Universal health care
“Universal health care works here. Not sure if it will for the states.”
V – Toronto, Canada
From what I can tell, universal health care does seem to work as intended in Canada. Why is this? First, the population is smaller. Second, it seems that there are less contrasting interests than what we would find in the states. Although Canadian demographics are diverse, almost on par with those of the United States, its mindset is more consistent. What I am trying to say is if a social program like universal health care is to work, the people in the nation need to be on the same page.
Consensus in the United States is virtually impossible to achieve. Obamacare was poorly constructed and seemed doomed to eventually fail, and effectively, it has. Beginning in 2019, the personal mandate penalty will be eliminated. This means that societal pooling of insurance risk will be removed from the equation. This was the primary premise under the program’s normative economic analysis. Moreover, the cost burdens of the program still resided with the health care consumer. Just ask anyone in the U.S. seeking healthcare insurance.
My only concern is that the negative externalities of any social program are rarely ever revealed to the public. Normative economic study is what I would consider “subjective” analysis. Normative policy is employed when interested parties wish to achieve a policy goal. In the United States, supply-side tax cuts come to mind. Those promoting supply-side programs employed complex algorithms to make their case, but at the end of the day all it resulted in was explosive deficit spending. This only worked to help the wealthy; those with a lot of taxable income and those with the income-generating assets.
Normative analysis usually leads to disingenuous arguments and the promotion of self-interested agendas; those who stand to receive the lion’s share of the benefits exert the most effort to achieve their desired results. Normative analysis will almost always lead to misleading findings.
This is why I am careful to stay clear of opinions. While positive analysis can be misleading as well, it is much more straightforward in its logic and results.
Martin Armstrong has been dissing real estate for several years
“Martin Armstrong a couple of days ago was saying real estate has peaked. It’s time to get out. Property taxes are going through the roof. Looked at Zillow for our nearest neighbour, Erie county, western New York State. Example, $350k house, $11k property taxes. Crazy.
Looked up Florida. Suburban Orlando, Winter park. $ 1.2 million mansion [equals] an 800 sf shack house in Vancouver. Bargain price.
In Detroit about 30% of the houses that are remaining are in property tax arrears, and are being sold off at auction. Corporations are buying them up and renting them. I agree with Martin Armstrong that certain locations, New Jersey, New York State, Illinois are going to see an exodus of people leaving to less taxed states.“
V – Toronto, Canada
There are many areas of the United States in which I would not invest. The northeast comes to mind. In late 2011, I purchased a single-family house on Long Island, just outside NYC. While the market value was about 250k at the time, the property taxes were about $10,000 a year. Although I owned the house free and clear, I needed to rent the house for $1,000 a month just to cover taxes and insurance. In early 2013, I sold the property and deployed the capital to properties in suburban Maryland and Virginia. In Maryland the tax rate is at about 50% lower, while in VA, the rate is at about 70% lower.
High tax states, such as Illinois, New York, New Jersey, and Connecticut are having a difficult time maintaining home prices. Keep in mind the changes to the IRC, which caps SALT to $10,000 a year is clearly designed to anger the voters in the blue states. Trump got the last laugh on that one.
I am familiar with the real estate process in Detroit. The houses lay vacant for years, and every third year of delinquent taxes, a property is auctioned off for back taxes. Speculative investors will scoop up the properties for the back taxes (maybe a couple thousand dollars), lay on them vacant for the next three years, and hope for a redevelopment or city buyout. If this doesn’t happen, they give the properties back to the city for another auction. Consider this like buying a call option on the property.
Be careful of people like Martin Armstrong. He has clearly been incorrect in his conclusions about real estate for almost four years. His confirmation bias is to see real estate fail, so he will only write about the areas with problems. He cherry picks his positive economic analysis. Moreover, he demonstrates the backfire effect when confronted with conflicting information.
Amstrong also likes to instill fear in his followers; he has expensive services to sell you and can only make the sale if he can convince you that he is needed.
There are plenty of areas in the U.S. and sectors of housing to invest. Working-class housing in affordable areas is still highly sought out by investors and homeowners. With interest rates fading, it is still worth looking into, but Armstrong will not tell you about these situations. He has his Socrates service for you.
I agree what you say that this is all done by design. Make housing unaffordable, crashing the market. The people holding cash 💰 buys them cheap, and rents them out. Your observation of buying houses in the secondary markets to rent out is spot on. You have to do your due diligence. Check to see how financially sound the city is, and your investment has a good cap rate.
V – Toronto, Canada
Indeed, this is correct. But this provides us plenty of opportunities.
It’s funny how socialism is embraced by the millennial Bernie Sanders generation. They don’t understand that if you tax the population too much and make the cost of living too expensive, people will flee. It’s all the same in Western Societies. All done on purpose. Like you said. These globalists want to destroy the western societies.
V – Toronto, Canada
Once again, your observations seem spot on. Moreover, these social programs will be administered by the banks and corporations. The deficit spending helps these shareholders, while the monetary printing and leverage ultimately benefits the asset-owning class. The intended beneficiaries lose out over time as their cost of living continues to escalate. The debt is turned into negotiable instruments and bonds that investors use as collateral to buy up more assets. So, these folks listen to the disingenuous normative analysis and cannot make the connection between their social benefits and their ever higher cost of living. Rents, education, taxes, and healthcare costs will spiral out of control and the masses will engage with the government to “help out” again.
Keep in mind, I am not here to denigrate social spending. I am only here to warn the reader to take action to make the best of the situation.