It's worth looking at the outcomes of the public housing experiments here, in the US & UK as an example of what can occur without property investors.
Firstly, with large-scale public housing developments ghettos can be created which lock certain segments of society into downward spirals of poverty and violence. Greater racial segregation occurs where there are different economic profiles for different races. Quiggles may be able to back this up with his recent US trip experience.
In Australia the housing commissions have abandoned the concentration theory (that concentrations of public housing were easier to build, manage and maintain because they were in certain areas...it would also improve the ability of police & social workers to identify the areas that needed increased attention) and have moved to a diversification theory. A few public houses in each suburb intermingles them with different economic and social groups, leads to improved home maintenance and a sense of respect & hope - much better economic outcomes!
With fewer or no investors there would be enormous pressure on the government to step in. They would be forced to concentrate purely on a cost basis. The period when negative gearing was removed (85-87) is a prime example of how this experience is one the government does not want. When they realised how pressured the government would be - over only a two year period - if forced to provide all the rental housing, they reintroduced negative gearing lickety-split!
If the government had to proivde the rental housing, next we'd see rentals being subsidised more by taxpayers - and significantly less revenues for states in land tax or stamp duties (or exit taxes). This would push down state revenues & necessitate increased revenue raising in other areas - or more handouts from the Federal Government to states.
Either way taxes would increase in other areas - where people are not earning rentals to offset at least part of the cost.
This would in turn reduce consumable income across the board & lead to slower or non-existent economic growth. At the same time a significant proportion of the country's wealth (in property) would not be in the hands of investors saving for their retirement, but in government hands. This would lead to future impacts on social security, the health system, the wealth passed on to future generations & necessitate a much stronger superannuation system.
Thus without private investors owning property, ultimately the ability for the country to generate wealth would be severely restricted.
Anyone notice the picture I'm painting is very similar to that of cold-war Eastern Europe & Russia under communism?
Shabby falling down properties, empty shelves, widespread economic misery AND (possibly most important) widespread human misery?
Looked at in this way, property investing is one of the main backbones of the modern Western world. By investing in property we are providing wealth and happiness for our fellow Australians as well as ourselves.
It's a vital public service that only a few of us are prepared to deliver in a serious way.
So next time someone looks at you strangely because you tell them you're a property investor, remind them who is ensuring that they get to live the opulent middleclass lifestyle we enjoy today, who is ensuring that their children get decent schooling, that they have good health care and that they have the possibility of becoming wealthy within a single lifetime.
(and this way of thinking about the ripple effects is not as far-fetched as some may think!)
Cheers,
Aceyducey
Firstly, with large-scale public housing developments ghettos can be created which lock certain segments of society into downward spirals of poverty and violence. Greater racial segregation occurs where there are different economic profiles for different races. Quiggles may be able to back this up with his recent US trip experience.
In Australia the housing commissions have abandoned the concentration theory (that concentrations of public housing were easier to build, manage and maintain because they were in certain areas...it would also improve the ability of police & social workers to identify the areas that needed increased attention) and have moved to a diversification theory. A few public houses in each suburb intermingles them with different economic and social groups, leads to improved home maintenance and a sense of respect & hope - much better economic outcomes!
With fewer or no investors there would be enormous pressure on the government to step in. They would be forced to concentrate purely on a cost basis. The period when negative gearing was removed (85-87) is a prime example of how this experience is one the government does not want. When they realised how pressured the government would be - over only a two year period - if forced to provide all the rental housing, they reintroduced negative gearing lickety-split!
If the government had to proivde the rental housing, next we'd see rentals being subsidised more by taxpayers - and significantly less revenues for states in land tax or stamp duties (or exit taxes). This would push down state revenues & necessitate increased revenue raising in other areas - or more handouts from the Federal Government to states.
Either way taxes would increase in other areas - where people are not earning rentals to offset at least part of the cost.
This would in turn reduce consumable income across the board & lead to slower or non-existent economic growth. At the same time a significant proportion of the country's wealth (in property) would not be in the hands of investors saving for their retirement, but in government hands. This would lead to future impacts on social security, the health system, the wealth passed on to future generations & necessitate a much stronger superannuation system.
Thus without private investors owning property, ultimately the ability for the country to generate wealth would be severely restricted.
Anyone notice the picture I'm painting is very similar to that of cold-war Eastern Europe & Russia under communism?
Shabby falling down properties, empty shelves, widespread economic misery AND (possibly most important) widespread human misery?
Looked at in this way, property investing is one of the main backbones of the modern Western world. By investing in property we are providing wealth and happiness for our fellow Australians as well as ourselves.
It's a vital public service that only a few of us are prepared to deliver in a serious way.
So next time someone looks at you strangely because you tell them you're a property investor, remind them who is ensuring that they get to live the opulent middleclass lifestyle we enjoy today, who is ensuring that their children get decent schooling, that they have good health care and that they have the possibility of becoming wealthy within a single lifetime.
(and this way of thinking about the ripple effects is not as far-fetched as some may think!)
Cheers,
Aceyducey
