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Help! please rate my analysis of an argument [#permalink]
24 Sep 2010, 20:52
The following appeared in the personal finance section of a popular magazine:
“The average price of an acre of land in the United States is now 50 times what it was in 1970, and nearly 200 times what it was in 1920. The nation’s population is projected to keep increasing, even as the amount of land remains constant. Therefore, people who are approaching retirement should invest heavily in real estate in order to ensure their financial security.”
Discuss how well reasoned you find this argument. In your discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counterexamples might weaken the conclusion. You can also discuss what sort of evidence would strengthen or refute the argument, what changes in the argument would make it more logically sound, and what, if anything, would help you better evaluate its conclusion.
The writer of this personal finance section of the concerned magazine has given data relating to the price of real estate today as compared to that in the 1970's and 1920's.He states that real estate has boomed price-wise to 200 times as compared to the price in 1920's; the same land is worth 50 times more today as compared to that in the 1970s . He suggests that people reaching retirement should invest heavily in real estate in order to ensure their financial security, as land is limited and population is ever increasing , and so is the price of land increasing. The writer has ,it seems, assumed that all the people approaching retirement have more financial capability to invest "heavily" in LAND today than in coming years(with the inflated price of land).He has also overlooked other possible avenues of investment by mentioning the phrase "should invest heavily in real estate in order to ensure their financial security.” Thus i feel that the argument is full of errors so much so that the argument reasoning itself is rendered flawed.
Firstly, the writer has, in his reasoning , assumed that the increasing population has access to only those lands that they can access today by mentioning ", even as the amount of land remains constant." Now, in the literal sense this is true but in the context , a person can invest in land anywhere its a given that land for investment is available to such an extent that there's no need for hoarding it in the present.
Secondly, the writer has assumed that all the the present population approaching reitrement, has the finances to invest "heavily" in land. It may be so that they cant afford to invest heavily, and thus just put in a meagre amount.A statement more on the lines of "therefore, people who are approaching retirement may invest in land which might ensure their financial security in the long run" is more appropriate.
Thirdly, the writer it seems has completely bypassed other possible avenues of investment like the equity market or the commodity market. Such markets have also gone a long way in providing financial security to the public,in the long run.Again, mentioning of the statement "therefore, people who are approaching retirement should invest heavily in real estate in order to ensure their financial security,” has come to the writer for grounds of criticism in his reasoning.Such a statement may indicate to people that the writer is all for land ONLY.
Some people might argue that that investing in gold bars and other such commodities might be a much safer bet as gold has paid rich dividends to its investors historically.Its availability being limited and not infinite gives it an edge over land in that land value may have other factors like government policy which might lead to its devaluation or worst case scenario,being taken over by the govenrment, while in the case of gold, the scarcity element ensures its appreciation over a period of time.
In conlcusion,the writer's reasoning in the given argument is clearly flawed with absurd assumptions about the retirement - approaching population's wealth and bypassing other avenues of investments for financial security.