The economic pie isn't shrinking, it's not being allowed to grow.
Companies produce more things when the price goes up. This works amazingly well for consumer goods.
However, companies have been banned from doing so in the housing market. What follows is a shortage, the driver of all inflations. However, this only reflects rents, not necessarily the prices of homes because they are primarily driven by the availability of cheap credit whose monthly payments may stay the same despite a more expensive house.
From what I can tell rent inflation itself went up by 3%+ every year since 2000. One problem with rents is that the only way they can employ people is via construction and since that isn't happening it will not translate into increased wages, which will cause wages to lag behind as most people are employed in an industry whose maximum wage increases are effectively bounded by CPI+productivity growth, not rent inflation+productivity growth, rents outpacing wages is only natural.
Education is one way to increase productivity growth, but another way would be to simply reduce the productivity growth needed to have a normal life, by building more housing.
rent inflation - CPI = education shortfall
or
rent inflation - CPI = construction shortfall
it's a choice and a lot of people are picking 1. because it's other people that have to get educated to pay for the shortfall, not the ones owning the land.
Companies produce more things when the price goes up. This works amazingly well for consumer goods.
However, companies have been banned from doing so in the housing market. What follows is a shortage, the driver of all inflations. However, this only reflects rents, not necessarily the prices of homes because they are primarily driven by the availability of cheap credit whose monthly payments may stay the same despite a more expensive house.
From what I can tell rent inflation itself went up by 3%+ every year since 2000. One problem with rents is that the only way they can employ people is via construction and since that isn't happening it will not translate into increased wages, which will cause wages to lag behind as most people are employed in an industry whose maximum wage increases are effectively bounded by CPI+productivity growth, not rent inflation+productivity growth, rents outpacing wages is only natural.
Education is one way to increase productivity growth, but another way would be to simply reduce the productivity growth needed to have a normal life, by building more housing.
rent inflation - CPI = education shortfall
or
rent inflation - CPI = construction shortfall
it's a choice and a lot of people are picking 1. because it's other people that have to get educated to pay for the shortfall, not the ones owning the land.