The real cause of Western world high property prices

A documentary on  Dateline  in Australia highlights the perils of Chinese investment in Western property. The argument is brought to the for...

Media displays of Chinese frivolity in the West – lessons in perspective

In a separate article “The real cause of Western world high property prices” I highlighted how wealthy Chinese investors are not the cause of high property prices in Western markets. In this section, I want to deal with the impact of stories that suggest as much. Consider the litany of stories that make this argument. We are talking about:
  1. An endless stream of articles under the ‘NZ Housing Crisis‘ tag in the New Zealand Herald, with similar stories in One News and elsewhere.
  2. An endless stream of stories in Australia, both in the commercial press, as well as from the government-owned Australian Broadcasting Commission (ABC); for example, its Datelineprogram described above.
The property crisis is a popular storyline because it affects everyone; moreover the narrative has allowed the media to serve up a broad pallet of ‘related stories’ like homelessness, wage disparities and the impact of immigration. There is of course a reason for this type of storyline, and that is ‘commercial stress’. You could argue that it is ‘greed’, but the reality is that this is just a sordid narrative that ignores the fact that — everyone is right to pursue their self-interest, and ‘greed’ suggests an overt concern for one’s interests, rather than what is critical, and that is a concern with facts. Greedy people don’t need to sell falsehoods; they just do because there are no consequences for doing so. Of course the media is not thinking about the impact of their narrative on their readers. They are simply concerned with pleasing their employers and getting paid to ‘fill a role’. This is not overtly an attack upon the media, but rather to highlight how politics founded on extortion is effective at breaking down the fabric of society. People’s purported ‘narrow self-interest’ does not arise from capitalism, or even ‘a greedy nature’, but actually from the tragic nature of democracy, or if you like, the ‘nature of humans’ when they are subjected to tragic values like democracy. This is not a popular storyline to espouse, however a litany of argument at CMG and other postings at Quora, will expand the argument.
We need to recognise that globally, there has been immense consolidation in the media over a number of decades. Media groups are under stress despite the economies of scale they have reaped, and despite their capacity to combine TV and newspaper media content resources. The travesty for the media is that:
  1. They don’t have the resources to offer quality news
  2. They face a great deal of competition from other forms of media
  3. They have witnessed a huge loss of revenues from the ascension of cable TV in the first instance, and the internet, blogging, Google Search and other conduits like Netflix and YouTube
  4. They have been gravely impacted by plagiarism, both of their own context, as well as movies, since there is no longer a reason for people to watch TV anymore. The benefits of ‘the big screen’ have been curtailed by free content online.
It is easy of course to argue that the problem is ‘capitalism’ or ‘greed’, or ‘competition’, but it isn’t simply the political structure that dictates how people conduct themselves; it is the underlying values that shape their conduct, and how ’empowered’ they feel to decide their course of action. A journalist doesn’t decide the standards – they are external. The corporate media boss doesn’t decide the standards or media market laws, an external politician does. The politician doesn’t decide whether he is elected, or what policies he advanced, an unaccountable constituent does. Now, even the constituent has a ‘gripe’, because he doesn’t really possess meaningful power, so why should they invest time in a process that doesn’t reward them. This is why democratic outcomes are so bad – because it estranges or alienates political actors when it ought to be bringing about engagement. It is an intellectual war, like any physical war, and it is arresting the intellectual and personal development of all members of the human race.
Of course the media have been able to capitalise on certain advantages, for example:
  1. The largest media groups still preserve a strong brand name and a loyal following from elderly viewers, who persist in buying their newspapers and watching their TV channels
  2. The largest media groups retain a near monopoly on their accessibility to the nation’s politicians and business leaders
  3. The largest media groups are able to expound ‘issues’ that are destined to captivate the public, and using the ‘polarising’ content of politicians only serves that end.
This surely looks impressive to the media bosses that take home more money, buy larger houses, and fund the private school education of their kids. You should however not be surprised to learn however that even these ‘bastions of the good life’, are not so happy with life. The reason is:
  1. They are not happy dealing with ‘unreasonable people in their life’
  2. They don’t have time to engage in their children’s lives; their kids are out of control
  3. They are subjected to unreasonable standards in the office, and through the media
  4. They are obliged to take on vast responsibilities as ‘corporate officers’, and are feeling the pressure of a political witch hunt
The question you have to ask is:
  1. Who does it serve for the media to extol these stories?
  2. Who is destined to keep the media honest? Who is performing the fact checking?
Now, you might expect the media to treat the public with respect when it writes its story lines. After all, the media is supposed to research, gather facts, and present compelling, objective articles. The travesty is that, the media is not so motivated at all, but is rather motivated by:
  1. A desire to instill a sense of fear in the public, so that their content presents ‘riveting’ viewing, and thus allows them to earn more money
  2. A desire to appeal to certain constituents, and to serve as a mouthpiece for those groups
  3. A desire to ‘leverage’ their ‘faithful’ constituents, so that those constituents ‘spread the word’ of their media ‘representatives’.
The reason of course is that ‘education is not a value in itself’, so for the media to lock people into a ‘buy signal’ for any particular newspaper, they feel compelled to give prospective readers with busy lives:
  1. An imperative to read that specific story in that specific paper
  2. An imperative to reach other readers by buying advertising
The implication is thus:
  1. The media is no longer presenting ‘balanced’ or ‘objective’ coverage of issues, but is rather canvassing a narrative that it thinks will resonate with a ‘mass audience’, or in the case of some media groups, with a certain ‘political constituency’.
  2. The media is functioning as a political party in some respects, whether it is serving the interests of a single political party, a constituency, or the ‘mainstream parties’ that are the bedrock of democracy, as legitimatised by the media and these political parties. These parties and associated media groups are therefore dedicated to the ‘marginalisation’ of any alternate parties or voices that would undermine their paradigm. You see this most clearly with the attempts of the media to ‘disparage libertarian parties’, along with more unreasonable interests like nationalists. i.e. Pauline Hanson’s One Nation.
Any presentation of libertarian parties is destined to give rise to:
  1. Rhetoric suggesting that libertarianism is (i) ‘extreme’ (when it is somewhere between conservatives and liberals on many issues), (ii) classical (in keeping with the original constitutional provisions of the nation), and (iii) are the only exponents of common law (given that the mainstream parties are undermining it with a predilection for statutory creep).
  2. Rhetoric implying that libertarians are ‘unrealistic’ because they are ‘ideological’ or ‘principled’ in outlook. There is never an argument made to ‘defend ideology‘.
We saw in the case of the US election that Gary Johnson was not even given the opportunity to be presented as a plausible ‘3rd candidate’ in the US presidential race by the two main parties, or the media. Trump was not against his participation, though that could be construed as a ‘straw argument’ if he knew that Hillary would veto his tacit support.
It is interesting to look at how the media misrepresents the state of markets. They do this in a variety of ways, including:
  1. Canvassing the views of ‘tragic narratives’ supported by academics who seek ‘limelight’ in the media. This could be construed as a logical fallacy known as ‘appeal to authority’. i.e. Taking an academic view as an ‘expert view’, and not subjecting it to critical review. In the NZ Herald and One News (NZ), you could be forgiven for thinking that there was only one viewpoint on property, and that it was a ‘housing crisis’. This has been the narrative of the NZ Herald ‘Home Truths‘ series. Clearly the appeal of these stories generates great interest, so the fear has to be perpetuated.
  2. Canvassing the need for taxes. The media actually has an interest in empowering minorities, and expanding the number of vested interests vying for power. We are inclined to think this is an ideological position, but in fact, it could be construed as an affirmation of the media, who serves as the ‘glue’ that brings it altogether. These minorities need representation as well, and they need governments to fund the parties, and supporters who make the conflict that allows fear and greed to demand the media can ‘serve as the glue’ in this democracy.
Seemingly, this ‘housing crisis’ narrative has fostered a number of issues, that have served to embarrass the NZ government. The reality is that most of these issues have no link to high property prices, even if they are embarrassing for the government. But are they reason to vote for a ‘bigger embarrassment’ – the opposition parties? There is no consideration of this issue because the media is really only interested in a ‘competition’. A foregone conclusion is not good for business. The media want a bloodbath to get people buying newspapers. This underlying strategy does not feed into the media narrative, as that would diminish readership. It would turn people off and make them cynical.
Now, to draw upon the content from the Dateline story, I will elucidate the media proclivity to sensationalise issues. Watching this story you would be inclined to draw the conclusion that:
  1. Vancouver property prices are high because of the Chinese. The truth is that property is a popular investment for a great many people, and most Chinese are more likely to buy new apartments rather than old houses. In any case, it cannot be argued that Chinese are ‘driving the market’ because we are not seeing a withdrawal of other buyers. The reason why property prices are rising is because currencies are expected to decline in value, making retention of ‘hard assets’ a good defensive strategy from currency debasement. Leveraging yourself into asset markets at a time of low interest rates is a sensible investment strategy. The Chinese are doing it because of the ‘yields crisis’ in their own country, but Westerners should be doing it as well.
  2. The media is actually chronically mis-educating the public on investment advice. We have the government reining in ‘the advice of financial advisers’, but the flipside is that the government has done nothing to stop the media ‘creating the illusion that housing prices are a bubble’. Of course they pitch it through the eyes of an academic, who is not a licensed professional’, and yet he is offering investment advice, albeit of a general nature. One can also see the media pitching art through its tabloids, as well as selling solar panels as an ‘investment’. They are not an investment. They are not commercial viable, unless the media or the installers are guaranteeing future electricity prices.
  3. The story pitches the story as if it ‘not about the fact that they are Chinese, but the fact that they are wealthy people who happened to be Chinese’. The overt message ‘is that this dialogue is not racist’, but it is still prejudicial because it is identifying a group, and creating a false narrative, and attributing it to a group of people, who are mostly ‘spoilt rich people’. Of course, they didn’t earn all the money they made. Their parents in most cases made it. Of course this is an opportunity for the ‘left media’ to present rich people as ‘greedy’ and ‘gratuitous’.
  4. It presents wealthy people as spoilt and unrealistic, however this is but a stage in the life of everyone. We make mistakes with purchases, and we might pay a price for those mistakes, and someone profits at our expense. They might be profitable today, but losers tomorrow. One is left wondering whether the story is contentious at all. Of course conservatives will deplore the materialism, but they don’t spurn the jobs created. ‘Ultra Rich Asian Girls’ highlights a culture of wealthy people ‘bidding over the top’ for assets. A broader perspective would argue that the bulk of Canadian (and other Western investors) already entered the market at the ‘bottom’, whilst the Chinese are entering at a high end. The issue is where prices will go, and the media is suggesting the property market is a bubble.
  5. The argument that 80% of buyers in some areas are ethical Chinese highlights the fact that Chinese buyers are pitching themselves at the top end of the market. The reason why ‘doctors can’t enter the market’ is more likely because they are indebted with student debt. The spectacle of Chinese bidding up ‘top end’ properties is not going to flow into lower priced markets if there is a physical demand, unless those investors are merely sitting on the property. There is no reason to ‘sit on properties’, unless there are fears about destruction by tenants.
  6. There is nothing new about people being unable to pay their way, whether earlier Chinese labourers who couldn’t afford to pay their way, or the ‘new age’ immigrants who can. The fact that Chinese are bringing in cash and are not confined by low wages. It is no different from any other wealthy person entering a ‘cheap market’ and buying up.
  7. It is not surprising that ‘millionaire migrants’ are not interested in traditional Chinese culture, which is anachronistic in the new era. Why is not advocacy of ‘traditional Chinese arts and culture’ not being questioned. There is really nothing new about ‘spoilt girls’ spending. The same occurred in Japan. You might wonder why there is no focus upon the number of Hollywood children who end up on drugs.
  8. The issue here is ‘pitching Chinese Canadian Establishment’ as inconvenienced by ‘modern millionaires’. i.e. The modern immigrants are making it a struggle for the Establishment to remain in their position.
  9. Journalist Ian Young suggests that these Chinese ‘millionaire property speculators’ are paying little tax, implying that there is no gain for Canada in accepting these immigrants. Yet the subtext of the story is that they are ‘bidding up property prices’ and spending lavishly. The ‘income making is being done by others, or their parents in China. What are we to make of this selective thinking, but to consider it highly biased or ‘parochial reporting’. The media is out looking for ‘victims’, and it is struggling to find them. His narrative is that ‘millionaire migrants’ are not good because they don’t pay taxes, and they don’t contribute to the country. Clearly he is espousing a ‘mercantilistic view’ wherein you only adopt policies that benefit the country, as opposed to adopting policy that treats everyone equally before the law. He argues that these millionaire immigrants are not creating jobs or fostering growth’, but that is not true if you acknowledge their asset purchases, their tax payments and their spending. He is only looking at their personal ‘income taxes’, and not their sales or consumption taxes. Understandably the government never considered the ‘millionaires visa’ a failure.
  10. A community ‘liberal‘ argues that “money has taken precedence over our community”, but the reality is that the rights of Chinese people to invest in Canada have were upheld as a right (until recently), along with other’s rights. So you have to ask whether liberals are exponents of ‘rights’, and whether they are really defenders of people from prejudice. The fact is that, when subjected to fear, they are as ‘reactive’ as conservatives. The greater travesty is that this is a global market phenomenon that has its origins in the same statism that liberals support – albeit a ‘conservative’ overt authoritarian variety, that saw Asian workers locked out of employment markets for decades (1960s to 1980s). She parochially is defending ‘rights at the expense of others’. The conservative view is equally not helpful, arguing that ‘she is racist’ or that ‘she should move’. It is not Chinese people calling her a racist, it is wealthy ‘white’ property owners who want the right to sell.
  11. Dateline has certainly managed to find an academic who is prepared to support their narrative that it is a bubble. This time it comes from Dr David Ley, a professor of geography. In my earlier article, I highlighted the fact that this is not a ‘physical or real housing market crisis’, but a monetary ‘asset inflation’ crisis, and that it will be resolved in time, and that people needed the truth, and not to be mislead by the nature of the market.
The Chinese millionaire featured is ‘spot on’. She reasonably argues that those begrudging people need to acknowledge that life is confronting; that ‘time changes’ and things change in time. I would argue that these Chinese buyers are ‘relatively lucky’ in terms of timing, but if they are not attentive to the risks, they will face the prospect of losing their new-found wealth, or needing a bail out from their parents.
It is possible that this focus on the Chinese comes from a desperation within the media for influence, and a spectacle of hypocrisy. Are they not trying to make a dollar by sensationalising stories? After all, who is the loser if these stories find no audience? Consider that this Dateline story was published on the 7th June 2016, and just two days later there was a competing story on the 9th June 2016. Media competition or some notion of ‘syndicated research’? You might wonder. The media is under pressure, and it would be understandable if tragically journalists were really extolling whatever narrative was destined to keep their heads above water. Here are the stories:
  1. “China’s Millionaire Migration” by Aaron Thomas, Datline, website, 7th June 2016.
  2. “China’s Rich Girls” by Steve Chao, Al Jazeera, website, 9th June 2016.
The sentiments of these girls is little different from many other rich women for decades or centuries past. One might be surprised by the number of Chinese people who stay in China and work hard in the family business, pleasing parents and earning a meagre allowance for it. These are ‘new liberal’ Chinese parents, who hold a double standard for their children. It is not even typical for Chinese, however it reflects a ‘guilt’ or intellectual laziness that sees them as too generous. In this case, these women are engaged in ‘self promotion’, so developing an image is part of it. It is therefore a ‘celebrity development’ enterprise. Some of these ‘frivolous values’ display nothing more than adolescence, however in other cases there is an appreciation of ‘sustained value‘. Chelsea describes how her wish for her child is that “he will be able to spread his wings without falling”, even if she insists she doesn’t want to spoil him. In fact, these girls are studying in the West, or working, so they are not the frivolous lives that we are lead to believe.