Does Minimum Wage Build a Rich Country?????

Median Household Income

Look at these two charts. These countries with high minimum wages seem to correlate with other countries with high median income. Is having a high minimum wage great for the finances of a country? Many companies worry that minimum wage will destroy their businesses. This is true, but only the worst companies that barely survive will hurt from a high minimum wage. A high $15 hourly wage to Walmart workers will not destroy the Walmart corporation. Maybe minimum wage does nothing but help workers to survive in these high standard of living countries, but maybe minimum wage is healthy for a nation.....

How to Fix China's Housing Bubble

Everybody knows that China has one of the world’s largest real estate bubbles, but it may be possible to fix this bubble from popping. I believe that China’s real estate bubble can be possibly prevented if a certain policy is enacted. My theory assumes that retirement funds and pension funds drive up stock market prices over time. 

       This is what makes some stock markets go up in the long run and other stock markets stagnant. China’s stock market has been quite bipolar or stagnant over time and is not trusted. The stock market in China is not like America’s where only professional analysts rate stocks. China’s stock market does not increase in value over time because pension and retirement funds are not allowed to participate in the stock market. Retail investors are pretty much the only investors in China. Chinese pension funds have been limited to speculating/investing in real estate. These pension funds having been limited to investing in only private companies and real estate. Private companies and real estate may not super attractive returns. 

        These limits in capital allocation has led to an unhealthy, overinvested, bubble-like real estate sector. Pension funds suffer because they are not offered a wide variety of investment choices. Thus, people invest on their own and often regular people invest in real estate because it is easier to understand than the stock market. The U.S. pension industry is massive! And over a long period of time more people in China will embrace pension plans if the returns are decent and if pension companies can invest in the public markets. If pension funds can invest in the Chinese stock market then the stock market will become more stable and real estate may steadily become a less appealing investment. 

       Hence the real estate bubble will not immediately pop, but it will be stagnant or have more realistic growth. Real estate will still be a great investment with pension funds, but pension funds will balance out its asset allocation with stocks and real estate to a more reasonable level. This transition from interest in real estate switching to pension funds will take years. This will ensure a bright future for both real estate and the Chinese stock market in China. A slow transition like this which may take 10 or 20 years, and it will have little immediate effect on the stock market or real estate. That means no crashing real estate bubbles popping which wipes out trillions of dollars in wealth. But the long term effect is substantial in that the overinvestment in real estate will become more balanced. This being said, pension funds having access to the public market may have long term effects as opposed to short term effects. And this will “slow down” the real estate frenzy that is currently going wildly up in value. 

      A countering view is that pension funds having access to public markets will actually POP the real estate bubble. This is not my view. I think pension plans having access to the stock market, will make the entire asset allocation in China safer.