'Neutrality' is often espoused to support of theoretical models requiring 'all things being equal'. Such an (inherently flawed) assumption is critcial to making the theories fly.

However, nothing is equal, no neutrality in reality. Its an intellectual construct (based on equality ideal) which doesn't exist. Philosophically... battle between the mind (illusions) and the physical (reality).

Humans, whilst we like to paint ourselves in cultured and civilised tones who transcend our place in animal world, aren't that different from the other beasts (we use deoderant). ;)

Major difference is capacity to think/rationalise... double edged sword. Good... yields many palpable things. Bad... mind looks for meaning where none exists, constantly re-ordering perception to fit ourselves (driven by self preservation at its most basic level), causing confusion by contriving complexity in the face of simplicity.

My perceptual framework... we're thinking animals, acting out of self preservation, adept at inventing molifying thought processes making for peaceful sleep.

To that end, your definition of 'distortion' strikes me as constructed to support political ideology, which appears to be socialist (l'm left of centre at times).

l dont accept idea of 'distortion' as... opposition to the concept of neutrality. In this context, it follows self interest. If something suits its not distortion, if it doesnt, then it is.

My view of distortion... external noise added to colour outcome.

Entirely natural to human behaviour. Markets are groups of people. Anything they do in agreement, of their own volition is a normal (natural?) outcome. Can be good, bad or ugly. If one person pays another a fee to swim in a pool full of swill, then thats a neutral outcome in my book. When someone who lives over the hill and far away chimes in and demands that this activity be banned or regulated because it offends his why-fors and where-hows, that too is normal distortion.

Its all colour. People find ways to order things to suit. Some lobby govts (developers, capitalists, greenies, socialists) to push agenda, others go around that, do what they can and avoid what doesnt suit.

waffle over...

cheerz.

I think you are quite right – distortion and normal market practices just run in together. It is extremely difficult to tell what is a distortion and what is just within normal practice at times. And yes neutrality is just about impossible in all but the most simple cases.

But that doesn’t mean we can’t recognise the major distortions as acts totally outside of practices just driven by supply and demand.

“To that end, your definition of 'distortion' strikes me as constructed to support political ideology, which appears to be socialist”

I do aspire to a degree of socialism in this matter, and to the overall distribution of wealth. Stuff the concept of a small number of people getting rich and powerful off the backs of the struggling masses. Stuff a democratic system if it is going to lead to a widening of the gap between the rich and poor and a stifling of our collective future….which is exactly what it is doing. Perhaps our democracy needs a bit socialistic adjustment.

“l dont accept idea of 'distortion' as... opposition to the concept of neutrality. In this context, it follows self interest. If something suits its not distortion, if it doesnt, then it is.”

Alright fair enough. So the self-interested antics of real estate and other big business people promoting unsustainable practices for their own profit is perhaps not a distortion. But again, the actions of governments that uphold that sort of thing certainly do amount to major distortions that are most definitely opposed to neutrality. But these distortions can be positive or negative.

So what I perceive as strong negative distortions by governments should be flipped over to positive ones.

Ludwig “I cannot see that it would be any more seriously distorted if governments were to introduce strong financial measures or laws to reduce the cost of house and land packages for first home-buyers and to discourage or prevent profiteering”.

As for first time buyers, they do receive “special consideration”, by qualifying for “first time owners grants”. Maybe the amount could be argued about but the principle of a benefit for first time buyers is real and already in place.

I am not sure what “profiteering” means, unless you are to suggest some form of “windfalls” tax which, itself will only “distort” the market. Such explicit manipulation, if applied exclusively only to housing (versus other avenues of investment) is the sort of corrupting and corrosive tactic which engender no benefit and by forcing investors away from housing will reduce the available rental housing
It will only victimise the most vulnerable, those who rely on cheaper rental housing. It is the negative response which promotes special rules to outlaw “negative gearing” – forcing “negative gearing” into “positive gearing” can only mean the investor charges a higher rent to the tenant.

Col, yes first home buyers have been assisted for a long time. So this financial incentive concept just needs to be developed a bit further in order to even up the wealth distribution between the home-owner and the profiteer. This ‘positive distortion’ doesn’t appear to have corrupted the market. In fact, I would argue that the market is still strongly distorted (?corrupted) in the opposite direction, ie towards the big end of town.

By ‘profiteering’ I mean reaping profit margins that are unfairly large, being driven by the profit motive above all else, buying up properties for the express purpose of selling or renting for profit over and above what one really needs to be comfortable, etc

Ludwig "even up the wealth distribution between the home-owner and the profiteer."

You are attempting to have enacted a subjective assessment of "what is fair and what is unfair".
This would require the basis of a financial return, is for some, deemed an action which represents "profiteering" instead of just “making a profit”.

When you can reasonably define and determine what is “Unfairly Large” versus what is “Adequately or Appropriately Large” you might be able to convince others of the merits of such laws.

Since neither you nor anyone else will ever find consensus on what is “unfairly large”, I don’t think you have much chance of ever finding such ideas passed into statute.

If I model the combined annual net incomes of an investment property which I might hold for say, 10 years, I make less return than if I sell it after 5 years (on an estimate of post tax net IRR). However, with the relative risk associated with housing even that IRR will be significantly less than if I were to invest/deal in commodity futures. Should commodity futures be subject to the same “rules of profiteering” as you would impose on the investors in real estate?

Finally “being driven by the profit motive above all else,”

We are all responsible for planning for our own financial security.

Tell me, what other motivators, other than to produce a secure profit, are there for “saving”?
- Especially if we consider that am free to choose to exercise my “altruism” in the way that suits me, not in the way which suits rental property tenants!

“You are attempting to have enacted a subjective assessment of ‘what is fair and what is unfair’ “.

No Col. We want the assessment to be as objective as possible. In just the same way that we assist first-home buyers, provide social security, have a sliding tax scale and take into account a whole range of factors when working out our tax, have a means-tested baby bonus, and so on, we can work out what is reasonably fair in terms of incentives to balance up the wealth gap in the property market.

Similarly, it should not be too hard to work out just what comprises a reasonable profit and what is profiteering.

All of this is highly objective. But of course like anything else, it would need to be kept reasonably simple, which would mean an element of unfairness.

“When you can reasonably define and determine what is ‘Unfairly Large’ versus what is ‘Adequately or Appropriately Large’ you might be able to convince others of the merits of such laws.”

I think this determination can easily be made. Why should the onus be on me or anyone who advocates a fairer system? Why shouldn’t the onus be on those who profit from the real estate market to justify the scale of their profits or else be required to put an ‘equalisation tax’ back into the government coffers in order to subsidise home-buyers?

John Howard is calling for the states and councils to stop restricting land releases. He wants prices to fall. Most people want prices to fall. Most people want homes to become much more affordable. Well, instead of opening up more land in order to do that, thus promulgating urban sprawl, let’s to the right thing and even up the wealth ratio by way of good-old government financial incentives and charges……oh, and by addressing the overall demand by greatly reducing immigration.

I can’t see what is in any objectionable to this philosophy Col.