I don’t really know what’s going on at the best of times. I sit in front of my laptop thinking and writing most days. And with two young kids, any spare time is spent hanging out at the St Kilda Botanical Gardens (not a bad spot, by the way), on or around the monkey bars.
Then there’s the whole dinner/bath/bed routine, which is like some Groundhog Day nightmare. By the time the dust has settled, it’s about 8:30pm. Outside of financial markets and economic news, I have no idea what goes on in the world.
So when my wife asked me the other day whether I had heard about the ‘avo smash’ debate going on in Australia, I just stared blankly and shrugged my shoulders.
Apparently, smug/bitter (I’m not sure which) 50-something demographer Bernard Salt had a go at millennials recently for having a couple of ‘avocado smashes’ on toast each week, when they should be saving for a house deposit.
Boy did that comment cause a stir!
The generational war continues over the battle for land. The landowners moralise to the landless, telling them that, if they only saved more, they, too, could have their slither of freedom.
It drew a predictable response from (predictably) The Guardian:
‘So what do you do when you can’t afford to buy somewhere to live? Well, you decide to live.
‘You get Ubers, you travel, you buy a good phone, you get a laptop, you go for brunch (many of these things — particularly travel and electronic goods have fallen in price, while house prices have accelerated way beyond income growth).
‘Brunch is the opiate of the masses. We are not going out for brunch instead of buying houses: we are brunching because we cannot afford to buy houses.’
This housing boom is causing quite a stir between generations, and it’s creating an interesting economic structure.
Let’s break it down…
House prices have now become so extreme in the major capital cities that younger people are just giving up on the expectation of ever owning their own home.
So they are deciding to live, instead. And because the major cities are where the jobs are, the youngsters move there, even though they can’t afford to live there.
Having decided to move for the job, and enjoy the fruits of their labour (instead of living frugally), the youngsters have created a thriving hipster economy. This increases the value of the hipster community, because, as Phil Anderson of Cycles, Trends and Forecasts says, all economic value capitalises into land prices.
The baby boomers have the capital to take advantage of it. They buy the apartments, houses or shops in the inner city and rent it out to hipsters. The hipster resents this economic domination and spends their money in the community where the baby boomers own all the land, increasing its value even more! Hip irony.
Here’s a tip for the hip: Before moving on to the next untouched area, buy the land first. Then you will economically benefit from your hipstering ways.
Thankfully, having purchased a fine Italian Bezzera espresso machine a few years ago, I rarely do the café thing. Not when I can make a double-shot cappuccino for less than a dollar. Bernard Salt is right; coffee and breakfast is very expensive. And I don’t have to see the bearded, tattooed barista cliché.
But the humble coffee and breakfast is expensive because the owners have to pay the rent. And the increasingly high rents are a result of all economic gains (and debt growth) capitalising into land prices. Phil calls it an iron law of economics — a law that only a few people really understand.
If you want to understand it, I suggest checking out Phil’s work here.
In hipster currency, it will only set you back around two avocado smashes on toast for a year’s subscription. Not bad at all!
Continuing with the theme — and not that I’d really know, because I don’t do the café scene — where is the original hipster jazz music in these places? The hipster originated in the 50s with the Beat Generation, right? Greenwich Village, Kerouac, Burroughs, and Ginsberg…all to the soundtrack of smoky black jazz?
Or maybe not. It’s been a while since I was into the beatniks.
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