<story><title>The Terrifying Reality of Long-Term Unemployment</title><url>http://www.theatlantic.com/business/archive/2013/04/the-terrifying-reality-of-longterm-unemployment/274957/</url></story><parent_chain><item><author>enraged_camel</author><text>&amp;#62;&amp;#62;There is another side of this that the article doesn&apos;t touch on: home ownership.&lt;p&gt;Oh boy. There&apos;s so much I can say about this topic, and none of it is positive.&lt;p&gt;Basically, the way our culture mindlessly promotes home ownership is insane. &lt;i&gt;Absolutely insane!&lt;/i&gt;&lt;p&gt;Every time I hear people complaining about &quot;throwing away money&quot; by renting, and how they would rather put that money into a house, I want to hold them by the shoulders and shake them violently. It&apos;s like the housing market crash did not teach anyone anything!&lt;p&gt;It comes down to this: a house is a terrible, terrible means of investment. It&apos;s a fixed asset that, contrary to popular belief, is not guaranteed to always go up in value. In addition, people don&apos;t really take into account the negatives. Primarily, a house ties you down. You have zero mobility as a labor market participant if you own a house, and this significantly reduces your leveraging power when it comes to negotiating salary. Besides that though, houses have a ton of expenses, and as fixed assets they are subject to a lot of uncontrollable risk (fire, floods, earthquakes, the neighborhood depreciating, etc.).&lt;p&gt;Instead of having that money tied down on a house, people are much better investing in the stock market, which has, over the past 100 years, gone up by 7% annually.&lt;p&gt;The only time a house makes sense is when raising kids. The stability of the environment has a lot of positive benefits for their growth. It also makes social integration easier.&lt;p&gt;/rant</text></item><item><author>cletus</author><text>This doesn&apos;t surprise me at all. One thing I&apos;ve come to learn in life is the importance of social proof.&lt;p&gt;Social proof takes many form. It&apos;s why MIT and Stanford CS grads have tech companies come to their campuses and throw money at them (these institutions don&apos;t have a monopoly on good engineers). It&apos;s why if you have Google/Facebook/Twitter on your CV you are pretty much guaranteed a job. It&apos;s why academic staff who have a Harvard degree have a much easier time than those that don&apos;t.&lt;p&gt;How long you&apos;ve been out of work is more social proof. Were I in this situation I would absolutely without a second&apos;s doubt invent fictitious employment and get a friend to back up any reference check and I wouldn&apos;t feel the least bit bad about it. I know employers are filtering on superficial things and those that have had difficulty finding work is a pretty quick and easy filter.&lt;p&gt;There is another side of this that the article doesn&apos;t touch on: home ownership.&lt;p&gt;10+ years ago I remember reading a study in Europe that showed the rate of unemployment was directly proportional to the rate of home ownership across the entire EU with a very high correlation. Spain had the highest rate of home ownership and unemployment. Britain (then) had the lowest for both.&lt;p&gt;We push home ownership as a political agenda. While it has benefits for creating stable communities it also creates an inflexible labour market as people won&apos;t move to where the jobs are.</text></item></parent_chain><comment><author>nostromo</author><text>A few things you&apos;re not accounting for:&lt;p&gt;* Leverage.  (The most you can leverage a stock investment is 2x.  For homes people can leverage their money up to an insane 20x, for example: by buying a 500k home with 25k down.  The proper comparison is not to compare buying a 500k home vs 500k worth of stocks; it&apos;s buying 25k or 50k worth of stocks vs a 500k home.)&lt;p&gt;* Mortgage deduction.  (Imagine if you could invest 500k in the stock market with only 25k, and then the government let you deduct your interest payments!)&lt;p&gt;* Inflation.  (I&apos;ve heard of people living in Manhattan in apartments they bought in the 1980s that pay a mortgage of $500.  Inflation has reduced their mortgage debt to negligible levels.  Time has in a very real way erased much of their debt.)</text></comment>
<story><title>The Terrifying Reality of Long-Term Unemployment</title><url>http://www.theatlantic.com/business/archive/2013/04/the-terrifying-reality-of-longterm-unemployment/274957/</url></story><parent_chain><item><author>enraged_camel</author><text>&amp;#62;&amp;#62;There is another side of this that the article doesn&apos;t touch on: home ownership.&lt;p&gt;Oh boy. There&apos;s so much I can say about this topic, and none of it is positive.&lt;p&gt;Basically, the way our culture mindlessly promotes home ownership is insane. &lt;i&gt;Absolutely insane!&lt;/i&gt;&lt;p&gt;Every time I hear people complaining about &quot;throwing away money&quot; by renting, and how they would rather put that money into a house, I want to hold them by the shoulders and shake them violently. It&apos;s like the housing market crash did not teach anyone anything!&lt;p&gt;It comes down to this: a house is a terrible, terrible means of investment. It&apos;s a fixed asset that, contrary to popular belief, is not guaranteed to always go up in value. In addition, people don&apos;t really take into account the negatives. Primarily, a house ties you down. You have zero mobility as a labor market participant if you own a house, and this significantly reduces your leveraging power when it comes to negotiating salary. Besides that though, houses have a ton of expenses, and as fixed assets they are subject to a lot of uncontrollable risk (fire, floods, earthquakes, the neighborhood depreciating, etc.).&lt;p&gt;Instead of having that money tied down on a house, people are much better investing in the stock market, which has, over the past 100 years, gone up by 7% annually.&lt;p&gt;The only time a house makes sense is when raising kids. The stability of the environment has a lot of positive benefits for their growth. It also makes social integration easier.&lt;p&gt;/rant</text></item><item><author>cletus</author><text>This doesn&apos;t surprise me at all. One thing I&apos;ve come to learn in life is the importance of social proof.&lt;p&gt;Social proof takes many form. It&apos;s why MIT and Stanford CS grads have tech companies come to their campuses and throw money at them (these institutions don&apos;t have a monopoly on good engineers). It&apos;s why if you have Google/Facebook/Twitter on your CV you are pretty much guaranteed a job. It&apos;s why academic staff who have a Harvard degree have a much easier time than those that don&apos;t.&lt;p&gt;How long you&apos;ve been out of work is more social proof. Were I in this situation I would absolutely without a second&apos;s doubt invent fictitious employment and get a friend to back up any reference check and I wouldn&apos;t feel the least bit bad about it. I know employers are filtering on superficial things and those that have had difficulty finding work is a pretty quick and easy filter.&lt;p&gt;There is another side of this that the article doesn&apos;t touch on: home ownership.&lt;p&gt;10+ years ago I remember reading a study in Europe that showed the rate of unemployment was directly proportional to the rate of home ownership across the entire EU with a very high correlation. Spain had the highest rate of home ownership and unemployment. Britain (then) had the lowest for both.&lt;p&gt;We push home ownership as a political agenda. While it has benefits for creating stable communities it also creates an inflexible labour market as people won&apos;t move to where the jobs are.</text></item></parent_chain><comment><author>kens</author><text>One thing that puzzles me is that rising house prices are treated as inherently good, and falling house prices are seen as inherently bad. But for most things, it&apos;s the exact opposite - rising prices are bad.&lt;p&gt;Is this just because newspaper articles are biased towards the perspective of real estate agents and homeowners? Or are high house prices good because houses are investments? Would cheap 3-d printed houses (hypothetically) make the country better off or worse off economically?</text></comment>