The Boom Bust Irony

The Boston Globe suggests that realtors actually don't profit very much in a real estate boom:

It would seem obvious that being an agent during a real estate boom is a great way to earn a good living.

As it turns out, however, most agents don't make very much money during a boom, because of one simple fact: the boom attracts way too many of them.

The point summarises well the great falacy with booms of any kind: while most people to some degree feel the benefits of the increased capital surplus, booms operate a little like pyramid schemes in that only those who were in first derive any kind of substantial windfall out of it. It is a bitter twist of irony however that when the boom turns to bust, the reverse is true: even those who never had anything invested in the phenomenon at all feel the dearth of the dry-up in capital.

It's another case of the minority outweighing the majority.

Comments

[harish]

Very true when you said that a boom need not be profitable .. since it means all tom, dick and harry enter it to encash the boom.

The same i observe is true with a bust.. for instance September 11 actually didn't change the software industry as many think about it.. but it did give a kick on the butt to all those numerous unmanaged software startups who thought anything with 'e' and internet would make money not bothering customer service quality.