That would be greed. It's out there, it's everywhere, and it's not
only tempting and addictive, but highly dangerous. Right, enough
hyperbole and superlative.
At my core I find myself as being a bit of a socialist. I think that everyone should have what they need and not at the expense of others, and I view the socio-economic disparities that we see in the US and Israel (among other places) to be indicative of having at the expense of others. I would argue that this goes up to the level of nationhood as well (although that's for a post on politics and not economics), whereby every "people" is entitled to at least a little slice of land to call their own. I have no problem with capitalism, but rather I think it should be tempered with a dose of socialism. Or maybe vice versa.
We're thinking about buying a plot of land. That in and of itself is a huge undertaking in Israel. What we're looking at is half (a quarter dunam) of a two-family plot. Two-family means two houses built with a shared wall on the larger plot. In Israel it's hard enough to buy land, but in Yokneam (as in many other places as well), finding an undeveloped plot is near impossible. So we jumped quickly at the possibility and spent a good deal of time running around checking details and mortgage rates and building costs. And we met with the seller. In Israel real estate is a face to face experience with the real estate agents in the room, but basically it's a direct negotiation.
Well our seller is a real piece of work, which brings me to my point of this post - greed. He's asking more than double his purchase price. He has owned the land for barely more than a year and done NOTHING to develop the plot other than the mandatory development which is included in the purchase. And he's not budging at all.
Of course the argument goes, "this is how the market works", right? Someone will pay his price, therefore the price is correct. But that doesn't work for me (the daughter of an economist). Capitalism lacks feeling, emotion, caring. The absence of feeling leads to greed as the primary motivation - how much can the market bear me asking? This desire for more money, more wealth, more economic growth in the private sector (ie - capitalism) is simply greed because of the absence of feeling.
This seller has no legitimate reason to ask the amount that he is asking - there are no other plots of land for sale or sold to based his number on, he did not invest anything in the plot that could be evaluated and valuated. Perhaps he has a personal reason, I certainly hope there is nothing in his family life necessitating this huge sum of money, but that is in the realm (albeit at the fringe) of the possible. Most likely, though, it just comes down to greed. He thinks he can get someone to pay that amount so he'll ask. And the stickler here is that he's turned down close offers because he thinks he's entitled to this amount, somehow. He has no concern over the buyer, and capitalism says he doesn't need to care. But when we start to crunch the numbers, such a massive purchase price for the land may well put the building of the house out of our reach...and we're in good shape financially.
Why does this matter? Why should we care? It is precisely this greed which drives capitalist markets and prices, hiding the reality that pricing in a capitalist market is entirely artificial. Prices are simply based on what people will pay; however, what people will pay is sometimes really driven by what is available. Even for items as basic as milk and bread: people need to eat and so they will pay what they have to pay to provide the bare minimum of food for their families. Those prices are inherently artificially constructed, above and beyond the costs of the raw ingredients, production, and transport costs. If all prices are in fact based on some portion of artificiality, capitalism sets itself up for the risk of implosion. Looking at the implosion of the housing market in the US we can see a widespread and comprehensive example of how greed and artificial pricing markets lead to financial disaster on the individual, state, and national levels.
So what to do as an alternative? I would argue that socialism in contrast is an attempt to add feeling, emotion, the personal element, to capitalism in an attempt to ward off greed.What could markets look like, what could the buying experience be for the buyer, if the markets had just a touch of feeling in them?
At my core I find myself as being a bit of a socialist. I think that everyone should have what they need and not at the expense of others, and I view the socio-economic disparities that we see in the US and Israel (among other places) to be indicative of having at the expense of others. I would argue that this goes up to the level of nationhood as well (although that's for a post on politics and not economics), whereby every "people" is entitled to at least a little slice of land to call their own. I have no problem with capitalism, but rather I think it should be tempered with a dose of socialism. Or maybe vice versa.
We're thinking about buying a plot of land. That in and of itself is a huge undertaking in Israel. What we're looking at is half (a quarter dunam) of a two-family plot. Two-family means two houses built with a shared wall on the larger plot. In Israel it's hard enough to buy land, but in Yokneam (as in many other places as well), finding an undeveloped plot is near impossible. So we jumped quickly at the possibility and spent a good deal of time running around checking details and mortgage rates and building costs. And we met with the seller. In Israel real estate is a face to face experience with the real estate agents in the room, but basically it's a direct negotiation.
Well our seller is a real piece of work, which brings me to my point of this post - greed. He's asking more than double his purchase price. He has owned the land for barely more than a year and done NOTHING to develop the plot other than the mandatory development which is included in the purchase. And he's not budging at all.
Of course the argument goes, "this is how the market works", right? Someone will pay his price, therefore the price is correct. But that doesn't work for me (the daughter of an economist). Capitalism lacks feeling, emotion, caring. The absence of feeling leads to greed as the primary motivation - how much can the market bear me asking? This desire for more money, more wealth, more economic growth in the private sector (ie - capitalism) is simply greed because of the absence of feeling.
This seller has no legitimate reason to ask the amount that he is asking - there are no other plots of land for sale or sold to based his number on, he did not invest anything in the plot that could be evaluated and valuated. Perhaps he has a personal reason, I certainly hope there is nothing in his family life necessitating this huge sum of money, but that is in the realm (albeit at the fringe) of the possible. Most likely, though, it just comes down to greed. He thinks he can get someone to pay that amount so he'll ask. And the stickler here is that he's turned down close offers because he thinks he's entitled to this amount, somehow. He has no concern over the buyer, and capitalism says he doesn't need to care. But when we start to crunch the numbers, such a massive purchase price for the land may well put the building of the house out of our reach...and we're in good shape financially.
Why does this matter? Why should we care? It is precisely this greed which drives capitalist markets and prices, hiding the reality that pricing in a capitalist market is entirely artificial. Prices are simply based on what people will pay; however, what people will pay is sometimes really driven by what is available. Even for items as basic as milk and bread: people need to eat and so they will pay what they have to pay to provide the bare minimum of food for their families. Those prices are inherently artificially constructed, above and beyond the costs of the raw ingredients, production, and transport costs. If all prices are in fact based on some portion of artificiality, capitalism sets itself up for the risk of implosion. Looking at the implosion of the housing market in the US we can see a widespread and comprehensive example of how greed and artificial pricing markets lead to financial disaster on the individual, state, and national levels.
So what to do as an alternative? I would argue that socialism in contrast is an attempt to add feeling, emotion, the personal element, to capitalism in an attempt to ward off greed.What could markets look like, what could the buying experience be for the buyer, if the markets had just a touch of feeling in them?
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