> Your growth rate of 560k to 627k is 11.9%

These are hypothetical numbers. The point is that you can receive a return without any capital gain, not what the exact percentage is.

> This outpaces wage growth

So does the S&P 500. The big problem here is that real wage growth has stagnated, of which a major contributor is... high real estate costs.

> The end result of asset growth outpacing wages is complete divergence and the end game of Monopoly where 1 guy owns everything.

This is obviously untrue. Example: Jeff Bezos and Elon Musk get into a bidding war over real estate on Mars. The Martian real estate market is now worth a hundred trillion dollars, even though nobody lives there. The owners of Martian real estate now have a net worth of trillions, but it's all locked up in Martian real estate. The rest of the economy is unaffected.

Asset price inflation only affects ordinary people if the inflated assets are something they have to buy.

Which gets us back to real estate, which is such a thing. Suppose Bezos wants to buy Earth real estate in order to rent it out and turn a profit. He buys units that cost $25,000, makes not just 12% but 25% annual returns, uses all the money to buy more units.

If construction is constrained, housing costs are going up with higher demand, which is the problem in the existing market. But suppose we're not doing that; it still costs $25,000 to add a new unit of housing and anyone proposing regulations to make construction more expensive shall hang from the neck until dead in the gallows on main street.

If Bezos wants to use his profits to buy more housing and he tries to buy the existing housing, demand increases, so the price goes up to $26,000/unit, so construction companies build more units until it falls back below $25,000/unit again. Then Bezos goes to rent out his new units and finds that rents have gone down because there are now more units on the market. But a 21% return still great so he keeps at it and then goes to buy more units with the profits again, which causes more to be built, which further lowers rents/returns by increasing supply.

The ultimate result of this, then, is that r falls below g. Unless you constrain construction.

I think you present an idealized version of market economies that is not in line with my experience (I live in Sydney Australia our housing system has collapsed). Our disagreement seems predicated on our beliefs around r > g. Have you read Piketty?

I'm familiar with it. The obvious question to ask in response is, why is r > g? What can be done about it?

Piketty's answer is more or less "do socialism", but that's not obviously correct. For example, a lot of government spending programs tend to funnel money into well-connected industries, which are the things already accumulating capital. Likewise, transfer payments to individuals can be absorbed by monopolists if the monopolies are allowed to persist.

And that, really, is the true cause of it. Market consolidation. Regulatory capture. If there is more competition, the competition lowers margins, and then more of the surplus goes to the consumer instead of the investor. If the incumbents capture the government (or the government is careless about creating market barriers to entry) then competition is reduced, margins increase and more returns go to capital. The latter is clearly what's happening in the housing market.