THE RENTIER–ASSET IMPOSSIBILITY THEOREM

Official Paper Release

I’m excited to finally release my paper on The Rentier–Asset Impossibility Theorem after a long stretch of research, writing, and revision. This project has been a deep dive into why essential costs keep outrunning wages — and why that isn’t an accident or a cycle, but a structural trap baked into the system. You can access the abbreviated version or the full technical paper at the links below:

Read the plain-language version
Download the full 309-page paper

If this work resonates with you, subscribe to the Substack to stay updated — this is just the beginning, and I’ll be posting regular analysis, data, and plain-language breakdowns as I continue building out the implications. It’s a long road ahead, and I’m glad you’re here for it.

1. INTRODUCTION (from the paper)

America’s affordability crisis is becoming the country’s defining political issue, and is poised to be the dominant political and economic force for the remainder of the decade.

A recent AP voter poll shows economic anxiety dominating the 2025 elections in New Jersey, Virginia, California, and New York City—outpacing every other issue—and CNN exit polls confirm that cost of living, taxes, and the economy ranked as voters’ top concern everywhere, far ahead of immigration, crime, health care, or climate change. Among younger Americans the crisis is even sharper: 70% of Gen Z report money worries tied to policy failures like unaffordable housing (81% under 35 say costs are “too high”) and healthcare. The median homebuyer age has climbed to 40, and 62% of adults under 35 fear they will never own a home. Half of under 35’s now live with their parents, and two-thirds of the country believes America’s best days are behind it. Only one in five still thinks hard work leads to upward mobility. For Gen Z and Gen Alpha, anxiety has overtaken optimism for the first time in modern history, fragmenting the public mood—nationalism rising on the right, socialism on the left, and a broadening conviction that the economic game is rigged.

So what happened?

That is what this paper ultimately seeks to answer. The empirical findings we present are striking, but the theorems matter far more, because they show why these patterns must occur. The results are not simply that essentials have outpaced wages; the theorems demonstrate that, once these goods are priced to required returns, rising unaffordability becomes a mathematical necessity, not an accident of policy or circumstance. The system does not merely “tend” toward unaffordability—it is structurally designed to produce it, as reliably as 1+1=2. What was previously hand-waved as “complicated” now has a clear mechanism: the conditions that price essentials also guarantee that the affordability wedge grows without limit.

Recognizing this structure does not, by itself, prescribe a moral or political stance. Whether one believes this outcome is acceptable, undesirable, or in need of reform is a separate normative question, and this paper attempts to remain neutral on that point as far as possible. Its goal is simply to make the mechanism visible, undeniable, and plain so that the reader can decide.

Empirically, we show that decades ago prices of inelastic essential goods, the things you must buy to live, stopped tracking with slow growing wage increases, and began tracking with much faster growing Wall Street returns. The compounding effects of that are only now becoming too difficult to ignore, as we enter the exponential part of the curve. Affordability is likely get much worse than it is now, and the growing wedge is sure to become the defining political and economic variable of the decade ahead.

Since 1973, the basket of necessities for living (CPI-ES: housing, healthcare, food, and energy) stopped tracking the median worker’s wage and began tracking Wall Street’s required real return. A fixed basket of these essentials (CPI-ES) has risen an average of 4.3 percentage points per year faster than real median wages, a wedge that has been positive in 48 of the last 52 years and now represents a +732% cumulative affordability loss.

The data are unambiguous:

· Before 1973: essentials moved with wages; real interest rates explained almost nothing.

· After 1973: essentials decoupled from wages and began moving with the 10-year real yield (R² = 0.46).

Before 1973, essentials rose with wages; after 1973, they rose with investor return requirements — a shift that’s unambiguous, and plainly visible directly in the data.

TWO New Economic Theorems

This paper introduces TWO new economic theorems, and several related correlates.

The first new theorem is The Rentier–Asset Impossibility Theorem which shows the inflation of essentials over wages was not a policy mistake or an unfortunate coincidence. It is arithmetic. As long as:

1. rentiers capture a positive share of national income,

2. any portion of inelastic essential-goods supply is priced to deliver a financial return, and

3. required returns exceed real wage growth,

the cost of staying alive must outrun the median paycheck every year, indefinitely.
Nothing short of breaking one of these three conditions can reverse the trend.

If you are asking why, lets look at the logic:

Condition 1: Capital earns a positive share of income.

Once capital earns anything at all, its owners will expect a certain return.

Condition 2: Essentials are priced—even partially—to meet required returns
Once essentials become “capital” investments the investors will therefore have expectations of a certain return (profit) on those essentials

Condition 3: Required returns grow faster than real wages

Investors won’t accept returns that only match wage growth or inflation; they demand higher returns, and they move their money until they get them.

When all three conditions hold simultaneously, essential prices must rise faster than wages—because they are tied to required returns that grow faster than workers’ earnings.

RAIT has held for 48 of the last 52 years, the four exception years confirm RAIT’s law: each exception year occurred only when a RAIT constraint briefly relaxed—when required returns collapsed or essentials temporarily could not command a positive real return—allowing a momentary inversion before the regime immediately reasserted itself.

This paper introduces a second core contribution The Asset-Pricing Constraint on Essential Supply (The Return–Restoration Principle) and its corollary, Dual-Curve Pricing and the Asset-Pricing Floor in Essentials that are also new to economics, because a natural question follows the first theorem: “What happens if an essential-sector investment fails to deliver the required return?” This can occur when supply suddenly expands such as in the mid-2000s housing boom in Las Vegas, or when demand collapses—as in energy markets during the COVID shutdowns.

In these moments, realized returns fall below the required level, but investors will not sit idly by while their capital doesn’t supply an attractive return, instead:

1. Capital leaves. If returns in essentials fall to the level of wage growth (or lower), investors instantly shift their money to assets that do outperform—bonds, equities, REITs, private credit, anything with higher yield.

2. And when capital leaves essentials, supply shrinks.
Construction stops. Hospitals delay expansion or close units. Utilities cease to build new capacity.

3. Shrinking supply + inelastic demand = higher prices.
Because people can’t reduce consumption of housing, energy, food, or healthcare, any drop in supply pushes prices sharply upward, until returns rise back to the required level that brings capital back to the sector.

So the system enforces a simple rule:

If essential-sector returns fail to exceed wage growth, capital exits until prices rise enough to restore the required return.

supply ↑ → returns ↓ → capital exits → supply ↓ → prices ↑ (to the return floor)

The implication is not that supply cannot move prices at all.
The implication is that supply cannot sustainably lower prices below the level implied by required returns, nor can it realign prices with wage growth. This yields an impossibility result:

It is mathematically impossible for prices on capitalized essential goods to track wages as long as essentials are priced to required returns that exceed wage growth.

Further:

No feasible supply path can restore wage-based affordability in an inelastic asset-priced essential sector; prices remain anchored to the return floor, which grows faster than wages.

This leads to a new conceptual object: the asset-pricing floor, a curve absent from standard microeconomic or IO models. The corollary shows that prices obey a dual-curve rule:

Pₜ = max(Pₜ^{sd}, Pₜ^{A})

When the asset-pricing floor exceeds the supply–demand equilibrium, prices are pinned to required returns, while supply shifts affect only quantities, not affordability.
Essential sectors therefore behave not as goods markets, but as return-anchored capital markets whose prices must outpace wage growth as long as required returns exceed it.

In short:

“Supply can lower prices temporarily, but never enough to reach wage-based affordability; once returns approach the floor, capital withdraws and prices revert to the return path.”

This framework reconciles why we repeatedly “build more” yet never achieve affordability: supply can bend the curve, but it cannot break the return floor.

This mechanism is unique to essentials like housing, healthcare, energy and food because they combine inelastic demand with capitalized, return-constrained supply, creating a sector where any attempt to lower prices triggers capital exit and a snap-back to the return floor.