This is what it has come to. Just like Roosevelt did during the great depression, destroying millions of farm animals, and other food, all to remove supply and artifically prop up demand. This is wealth destruction.
I’m sure if you were to sell those houses for $1 someone would have bought them.
Voltaire said something about the correlation between believing absurdities and committing atrocities. Keynesian economics → global ruin.
It’s called “reallocating misallocated resources”.
I believe that (the video) shows wealth destruction. Those resources are not being reclaimed, they are being destroyed because their maintence or project completion costs cannot be paid.
In a way, it’s as much a testament to the housing boom, and Mises’ builder scenario, as it is to the stupid municipality that has regulations that push the builder to destroy the property rather than salvage it. In the end, as the capital is lying dead on the floor, the state walks by and gives it one more kick in the head for good measure.
You gotta be an idiot to not recycle those building materials. All that copper and stuff can be recycled into something else. Besides, what ever happened to “creative destruction”?
That’s EXACTLY what it is.
code enforcement at its finest - so you have these unfinished houses in the middle of nowhere that no one wants bothering no one so we must fine you on a daily basis to enrich our dwindling current accounts
I imagine the owning bank ran the numbers and concluded that destroying them was the best option?
My Buddie’s in laws live in Victorville. It is a couple hours north of where we live in San Diego. He was planning on moving there because of cheaper house prices and the fact he has a baby on the way. I forwarded him this webpage and he got viciously angry at the news.
I see no reason why those houses could have been liquidated at cheap prices. The occupants would be able to afford their homes and would have extra disposable income to spend in the economy. New occupants would afford and pay property taxes and this would benefit the community. That would be a real economic stimulus. Destruction of this wealth and propping of house prices only stifles economic growth.
See, I’ve not watched the video, so I’m going on what I know from this topic. But it seems to me that if these houses are being destroyed because their maintenance or projection completation costs are not being paid, it is an illustration of the inability of entrepreneurs to complete the metaphorical structure of production, in which case the liquidation of these bad investments is not wealth destruction but wealth creation.
The reason why they are being destroyed (or forced into liquidation) is that the creditor insists upon full value in taxes and code compliance, or destruction.
In a free market, no creditor would insist upon full payment or no-payment. Faced with losses, any rational creditor will seek to recoup as much as they can.
The state is forcing this property to be destroyed, instead of allowing opportunities for it to be re-organized.
So while “technically” it is a liquidation, the result is capital destruction. In place of half built buildings, you will have no buildings, and no bricks (for all intents and purposes) to be reused on the next project.
That is true so far as it goes: the land and money that would otherwise be spent on maintenance is now freed up for better uses. But the materials and labor to build the houses are sunk expenditures that produced no return. It’s as if instead of building houses we just piled up the money used to buy the materials and labor and set it on fire.
^This.
This is just sad.
When it doesn’t make sense, just think of the taxes. I’ll bet that the realestate taxes are much less for unimproved property than for improved property. So if the owners unimprove the property then they will lose less money.
It makes perfect sense for them to do this. Cutting down the supply of homes will help home suppliers maximize their profits, and will free up the land for more value-productive uses. Ignore sunk costs.
Except that you’ve already wasted effort in building these homes. You’re taking something that is useful but was a bad investment and turning it into nothing. Somewhere in LA a family cramped into a 1 bedroom apartment weeps as the space they could use is being destroyed.
For the purposes of abstract theory, fine.
If you are an entrepreneur stakeholder, flushing your sunk costs without any margin for recovery is enough to make you jump out of a window.
The bottom line here is that the project was non-viable as intended, but it may have been able to restructure but was prevented from doing so partially by the state. Not totally unlike the reaming Big 3 investors are taking.
Precisely. The auto manufacturers’ assets could be redeployed in right-to-work states making market viable cars instead of “alternative fuel” and “green” vehicles that Obama and his SWPL crowd fantasize about. GM and Chrysler are going to become gigantic money pits, like Amtrak and the Postal Service. Obama truly is FDR to Bush’s bumbling Hoover.
Another video giving more info on the Victorville Massacre
http://cosmos.bcst.yahoo.com/up/player/popup/?rn=3906861&cl=13325340&ch=4226714&src=news
What does SWPL stand for?
Socialist Workers’ Party of Labour?
stuff white people like. it’s the modern incarnation of the white middle-class liberal guilt meme. check out the blog.