Saturday, January 14, 2012

Keeping the real value of your paper wealth

One way I look at real value is how many hours of the median workers wages does it buy.  Right now in the SE a home is basically an entire lifetime after-tax earnings of the median British worker.  35 years * 50 weeks * 40 hours per week * say £8 an hour = £560,000.  The median detached in greater London went for £850,000 last year.

Basically how do you keep that claim on other peoples labour.  Of course it gets more complex when you look at things like Bangladeshi workers competing for your money who make 1/50th what British workers do.  Now holding that labour value becomes extraordinarily powerful. 
If you owned a house free and clear in London and sold it and managed to keep that value of claim against Bangladeshi labour.. you have a claim of 50 lifetimes of labour. 

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