Rebuilding the State

I am cycling through some great environments, and I would imagine more to come. I am told much of the good stuff of Germany was destroyed in the second world war (but not Bamberg where I am writing) and most of that has been rebuilt. This country has gone from devastation to reclaim its older glory as a rich liberal country, including all this rebuilding of places that evolved over centuries. How can this be? Let me venture part of the explanation.

This place does not waste too much of its money on unproductive personal real estate whereas in Australia we are obsessed by it: making money out of doing nothing. The Germans invest in advanced technology, public architecture and the arts, and bike paths but that is modest in the scheme of things.

They manage the supply of land for apartments and houses so as to minimise inefficient land transfer payments from the poor to the rich.

They don't seem to build on land that is flood prone nor has a better use for agriculture.

Housing in Germany has hardly increased in price in real terms in many decades, whilst in Australia it has increased nearly 3 times in real terms. This increase in places like Australia is simply a transfer payment that is largely squandered by the rich on overconsumption of imported luxury goods and services.

The Germans have a more equal wealth distribution than some other developed countries. You can see the extremes of inequality in Nigeria and the USA plotted on the GINI index, there is Australia which is now not good whereas it was once the fair country, and a sample of 3 advanced European countries.

They are in the business of creating real wealth. And they have prices that allow me to travel at a modest cost.

Remember there is no cost for raw land - there is what there is, we don't incur any cost to make it. The Germans have worked this out. And furthermore they appear not to waste money on excessive houses that are never an investment as they deteriorate and require maintenance.

The Australian approach to housing in a country like this would be a nightmare.