…that dislike I think is due to it being unintelligible to them. They want to make it intelligible—translucent to them; they think nothing can be good unless it is demonstrated to you that in the particular case it achieves a good object. And that of course is impossible. You can only understand the structure as the principle of it…but you couldn’t possibly demonstrate that in the particular event a particular change has a purpose, because it always is connected with the whole system, which, as a rule, you can only understand in principle but not in detail.

So i think I would give them the benefit of the doubt at least—I think in most instances it’s a deeply ingrained intellectual attitude which forces them to disapprove of something which is unintelligible to them and to prefer something which is visibly directed to a good purpose.

You need to learn how to read.

Sione

There’s other “after move in” stuff I failed to mention — including color paint and wall paper for the wall, finishing the garage, and all sorts of other stuff.

I remember the streets being full of contractors for 2 years after folks had moved in.

A priori, for any decline in the economy the consumer is to blame.

It doesn’t matter how precisely and accurately the data is gathered or whether the data is put into a micro or macro economic model or whether its interpreted through the Keynesian or Austrian theory. When the price of houses rose the Agents and Brokers, Mortgage Lenders, Developers and their Financiers were considered geniuses and when prices fell it was the fickle consumers fault.

I have also not been able to understand why it is that Keynesians pretend that productive activity and processes take no time to occur. They seem to believe that goods are finished the instant they are started. They behave as though machinery for making cars can transform into machinery for producing pharmaceuticals, then into plant for generating electricty and back again. They appear to believe as though such machines are called into existence instantly, perfect and without fault or error. Again, this all occurs without effort or time delay or error. It really is faster than light stuff.

Why faster than light? Let time run backwards. Pretend that is happening and it becomes possible to pretend there is a way for Keynesianism to work!

Sione

Construction times are as follows:

Less than 1500 square feet: 4 months
1500 to 2500: 6 months
2500 to 3500: 9 months
3500 to 7000: 1 year
over 7000: 18 months

Much of the time is based on availability of sub contractors, today they are easy to get and the last house I built was a 7200 square foot custom that took 11 months.

There are also many construction jobs still to be done, decks, landscaping, rain gutters, shutters, cabinets, etc.

None of this is imagined by Sumner.

Also, average construction time foor custom built homes is 2 years …

In this Murphy’s brilliant popular exposition of the capital theory we can see the world of difference that separates it from the Keynesian notion of an economy as a GDP factory with simultaneous production and consumption. It is as if someone were to compare the 19th century theory of “ether” with David Witten’s M theory of strings.

You need to understand the make-up of construction labor force. In 2000, we had about 15% of the workforce was Hispanic and were primarily in the drywall and insulation business. During the peak in 2006 about 60% of the workforce was Hispanic and they expanded in the higher skilled jobs like finish carpentry, HVAC, foundations, framing, masonry, painting, etc… Then today, most of the Hispanic workers have left construction with many of them returning to their home countries.

Another way to look at construction labor and the boom is to look at the cost of labor. In 2000 I was paying about $3.00 a square foot to frame a house, at the peak in 2006 my cost was $5.80 and the last house I had framed 5 months ago cost me $2.80. The funny thing is that I had the same framers I hired in 2006 frame the house 5 months ago.

Most of the direct unemployment in construction was the loss of the transient employees and most of the construction workers that remained are performing work for “cash” jobs that are off the books. What is killing the local economies is the indirect employment that is loss. All the service industries and suppliers that were built around construction worker spending is huge since most construction workers spend every dime of their pay, every week.

The problem everyone is having is drawing any conclusion to the relationship of construction to the economy based on a spike in activity in 2006. If you look at national housing prices from 2000 to 2010, you will find prices have increased 54%. You will also see only a slight increase in labor and materials over the same period. The problem is everyone went stupid in 2006 and a lot of people got caught holding the bag.

What caused the problem, well there are many views, but I go back to supply and demand. When I had investment groups coming up to me, offering me to finance building a house, paying me 12% fee and then they would sell the house, I knew we were headed for trouble. These investors made money at first and more investors entered the market. What all these guys failed to realize was that it takes 6 months to build a home and when the market started to fall, they were not in a position to liquidate the home. And because they paid 12% over cost, they could not cut their prices as much as the builder that was willing to sell their home with a slight margin.

There was many other factors such as the increase number of inexperienced builders, homeowner builders, banks lending to these people and the general concept that all real estate was going to rise. Was the Fed responsible for that, I don’t know, but I do know there was a lot of people chasing returns greater than what they can earn in the bond market.

Where is housing headed? That I do know, demand will increase, the current supply will get absorbed and housing will return to a moderate growth industry. Just like it was in 2000.

My simple theory is that they absolutely refuse to become familiar with basic Austrian concepts like ignorant acting man, subjective value and distortion of economic calculation and the pricing process. Ultimately, there is NO ROLE for their technocratic personality in “managing” the “economy”, which is more than they can stand. So they ignore the entire Austrian insight. As Hayek said on “Meet the Press” in 1975:

Will: “Dr. von Hayek, capitalism and particularly American capitalism would seem to have a good record at giving people a rising standard of living. Why are so many intellectuals, and particularly so many economists, skeptical about and even hostile to capitalism?”

Hayek: “Well, I’ve been puzzling about it for a long time, particularly about the economists who ought to understand better. It’s very difficult to know why they don’t. I think it’s the intellectual attraction of a system you can deliberately control, which is fascinating to the intellectual.”

http://mises.org/daily/3311

http://mises.org/media/2773

Unfortunately, Hayek made some statements supporting “the printing money” by “the Ben Bernank” in his later years.