Beyond Human Capacity
Distilling down and projecting out the economy’s limitless spectrum of interrelationships is near impossible to do with any regular accuracy. The inputs are too vast. The relationships are too erratic.
Quite frankly, keeping tabs on it all is beyond human capacity. This also goes for the federal government. Even with all their data gatherers and number crunchers they are incapable of stitching together an exact understanding of where the economy is really at, let alone where it is going.
What’s more, the economy is always evolving and changing in ways that are hard to discern in advance. Cause and effect do not correlate with the simple precision of a balance scale. When one input decreases, an apparently correlated one can somehow increase.
For example, when incomes go down, apartment rents should also go down. Lower incomes should result in lower price competition for apartment rents and, thus, lower rents. Logic would support the inherent truth of this premise.
Yet, in Sacramento California, and many other places, the exact opposite has happened. Median incomes have declined 13 percent, while median apartment rents have increased 13 percent. How does that work?
Perhaps too burdensome development regulations have something to do with it. Or maybe lasting fallout from the great mortgage bust is the culprit. Certainly, the shortage of affordable rentals is driven by a great variety of factors.
This post was published at David Stockmans Contra Corner by MN Gordon ‘ June 10, 2016.
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