by Russia murdering tens of thousands in Ukraine.
From the Archives: A few months ago, I wrote about standardized tests for secondary school students. There is a distinction that needs to be emphasized: screening tests (to measure that rarely-asked5 question “Is our children learning” at a population level) are quite different from screening tests (to measure the question “can this person succeed academically at MIT). As they are both called “screening tests”, it is quite easy to confuse them. Perhaps they should have other names?
Tweet of the Week: Lichess launches another incredibly useful feature:
Dreaming of Suburbia
So, moderately wealthy individuals need to store wealth somewhere, and houses need to be owned by someone. It makes a lot of sense to incentivize individuals or families to own one home.
On the other hand: People shouldn’t need incentives to own a home. Ideally, they should be able to afford a home without incentives.
Currently, there are certain deductions for a “primary residence”. Which induces a cottage industry of finding ways for old people to own a house they don’t even want to live in.
At some point, we lost the trees for the forest. What is the real price of owning a home, and what are the real costs of the subsidies we offer individual homeowners?
The Missing Middle
The term “missing middle housing” has become popularized6 over the last decade. Very roughly, it refers to housing that is “in-between” a single-family home and a dormitory in terms of lifestyle and amenities.
In certain cities (New York and Boston), this type of housing isn’t completely missing. I believe the term is “brownstones”. It is similar to (but fancier than) a townhouse.
Why is the Missing Middle missing?
I hinted earlier that, due to the vast and confusing landscape of subsidies, tax evasion is a very profitable business.
It is also quite stupid.
We could just write laws that don’t incentivize people to cheat on their taxes.
One of the hobby-horses of the Newslettr is that people should have to fill out two forms with the IRS per year, one in April and one in October. Tax debits, and tax credits.
Tax debits are your standard taxes - income tax, property tax, capital gains tax, etc.
Tax credits are free money from the government. For example, the “26% solar rebate” if you purchase solar panels this year. Or the Earned Income Tax Credit. Or the Child Tax Credit7. Or … if you are of a certain age, you may remember Matthew Lesko advertising his book on getting money from the government. I haven’t read his book, but I assume that over 95% of the programs he describes fall in this category.
Why don’t we fix the tax code to be less stupid?
I have posed three questions, and that is enough8 for this week. Hopefully, next week, the long-awaited followup to “Education, part 1” will run.
And if you have made it this far, congratulations! Here is a joke to play on your friends tomorrow for April Fools’ - send them the URL https://rufo2024.com/ . It is a link to this issue of the Newslettr.
the Newslettr considered a fake issue - “I’m Brian Rufo and I’m running for President” - but that seemed like too much work.
I don’t know if Chris Rufo wants to run for President. But I sincerely hope he doesn’t run. He is a “problems” man, and appears to be excellent at that. He points out problems, he causes9 problems, …
But, for President of the United States, you do not want a “problems” man, you want a “solutions” man10 …
we are recused on style questions; the paper itself uses “Go” as the name. We might prefer goh or gōh as the spelling, except those have other problems.
The building definitely spells it MASSACHVSETTS.
if you aren’t watching the news: Ukraine is winning in the sense that they are winning battles, but is losing in the sense that there are massive civilian casualties. Also, even if Ukraine continues to win on the battlefield, Russia still might be able to enforce Transnistrian sovereignty for Donetsk and Luhansk.
It is important to note that this is English-language content, which means it isn’t intended for domestic Russian consumption. Russia either believes somebody (Sean Hannity?) will believe this crap, or wants people to think it believes that somebody will believe this crap.
“Rarely is the question asked: is our children learning” - George W. Bush
You can tell it is a popular term because the Wikipedia article has over 150 references.
For some reason, tax credits are insanely unpopular — unless they are only available to rich people. So the “Child Tax Credit” isn’t a direct thing - if you have child dependents, you get to have a larger “standard deduction”, which indirectly gives you money.
"You are old, Father William," the young man said,
"And your hair has become very white;
And yet you incessantly stand on your head—
Do you think, at your age, it is right?" - Lewis Carroll
In general, opinions on whether “causing problems” is a good thing are quite polarized. It depends on what problems you are causing, and for whom.