6 thoughts on “Quote of the day—Edward Abbey

  1. A company that comes to mind is 7-11. They seemed to have a goal of being on every street corner; now I’m amazed at all the varieties of businesses that look like a converted 7-11…indeed, I even remember when they were 7-11s!

    This is also one reason that, if I start a company, I’ll be doing my darnedest to keep it small. That isn’t to say that all big things are cancerous–but I don’t like the bureaucracies that become necessary for even the “just right growth” businesses to survive!

  2. I think of the “pro-growth” states like Florida, Arizona and Nevada. The states allow these developers to come in and create huge subdivisions and massive highrises that never sell…. The communities get stuck paying for the infrastructure and the developers walk away with the profits (bank loans taken out before they fold). Wash, rinse, repeat.

  3. “The communities get stuck paying for the infrastructure and the developers walk away with the profits…”

    There is a pair of huge “live, work, play” buildings near where I live, that I call “monstrosities”, one of which is only half completed. I have a hard time blaming just the contractors on this, though, because the city was trying to build it, too, and they were just as guilty as the business in trying to create these things; that, and construction seemed to suddenly halt at around the time of the bursting of the housing bubble. Apparently, the company attempting to build these things is still keeping an eye on them–they recently caught a person who was stealing plumbing fixtures from the building.

    Now, who’s fault is it that these communities are paying for this wasted infrastructure? Could part of the blame be put on the communities, who unjustly take tax money from those who oppose these things, and then turn around and pay these contractors with unjustly taken money? Do you seriously think that companies, if they had to pay *all* the costs to build these things, would want to waste a single cent to do so?

    Of course, there’s another factor, one that was beautifully illustrated by the housing bubble: artificially low interest rates. When interest rates are artificially low, we’re signalling to people that there’s enough money for everyone’s pet projects. But so many people start building projects, it produces inflation–and thus, what was originally “reasonable” for a given loan is gradually unobtainable, and people have to get more loans–and this can only be sustained for so long, before people just have to give up on their projects.

    And what happens when the bobble bursts? You have companies going out of business, half-completed buildings dotting the landscape, and lots of lost fortune. The resulting loss in savings puts us back further, economically, than we were before, because a good portion of the savings we had before the bubble began to grow was consumed by the bubble itself.

    And this is why aggressive “pro-growth” is a cancer; but there’s a simple solution to this: Stop interfering with the interest rates!!! And, in the case of this last bubble: Stop encouraging–even pressuring–banks into giving loans to those who cannot afford it!!!

  4. Alpheus,

    Interest rates helped the last bubble but doesn’t explain the bubbles that happened in other centuries.

  5. Yikes! My keyboard again! Not “centuries,” but “decades.”

    I grew up near one of those “planned communities” that ran out of money sometime before the 1970s. We had a whole city full of streets without houses. The guys used to go rabbit hunting there.

  6. “Interest rates helped the last bubble but doesn’t explain the bubbles that happened in other [decades].”

    Actually, it’s been a very long-standing policy of the United States, and probably the world, to push the interest rates below market-value–it’s better to think of them as “artificially low” rather than “low”. Even Calvin Coolidge–a President with known desires to just leave things alone–had no qualms to push interest rates lower than what they ought to have been. This last housing bubble is a very clear example, because it involved mortgages being manipulated in clear ways.

    This is also something I’d like to investigate more fully. So far, in the one or two times I’ve half-heartedly looked for interest rate over time data, I haven’t been able to find much of anything. I have no idea what I would do to calculate what the interest rate “ought” to be, though, which would be important for determining whether or not a rate is artificially low. (In some circumstances, for example, the rate might be “low” at 10%, when it ought to be 15%–but at other times it might be “high” at 5%, when it ought to be 4%, or “just right” at a level of 6%.)

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