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United States42262 Posts
On that matter you, me, and Thomas Jefferson are in full agreement. He proposed a wealth transfer/inheritance tax of 100%, to be paid out each year in the form of a dividend paid to citizens reaching the age of majority. His goal was to prevent the living from being constrained by the dead.
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On June 07 2019 01:18 Slydie wrote:
Both Sweden and Denmark have tries to regulate rental prices and I think it worked our pretty badly:
-Some rental contracts are frozen at some as low as 1/4 orf the market price.
-Those contracts get a hughe value! They are sold on the black market, 2nd 3rd etc. hand rental is common and nobody in their right mind would ever cancel a contract that valuable.
-The housing market will still be equally cutthroat when there is a shortage of homes.
-Landlords find loopholes wherever they can to make money, like huge deposits and forcing people to do reforms even after short stays.
IMO, this solves absolutely nothing! The market finds a way...
The solution to a problem is very rarely 'fuck it it's too hard'. That has a historic tendency to slowly make the problem worse.
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On June 07 2019 07:05 GreenHorizons wrote:
The "it's broken" part is key. Because he doesn't argue it's broken, but that it functions as it must. He's pointing out that it contains inherent, self-destructive, flaws, much as you see human nature as one to Communism in general.
The point of me drawing out your position (of which the ones you've hesitated to take I've noticed) is so that if/when I challenge your articulation of them/their relationship with one another we can know clearly what it is we're discussing.
Once upon a time I thought I'd pursue business and took some econ so I'm familiar. I disagree with your articulations of my argument and questions but rather than focus on that let's focus on the question you seem to want to answer but haven't yet.
What is your reasoning for the belief that one is entitled to profit from no labor/work of their own, but instead profit off of another person's labor.?
Because they're the people taking an actual risk and the ones who actually make the enterprise successful.
Every person owns his own labor and profits from it. That's the whole basis for the concept of employment. Employee owns his time and skills. Employee sells his time and skills to employer. Employee gets paid for his time and skills. It's a simple and fair exchange. Employee's risk here is limited. Employee is merely risking his time for which he receives immediate compensation. Employee generally has little or nothing else at stake.
What the owner/capitalist does is different. Like the employee, he spends his time on a particular enterprise. But he also spends his money and other resources on it. He's the ones paying for employees to make the enterprise go. And perhaps more importantly, he's the ones contributing the intellectual capital to make the whole enterprise work. Accordingly, he is the sine qua non of the whole enterprise and the one who stands to lose everything invested if the enterprise fails. What he does is both risky and hard. That's why he gets the profit.
And let me stress that there's an element of choice in roles. Anyone can start business and be the owner/capitalist. If anything, it is far easier to do that now than it ever has been with the current gig economy. All you need is a good idea and the will to follow through on it.
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On June 07 2019 08:56 xDaunt wrote:Show nested quote +On June 07 2019 07:05 GreenHorizons wrote:
The "it's broken" part is key. Because he doesn't argue it's broken, but that it functions as it must. He's pointing out that it contains inherent, self-destructive, flaws, much as you see human nature as one to Communism in general.
The point of me drawing out your position (of which the ones you've hesitated to take I've noticed) is so that if/when I challenge your articulation of them/their relationship with one another we can know clearly what it is we're discussing.
Once upon a time I thought I'd pursue business and took some econ so I'm familiar. I disagree with your articulations of my argument and questions but rather than focus on that let's focus on the question you seem to want to answer but haven't yet.
What is your reasoning for the belief that one is entitled to profit from no labor/work of their own, but instead profit off of another person's labor.? Because they're the people taking an actual risk and the ones who actually make the enterprise successful. Every person owns his own labor and profits from it. That's the whole basis for the concept of employment. Employee owns his time and skills. Employee sells his time and skills to employer. Employee gets paid for his time and skills. It's a simple and fair exchange. Employee's risk here is limited. Employee is merely risking his time for which he receives immediate compensation. Employee generally has little or nothing else at stake. What the owner/capitalist does is different. Like the employee, he spends his time on a particular enterprise. But he also spends his money and other resources on it. He's the ones paying for employees to make the enterprise go. And perhaps more importantly, he's the ones contributing the intellectual capital to make the whole enterprise work. Accordingly, he is the sine qua non of the whole enterprise and the one who stands to lose everything invested if the enterprise fails. What he does is both risky and hard. That's why he gets the profit. And let me stress that there's an element of choice in roles. Anyone can start business and be the owner/capitalist. If anything, it is far easier to do that now than it ever has been with the current gig economy. All you need is a good idea and the will to follow through on it.
I understand that's the stylized version, but while I may return to it, I'd like you to apply your explanation to this scenario so we can strip away the frivolous and focus just down on what about ownership entitles one to profit (rather than something like "intellectual capital" being the justification) not the bootstrap/entrepreneur stuff.
Included the scenario:+ Show Spoiler +On June 07 2019 07:47 GreenHorizons wrote:Show nested quote +On June 07 2019 07:29 KwarK wrote:
GH, you're surely aware that ownership and investment often comes with the acceptance of risk of loss. The theoretical compensation is proportionate to the risk of loss.
Part of the surplus that a renter pays to the landlord is effectively an insurance premium that protects the renter from loss in the event of destruction of the property, market value fluctuations, and so forth. Another portion is purchasing an option that allows the renter to walk away from the property at any time, for example if they accept a job in another city, without any loss of capital. They are effectively insured against the illiquid nature of the asset they inhabit. The opportunity cost on alternate investments is another.
Renting is not simply burning money due to an inability to get on the property ladder. For many people it is a profitable proposition, renting better suits their capital position, desired asset allocation goals, and short term plans.
The issue is when market failures allow renters that provide no additional value to their tenants to exploit their position. But in the frictionless vacuum that the invisible hand operates in renting is not intrinsically exploitative. Perhaps if we imagine the example of land posted out during "western expansion" and since abandoned in all but title and establishment of rights of ownership and bequeathed till today. Now, today, I own it. Anyone who wants to defend the idea of profit from ownership can explain to me why I should be entitled to the millions in profit from the oil underneath it, which can be accessed for many miles around. If I'm convinced you may never hear from me again 
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On June 07 2019 00:05 xDaunt wrote:Show nested quote +On June 06 2019 19:19 Acrofales wrote:On June 06 2019 18:03 Velr wrote:
Forbidding to make a profit from land/property you own seems a bit extreme to me.
I'm fully on board with hard regulations that make property owners responsible to keep their stuff in a good condition, just offering an appartment for rent and letting it go to shit while making a profit should be plain illegal.
Raising rents just for the sake of generating more rent also shouldn't be allowed, if you want to raise the rent on an appartment you own, you should need a reason aside from "more profit" to do it. It's completely absurd that people can buy up real estate and make a living off the rent. It has 0 added value. Worse still, in some cities it isn't even worth renting out the real estate, so it sits there empty until the time is right to sell it again, at a "healthy" profit, of course. I never expected to see this kind of post from you. Zero added economic value? That is sheer economic illiteracy. Residential, commercial, and industrial stock has tons of added value. These are some of the most expensive capital investments that one can make. And it's not just the initial expenditure to build a building. Ongoing maintenance and renovation are very expensive. This shit doesn't just happen on its own. Homes don't magically regenerate. Someone has to do it, often at great cost. And that's before we even touch the issues of the risk associated real estate investing. There are all sorts of things that can go wrong when you invest in and lease property. Bad tenants are a thing. Property investors should absolutely be allowed to earn a profit off of their real estate investments given all of these costs and risks.
Interesting discussion.
Buying a house and renting it out adds zero value to the economy.
You are not building a new house,you are not adding to the stock of houses. Exactly what value is added when you buy a house and rent it out? I am open to all explanations but if you look at it in an abstract way then it should be possible to see that it doesn't add anything of value.
If you build a house,develop a property,then you add value to the economy. The stock of houses does increase. Simply buying a house on the market and renting it out doesn't add to the stock of houses. Its only a transition. The stock of houses that are for sale decreases and the stock of houses that are for rent increases. But its the same amount of houses in the end.
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On June 06 2019 01:25 Danglars wrote:Biden recently clarified that he still supports the Hyde amendment. The amendment prohibits federal funds from the HHS going towards abortion, except for life of the woman/incest/rape exceptions. His earlier stance, favoring repeal of the Hyde amendment, was given to an ACLU activist. He said yes to committing to abolish the Hyde amendment, and said "it can't stay." He now claims he misheard the question. Sanders has responded: That's a major departure from the field. No other 2020 Democratic presidential candidate openly supports the Hyde amendment, and many have drafted proposals to end it. Read More
And ... today Biden announces he’s back to opposing the Hyde amendment. After clarifying he supports it when an activist had him on record opposing it.
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On June 07 2019 09:09 GreenHorizons wrote:Show nested quote +On June 07 2019 08:56 xDaunt wrote:On June 07 2019 07:05 GreenHorizons wrote:
The "it's broken" part is key. Because he doesn't argue it's broken, but that it functions as it must. He's pointing out that it contains inherent, self-destructive, flaws, much as you see human nature as one to Communism in general.
The point of me drawing out your position (of which the ones you've hesitated to take I've noticed) is so that if/when I challenge your articulation of them/their relationship with one another we can know clearly what it is we're discussing.
Once upon a time I thought I'd pursue business and took some econ so I'm familiar. I disagree with your articulations of my argument and questions but rather than focus on that let's focus on the question you seem to want to answer but haven't yet.
What is your reasoning for the belief that one is entitled to profit from no labor/work of their own, but instead profit off of another person's labor.? Because they're the people taking an actual risk and the ones who actually make the enterprise successful. Every person owns his own labor and profits from it. That's the whole basis for the concept of employment. Employee owns his time and skills. Employee sells his time and skills to employer. Employee gets paid for his time and skills. It's a simple and fair exchange. Employee's risk here is limited. Employee is merely risking his time for which he receives immediate compensation. Employee generally has little or nothing else at stake. What the owner/capitalist does is different. Like the employee, he spends his time on a particular enterprise. But he also spends his money and other resources on it. He's the ones paying for employees to make the enterprise go. And perhaps more importantly, he's the ones contributing the intellectual capital to make the whole enterprise work. Accordingly, he is the sine qua non of the whole enterprise and the one who stands to lose everything invested if the enterprise fails. What he does is both risky and hard. That's why he gets the profit. And let me stress that there's an element of choice in roles. Anyone can start business and be the owner/capitalist. If anything, it is far easier to do that now than it ever has been with the current gig economy. All you need is a good idea and the will to follow through on it. I understand that's the stylized version, but while I may return to it, I'd like you to apply your explanation to this scenario so we can strip away the frivolous and focus just down on what about ownership entitles one to profit (rather than something like "intellectual capital" being the justification) not the bootstrap/entrepreneur stuff. Included the scenario: + Show Spoiler +On June 07 2019 07:47 GreenHorizons wrote:Show nested quote +On June 07 2019 07:29 KwarK wrote:
GH, you're surely aware that ownership and investment often comes with the acceptance of risk of loss. The theoretical compensation is proportionate to the risk of loss.
Part of the surplus that a renter pays to the landlord is effectively an insurance premium that protects the renter from loss in the event of destruction of the property, market value fluctuations, and so forth. Another portion is purchasing an option that allows the renter to walk away from the property at any time, for example if they accept a job in another city, without any loss of capital. They are effectively insured against the illiquid nature of the asset they inhabit. The opportunity cost on alternate investments is another.
Renting is not simply burning money due to an inability to get on the property ladder. For many people it is a profitable proposition, renting better suits their capital position, desired asset allocation goals, and short term plans.
The issue is when market failures allow renters that provide no additional value to their tenants to exploit their position. But in the frictionless vacuum that the invisible hand operates in renting is not intrinsically exploitative. Perhaps if we imagine the example of land posted out during "western expansion" and since abandoned in all but title and establishment of rights of ownership and bequeathed till today. Now, today, I own it. Anyone who wants to defend the idea of profit from ownership can explain to me why I should be entitled to the millions in profit from the oil underneath it, which can be accessed for many miles around. If I'm convinced you may never hear from me again
There's nothing stylized about what I said. It's how it actually works. Critique the fairness of that owner/capitalist reaping the profits given those circumstances if you want, but those are the circumstances.
With regards to your hypothetical about the mineral rights, the real question to ask is who else would be the owner? Common law property law traditions have always held that the owner of the surface estate is also the owner of the mineral estate unless the two estates have been separated by a transaction. In the absence of such a transaction, the minerals are owned by the surface owner. So getting back to your hypothetical, who else could it possibly be? It's your property. Why shouldn't you profit from it if you properly cultivate the mineral estate?
What's probably rubbing you the wrong way is this idea that you lucked into all of this wealth. That happens. The question thus becomes, what should we do about it? The answer is nothing, because such action would create worse consequences than doing nothing and simply letting you benefit from fortuity.
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On June 07 2019 09:19 pmh wrote:Show nested quote +On June 07 2019 00:05 xDaunt wrote:On June 06 2019 19:19 Acrofales wrote:On June 06 2019 18:03 Velr wrote:
Forbidding to make a profit from land/property you own seems a bit extreme to me.
I'm fully on board with hard regulations that make property owners responsible to keep their stuff in a good condition, just offering an appartment for rent and letting it go to shit while making a profit should be plain illegal.
Raising rents just for the sake of generating more rent also shouldn't be allowed, if you want to raise the rent on an appartment you own, you should need a reason aside from "more profit" to do it. It's completely absurd that people can buy up real estate and make a living off the rent. It has 0 added value. Worse still, in some cities it isn't even worth renting out the real estate, so it sits there empty until the time is right to sell it again, at a "healthy" profit, of course. I never expected to see this kind of post from you. Zero added economic value? That is sheer economic illiteracy. Residential, commercial, and industrial stock has tons of added value. These are some of the most expensive capital investments that one can make. And it's not just the initial expenditure to build a building. Ongoing maintenance and renovation are very expensive. This shit doesn't just happen on its own. Homes don't magically regenerate. Someone has to do it, often at great cost. And that's before we even touch the issues of the risk associated real estate investing. There are all sorts of things that can go wrong when you invest in and lease property. Bad tenants are a thing. Property investors should absolutely be allowed to earn a profit off of their real estate investments given all of these costs and risks. Interesting discussion. Buying a house and renting it out adds zero value to the economy. You are not building a new house,you are not adding to the stock of houses. Exactly what value is added when you buy a house and rent it out? I am open to all explanations but if you look at it in an abstract way then it should be possible to see that it doesn't add anything of value. If you build a house,develop a property,then you add value to the economy. The stock of houses does increase. Simply buying a house on the market and renting it out doesn't add to the stock of houses. Its only a transition. The stock of houses that are for sale decreases and the stock of houses that are for rent increases. But its the same amount of houses in the end.
If your argument is correct, then services industries add no value to the economy. I think you need to go back to the drawing board.
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United States42262 Posts
On June 07 2019 08:56 xDaunt wrote:Show nested quote +On June 07 2019 07:05 GreenHorizons wrote:
The "it's broken" part is key. Because he doesn't argue it's broken, but that it functions as it must. He's pointing out that it contains inherent, self-destructive, flaws, much as you see human nature as one to Communism in general.
The point of me drawing out your position (of which the ones you've hesitated to take I've noticed) is so that if/when I challenge your articulation of them/their relationship with one another we can know clearly what it is we're discussing.
Once upon a time I thought I'd pursue business and took some econ so I'm familiar. I disagree with your articulations of my argument and questions but rather than focus on that let's focus on the question you seem to want to answer but haven't yet.
What is your reasoning for the belief that one is entitled to profit from no labor/work of their own, but instead profit off of another person's labor.? Because they're the people taking an actual risk and the ones who actually make the enterprise successful. Every person owns his own labor and profits from it. That's the whole basis for the concept of employment. Employee owns his time and skills. Employee sells his time and skills to employer. Employee gets paid for his time and skills. It's a simple and fair exchange. Employee's risk here is limited. Employee is merely risking his time for which he receives immediate compensation. Employee generally has little or nothing else at stake. What the owner/capitalist does is different. Like the employee, he spends his time on a particular enterprise. But he also spends his money and other resources on it. He's the ones paying for employees to make the enterprise go. And perhaps more importantly, he's the ones contributing the intellectual capital to make the whole enterprise work. Accordingly, he is the sine qua non of the whole enterprise and the one who stands to lose everything invested if the enterprise fails. What he does is both risky and hard. That's why he gets the profit. And let me stress that there's an element of choice in roles. Anyone can start business and be the owner/capitalist. If anything, it is far easier to do that now than it ever has been with the current gig economy. All you need is a good idea and the will to follow through on it.
And a small loan of a million dollars.
The more capital you have the greater the returns. That's at the heart of capitalism, it is the exercise of the capital that generates wealth, not the labour. American society is more economically divided than ever.
It's far harder to do it now than it ever has been with the current economic divide. The working classes do not have the capital to invest in becoming capitalists. They cannot simply decide to become landlords etc. The educated kids coming out of colleges not only have no money to invest in starting a business, they have 100k of non dischargable student loan debt.
As for the gig economy, I'm not entirely sure that you know what that is. It's not starting a small business, it's taking work as a 1099 contractor to work for below minimum wage for a tech company. You're no more a small business owner than a pizza delivery guy is.
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On June 07 2019 10:09 KwarK wrote:As for the gig economy, I'm not entirely sure that you know what that is. It's not starting a small business, it's taking work as a 1099 contractor to work for below minimum wage for a tech company. You're no more a small business owner than a pizza delivery guy is. Indeed. An Uber driver is not a small business owner. An Uber driver is a loosely contracted employee that has none of the benefits a traditional employee has.
I would hardly consider the current "gig economy" trend a good thing. It has mostly ended up with desperate people being exploited by corporations whose business models are so fundamentally broken that they wouldn't work if the people that worked for them were actual employees. After fuel and vehicle upkeep is accounted for, a lot of Uber/Lyft drivers make less than minimum wage, but people are so desperate for money these days because of how badly wage growth has stagnated that they're willing to do this type of work.
Keep in mind that, after adjusting for inflation, minimum wage in the US has gone down since the mid-60s. People at the bottom are getting paid less these days while everything else is getting more expensive, which is why we see people now working 2-3 jobs. They can't afford to live otherwise. This is completely unacceptable. Nobody should be forced to work that much just to keep a roof over their head, pay for food, or see a doctor. It's unethical.
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On June 07 2019 09:19 pmh wrote:Show nested quote +On June 07 2019 00:05 xDaunt wrote:On June 06 2019 19:19 Acrofales wrote:On June 06 2019 18:03 Velr wrote:
Forbidding to make a profit from land/property you own seems a bit extreme to me.
I'm fully on board with hard regulations that make property owners responsible to keep their stuff in a good condition, just offering an appartment for rent and letting it go to shit while making a profit should be plain illegal.
Raising rents just for the sake of generating more rent also shouldn't be allowed, if you want to raise the rent on an appartment you own, you should need a reason aside from "more profit" to do it. It's completely absurd that people can buy up real estate and make a living off the rent. It has 0 added value. Worse still, in some cities it isn't even worth renting out the real estate, so it sits there empty until the time is right to sell it again, at a "healthy" profit, of course. I never expected to see this kind of post from you. Zero added economic value? That is sheer economic illiteracy. Residential, commercial, and industrial stock has tons of added value. These are some of the most expensive capital investments that one can make. And it's not just the initial expenditure to build a building. Ongoing maintenance and renovation are very expensive. This shit doesn't just happen on its own. Homes don't magically regenerate. Someone has to do it, often at great cost. And that's before we even touch the issues of the risk associated real estate investing. There are all sorts of things that can go wrong when you invest in and lease property. Bad tenants are a thing. Property investors should absolutely be allowed to earn a profit off of their real estate investments given all of these costs and risks. Interesting discussion. Buying a house and renting it out adds zero value to the economy. You are not building a new house,you are not adding to the stock of houses. Exactly what value is added when you buy a house and rent it out? I am open to all explanations but if you look at it in an abstract way then it should be possible to see that it doesn't add anything of value. If you build a house,develop a property,then you add value to the economy. The stock of houses does increase. Simply buying a house on the market and renting it out doesn't add to the stock of houses. Its only a transition. The stock of houses that are for sale decreases and the stock of houses that are for rent increases. But its the same amount of houses in the end.
On the surface, it's the same value as people trading stocks: none. It's just assets being shuffled around. But this ignores that the former owner of the house now owns whatever was given in trade for the house, be it cash or a promise of future payment, and he/she can put it to productive use. Also, there in inherent value in having contributed to liquidity in the housing market, both in giving the opportunity for those who want to sell, to sell, and in making house value clearer to those who want to build.
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On June 07 2019 09:19 pmh wrote:Show nested quote +On June 07 2019 00:05 xDaunt wrote:On June 06 2019 19:19 Acrofales wrote:On June 06 2019 18:03 Velr wrote:
Forbidding to make a profit from land/property you own seems a bit extreme to me.
I'm fully on board with hard regulations that make property owners responsible to keep their stuff in a good condition, just offering an appartment for rent and letting it go to shit while making a profit should be plain illegal.
Raising rents just for the sake of generating more rent also shouldn't be allowed, if you want to raise the rent on an appartment you own, you should need a reason aside from "more profit" to do it. It's completely absurd that people can buy up real estate and make a living off the rent. It has 0 added value. Worse still, in some cities it isn't even worth renting out the real estate, so it sits there empty until the time is right to sell it again, at a "healthy" profit, of course. I never expected to see this kind of post from you. Zero added economic value? That is sheer economic illiteracy. Residential, commercial, and industrial stock has tons of added value. These are some of the most expensive capital investments that one can make. And it's not just the initial expenditure to build a building. Ongoing maintenance and renovation are very expensive. This shit doesn't just happen on its own. Homes don't magically regenerate. Someone has to do it, often at great cost. And that's before we even touch the issues of the risk associated real estate investing. There are all sorts of things that can go wrong when you invest in and lease property. Bad tenants are a thing. Property investors should absolutely be allowed to earn a profit off of their real estate investments given all of these costs and risks. Interesting discussion. Buying a house and renting it out adds zero value to the economy. You are not building a new house,you are not adding to the stock of houses. Exactly what value is added when you buy a house and rent it out? I am open to all explanations but if you look at it in an abstract way then it should be possible to see that it doesn't add anything of value. If you build a house,develop a property,then you add value to the economy. The stock of houses does increase. Simply buying a house on the market and renting it out doesn't add to the stock of houses. Its only a transition. The stock of houses that are for sale decreases and the stock of houses that are for rent increases. But its the same amount of houses in the end.
You're missing it. As you said, a person builds a house. They have added value to the economy...but only if we can compensate them for it. So, someone else needs to be able to buy the house. The investor does so, paying the builder for the rather clear effort and value created. That then releases the builder to deploy that "value" which has been created elsewhere and benefit from it.
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On June 07 2019 09:41 xDaunt wrote:Show nested quote +On June 07 2019 09:09 GreenHorizons wrote:On June 07 2019 08:56 xDaunt wrote:On June 07 2019 07:05 GreenHorizons wrote:
The "it's broken" part is key. Because he doesn't argue it's broken, but that it functions as it must. He's pointing out that it contains inherent, self-destructive, flaws, much as you see human nature as one to Communism in general.
The point of me drawing out your position (of which the ones you've hesitated to take I've noticed) is so that if/when I challenge your articulation of them/their relationship with one another we can know clearly what it is we're discussing.
Once upon a time I thought I'd pursue business and took some econ so I'm familiar. I disagree with your articulations of my argument and questions but rather than focus on that let's focus on the question you seem to want to answer but haven't yet.
What is your reasoning for the belief that one is entitled to profit from no labor/work of their own, but instead profit off of another person's labor.? Because they're the people taking an actual risk and the ones who actually make the enterprise successful. Every person owns his own labor and profits from it. That's the whole basis for the concept of employment. Employee owns his time and skills. Employee sells his time and skills to employer. Employee gets paid for his time and skills. It's a simple and fair exchange. Employee's risk here is limited. Employee is merely risking his time for which he receives immediate compensation. Employee generally has little or nothing else at stake. What the owner/capitalist does is different. Like the employee, he spends his time on a particular enterprise. But he also spends his money and other resources on it. He's the ones paying for employees to make the enterprise go. And perhaps more importantly, he's the ones contributing the intellectual capital to make the whole enterprise work. Accordingly, he is the sine qua non of the whole enterprise and the one who stands to lose everything invested if the enterprise fails. What he does is both risky and hard. That's why he gets the profit. And let me stress that there's an element of choice in roles. Anyone can start business and be the owner/capitalist. If anything, it is far easier to do that now than it ever has been with the current gig economy. All you need is a good idea and the will to follow through on it. I understand that's the stylized version, but while I may return to it, I'd like you to apply your explanation to this scenario so we can strip away the frivolous and focus just down on what about ownership entitles one to profit (rather than something like "intellectual capital" being the justification) not the bootstrap/entrepreneur stuff. Included the scenario: + Show Spoiler +On June 07 2019 07:47 GreenHorizons wrote:Show nested quote +On June 07 2019 07:29 KwarK wrote:
GH, you're surely aware that ownership and investment often comes with the acceptance of risk of loss. The theoretical compensation is proportionate to the risk of loss.
Part of the surplus that a renter pays to the landlord is effectively an insurance premium that protects the renter from loss in the event of destruction of the property, market value fluctuations, and so forth. Another portion is purchasing an option that allows the renter to walk away from the property at any time, for example if they accept a job in another city, without any loss of capital. They are effectively insured against the illiquid nature of the asset they inhabit. The opportunity cost on alternate investments is another.
Renting is not simply burning money due to an inability to get on the property ladder. For many people it is a profitable proposition, renting better suits their capital position, desired asset allocation goals, and short term plans.
The issue is when market failures allow renters that provide no additional value to their tenants to exploit their position. But in the frictionless vacuum that the invisible hand operates in renting is not intrinsically exploitative. Perhaps if we imagine the example of land posted out during "western expansion" and since abandoned in all but title and establishment of rights of ownership and bequeathed till today. Now, today, I own it. Anyone who wants to defend the idea of profit from ownership can explain to me why I should be entitled to the millions in profit from the oil underneath it, which can be accessed for many miles around. If I'm convinced you may never hear from me again There's nothing stylized about what I said. It's how it actually works. Critique the fairness of that owner/capitalist reaping the profits given those circumstances if you want, but those are the circumstances. With regards to your hypothetical about the mineral rights, the real question to ask is who else would be the owner? Common law property law traditions have always held that the owner of the surface estate is also the owner of the mineral estate unless the two estates have been separated by a transaction. In the absence of such a transaction, the minerals are owned by the surface owner. So getting back to your hypothetical, who else could it possibly be? It's your property. Why shouldn't you profit from it if you properly cultivate the mineral estate?
The circumstances are man-made and can be unmade. It's not ordained by God to be this way or something (at least we can't govern under that belief). So if we recognize there's a problem reasonable people don't just throw up their hands and say "welp that's how the cookie crumbles"
On the mineral rights thing it would even under your description belong to the all of the property owners above it. But you only need access to one or two to drain most/all of it.
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On June 07 2019 10:09 KwarK wrote:Show nested quote +On June 07 2019 08:56 xDaunt wrote:On June 07 2019 07:05 GreenHorizons wrote:
The "it's broken" part is key. Because he doesn't argue it's broken, but that it functions as it must. He's pointing out that it contains inherent, self-destructive, flaws, much as you see human nature as one to Communism in general.
The point of me drawing out your position (of which the ones you've hesitated to take I've noticed) is so that if/when I challenge your articulation of them/their relationship with one another we can know clearly what it is we're discussing.
Once upon a time I thought I'd pursue business and took some econ so I'm familiar. I disagree with your articulations of my argument and questions but rather than focus on that let's focus on the question you seem to want to answer but haven't yet.
What is your reasoning for the belief that one is entitled to profit from no labor/work of their own, but instead profit off of another person's labor.? Because they're the people taking an actual risk and the ones who actually make the enterprise successful. Every person owns his own labor and profits from it. That's the whole basis for the concept of employment. Employee owns his time and skills. Employee sells his time and skills to employer. Employee gets paid for his time and skills. It's a simple and fair exchange. Employee's risk here is limited. Employee is merely risking his time for which he receives immediate compensation. Employee generally has little or nothing else at stake. What the owner/capitalist does is different. Like the employee, he spends his time on a particular enterprise. But he also spends his money and other resources on it. He's the ones paying for employees to make the enterprise go. And perhaps more importantly, he's the ones contributing the intellectual capital to make the whole enterprise work. Accordingly, he is the sine qua non of the whole enterprise and the one who stands to lose everything invested if the enterprise fails. What he does is both risky and hard. That's why he gets the profit. And let me stress that there's an element of choice in roles. Anyone can start business and be the owner/capitalist. If anything, it is far easier to do that now than it ever has been with the current gig economy. All you need is a good idea and the will to follow through on it. And a small loan of a million dollars. The more capital you have the greater the returns. That's at the heart of capitalism, it is the exercise of the capital that generates wealth, not the labour. American society is more economically divided than ever. It's far harder to do it now than it ever has been with the current economic divide. The working classes do not have the capital to invest in becoming capitalists. They cannot simply decide to become landlords etc. The educated kids coming out of colleges not only have no money to invest in starting a business, they have 100k of non dischargable student loan debt. As for the gig economy, I'm not entirely sure that you know what that is. It's not starting a small business, it's taking work as a 1099 contractor to work for below minimum wage for a tech company. You're no more a small business owner than a pizza delivery guy is.
Indeed. If i could choose to be a landlord here in Munich, renting out buildings, i would do so within seconds. Sadly, i don't own a building in Munich, and i don't have the cash to buy one.
We are at a point where owning is much better than working, and that is a problem, because you can own stuff simply because your parents owned it. If i had inherited a building in Munich, i would be set for life, and never need to work a single day in my life. I haven't, and thus i cannot get into that class of owners. If i work hard my whole life, and live frugally, then maybe i can safe up enough money during my lifetime of working so that one of my children can get into the lower end of the owners class.
But i can never even get close to the zero effort achievement of being born into the Quandt family, for example. I see this as a bit of a problem.
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On June 07 2019 12:40 GreenHorizons wrote:Show nested quote +On June 07 2019 09:41 xDaunt wrote:On June 07 2019 09:09 GreenHorizons wrote:On June 07 2019 08:56 xDaunt wrote:On June 07 2019 07:05 GreenHorizons wrote:
The "it's broken" part is key. Because he doesn't argue it's broken, but that it functions as it must. He's pointing out that it contains inherent, self-destructive, flaws, much as you see human nature as one to Communism in general.
The point of me drawing out your position (of which the ones you've hesitated to take I've noticed) is so that if/when I challenge your articulation of them/their relationship with one another we can know clearly what it is we're discussing.
Once upon a time I thought I'd pursue business and took some econ so I'm familiar. I disagree with your articulations of my argument and questions but rather than focus on that let's focus on the question you seem to want to answer but haven't yet.
What is your reasoning for the belief that one is entitled to profit from no labor/work of their own, but instead profit off of another person's labor.? Because they're the people taking an actual risk and the ones who actually make the enterprise successful. Every person owns his own labor and profits from it. That's the whole basis for the concept of employment. Employee owns his time and skills. Employee sells his time and skills to employer. Employee gets paid for his time and skills. It's a simple and fair exchange. Employee's risk here is limited. Employee is merely risking his time for which he receives immediate compensation. Employee generally has little or nothing else at stake. What the owner/capitalist does is different. Like the employee, he spends his time on a particular enterprise. But he also spends his money and other resources on it. He's the ones paying for employees to make the enterprise go. And perhaps more importantly, he's the ones contributing the intellectual capital to make the whole enterprise work. Accordingly, he is the sine qua non of the whole enterprise and the one who stands to lose everything invested if the enterprise fails. What he does is both risky and hard. That's why he gets the profit. And let me stress that there's an element of choice in roles. Anyone can start business and be the owner/capitalist. If anything, it is far easier to do that now than it ever has been with the current gig economy. All you need is a good idea and the will to follow through on it. I understand that's the stylized version, but while I may return to it, I'd like you to apply your explanation to this scenario so we can strip away the frivolous and focus just down on what about ownership entitles one to profit (rather than something like "intellectual capital" being the justification) not the bootstrap/entrepreneur stuff. Included the scenario: + Show Spoiler +On June 07 2019 07:47 GreenHorizons wrote:Show nested quote +On June 07 2019 07:29 KwarK wrote:
GH, you're surely aware that ownership and investment often comes with the acceptance of risk of loss. The theoretical compensation is proportionate to the risk of loss.
Part of the surplus that a renter pays to the landlord is effectively an insurance premium that protects the renter from loss in the event of destruction of the property, market value fluctuations, and so forth. Another portion is purchasing an option that allows the renter to walk away from the property at any time, for example if they accept a job in another city, without any loss of capital. They are effectively insured against the illiquid nature of the asset they inhabit. The opportunity cost on alternate investments is another.
Renting is not simply burning money due to an inability to get on the property ladder. For many people it is a profitable proposition, renting better suits their capital position, desired asset allocation goals, and short term plans.
The issue is when market failures allow renters that provide no additional value to their tenants to exploit their position. But in the frictionless vacuum that the invisible hand operates in renting is not intrinsically exploitative. Perhaps if we imagine the example of land posted out during "western expansion" and since abandoned in all but title and establishment of rights of ownership and bequeathed till today. Now, today, I own it. Anyone who wants to defend the idea of profit from ownership can explain to me why I should be entitled to the millions in profit from the oil underneath it, which can be accessed for many miles around. If I'm convinced you may never hear from me again There's nothing stylized about what I said. It's how it actually works. Critique the fairness of that owner/capitalist reaping the profits given those circumstances if you want, but those are the circumstances. With regards to your hypothetical about the mineral rights, the real question to ask is who else would be the owner? Common law property law traditions have always held that the owner of the surface estate is also the owner of the mineral estate unless the two estates have been separated by a transaction. In the absence of such a transaction, the minerals are owned by the surface owner. So getting back to your hypothetical, who else could it possibly be? It's your property. Why shouldn't you profit from it if you properly cultivate the mineral estate? The circumstances are man-made and can be unmade. It's not ordained by God to be this way or something (at least we can't govern under that belief). So if we recognize there's a problem reasonable people don't just throw up their hands and say "welp that's how the cookie crumbles" On the mineral rights thing it would even under your description belong to the all of the property owners above it. But you only need access to one or two to drain most/all of it.
Given God's general attitude towards rich men - going by 'literal word of god' the Bible - I'd say God isn't very fond of Capitalism as an idea, and the application of modern Capitalism is pretty much the exact opposite of God's political views.
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On June 07 2019 11:26 Sbrubbles wrote:Show nested quote +On June 07 2019 09:19 pmh wrote:On June 07 2019 00:05 xDaunt wrote:On June 06 2019 19:19 Acrofales wrote:On June 06 2019 18:03 Velr wrote:
Forbidding to make a profit from land/property you own seems a bit extreme to me.
I'm fully on board with hard regulations that make property owners responsible to keep their stuff in a good condition, just offering an appartment for rent and letting it go to shit while making a profit should be plain illegal.
Raising rents just for the sake of generating more rent also shouldn't be allowed, if you want to raise the rent on an appartment you own, you should need a reason aside from "more profit" to do it. It's completely absurd that people can buy up real estate and make a living off the rent. It has 0 added value. Worse still, in some cities it isn't even worth renting out the real estate, so it sits there empty until the time is right to sell it again, at a "healthy" profit, of course. I never expected to see this kind of post from you. Zero added economic value? That is sheer economic illiteracy. Residential, commercial, and industrial stock has tons of added value. These are some of the most expensive capital investments that one can make. And it's not just the initial expenditure to build a building. Ongoing maintenance and renovation are very expensive. This shit doesn't just happen on its own. Homes don't magically regenerate. Someone has to do it, often at great cost. And that's before we even touch the issues of the risk associated real estate investing. There are all sorts of things that can go wrong when you invest in and lease property. Bad tenants are a thing. Property investors should absolutely be allowed to earn a profit off of their real estate investments given all of these costs and risks. Interesting discussion. Buying a house and renting it out adds zero value to the economy. You are not building a new house,you are not adding to the stock of houses. Exactly what value is added when you buy a house and rent it out? I am open to all explanations but if you look at it in an abstract way then it should be possible to see that it doesn't add anything of value. If you build a house,develop a property,then you add value to the economy. The stock of houses does increase. Simply buying a house on the market and renting it out doesn't add to the stock of houses. Its only a transition. The stock of houses that are for sale decreases and the stock of houses that are for rent increases. But its the same amount of houses in the end. On the surface, it's the same value as people trading stocks: none. It's just assets being shuffled around. But this ignores that the former owner of the house now owns whatever was given in trade for the house, be it cash or a promise of future payment, and he/she can put it to productive use. Also, there in inherent value in having contributed to liquidity in the housing market, both in giving the opportunity for those who want to sell, to sell, and in making house value clearer to those who want to build.
There's a fundamental difference between real estate and stocks, though: stock has no inherent use. Speculation in it is mostly irrelevant, except maybe if a company needs stock for the purpose of voting rights, when speculation can be damaging. But mostly stocks are a financial product that has the single function to be traded.
Real estate is developed to be used. In the case we're talking of for living space, but any real estate has this property. Buying real estate primarily as an investment creates a perverse incentive to either not use it as a living space at all. Or in the case you do, to extract profit from your "investment". The fact that people are moving to some cities in particular means real estate is desirable there, which causes the prices to rise, which makes it a good investment, which causes people to buy real estate with no intention of moving there, which now puts further pressure on the real estate price, which just makes it more attractive for investors: these are not people who want to live there, or even build a company from owning and maintaining real estate. They just want to flip real estate for a profit in the exact same way that they would flip stock for a profit. From an economic point of view this may be fine, but from a "hey, let's keep our cities liveable" perspective it is awful.
There is 0 added value in this process and it should be stopped. Real estate is for using, and if you don't use it, you lose it, imho. I'll look into RvB's suggestion. It sounds like it may be a good idea. His ideas often are. But treating real estate as a financial product is definitely a terrible development.
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On June 07 2019 21:27 Acrofales wrote:Show nested quote +On June 07 2019 11:26 Sbrubbles wrote:On June 07 2019 09:19 pmh wrote:On June 07 2019 00:05 xDaunt wrote:On June 06 2019 19:19 Acrofales wrote:On June 06 2019 18:03 Velr wrote:
Forbidding to make a profit from land/property you own seems a bit extreme to me.
I'm fully on board with hard regulations that make property owners responsible to keep their stuff in a good condition, just offering an appartment for rent and letting it go to shit while making a profit should be plain illegal.
Raising rents just for the sake of generating more rent also shouldn't be allowed, if you want to raise the rent on an appartment you own, you should need a reason aside from "more profit" to do it. It's completely absurd that people can buy up real estate and make a living off the rent. It has 0 added value. Worse still, in some cities it isn't even worth renting out the real estate, so it sits there empty until the time is right to sell it again, at a "healthy" profit, of course. I never expected to see this kind of post from you. Zero added economic value? That is sheer economic illiteracy. Residential, commercial, and industrial stock has tons of added value. These are some of the most expensive capital investments that one can make. And it's not just the initial expenditure to build a building. Ongoing maintenance and renovation are very expensive. This shit doesn't just happen on its own. Homes don't magically regenerate. Someone has to do it, often at great cost. And that's before we even touch the issues of the risk associated real estate investing. There are all sorts of things that can go wrong when you invest in and lease property. Bad tenants are a thing. Property investors should absolutely be allowed to earn a profit off of their real estate investments given all of these costs and risks. Interesting discussion. Buying a house and renting it out adds zero value to the economy. You are not building a new house,you are not adding to the stock of houses. Exactly what value is added when you buy a house and rent it out? I am open to all explanations but if you look at it in an abstract way then it should be possible to see that it doesn't add anything of value. If you build a house,develop a property,then you add value to the economy. The stock of houses does increase. Simply buying a house on the market and renting it out doesn't add to the stock of houses. Its only a transition. The stock of houses that are for sale decreases and the stock of houses that are for rent increases. But its the same amount of houses in the end. On the surface, it's the same value as people trading stocks: none. It's just assets being shuffled around. But this ignores that the former owner of the house now owns whatever was given in trade for the house, be it cash or a promise of future payment, and he/she can put it to productive use. Also, there in inherent value in having contributed to liquidity in the housing market, both in giving the opportunity for those who want to sell, to sell, and in making house value clearer to those who want to build. There's a fundamental difference between real estate and stocks, though: stock has no inherent use. Speculation in it is mostly irrelevant, except maybe if a company needs stock for the purpose of voting rights, when speculation can be damaging. But mostly stocks are a financial product that has the single function to be traded. Real estate is developed to be used. In the case we're talking of for living space, but any real estate has this property. Buying real estate primarily as an investment creates a perverse incentive to either not use it as a living space at all. Or in the case you do, to extract profit from your "investment". The fact that people are moving to some cities in particular means real estate is desirable there, which causes the prices to rise, which makes it a good investment, which causes people to buy real estate with no intention of moving there, which now puts further pressure on the real estate price, which just makes it more attractive for investors: these are not people who want to live there, or even build a company from owning and maintaining real estate. They just want to flip real estate for a profit in the exact same way that they would flip stock for a profit. From an economic point of view this may be fine, but from a "hey, let's keep our cities liveable" perspective it is awful. There is 0 added value in this process and it should be stopped. Real estate is for using, and if you don't use it, you lose it, imho. I'll look into RvB's suggestion. It sounds like it may be a good idea. His ideas often are. But treating real estate as a financial product is definitely a terrible development.
I recognize this problem, and I mentioned my preferred solution for it (an "idle property tax", like São Paulo has been doing since 2014) a few pages ago.
What I don't agree was the claim that "Buying a house and renting it out adds zero value to the economy.". This is a different claim than "Buying a house and purposefully keeping it empty adds zero value to the economy.". Keeping it empty is obviously wasteful, much like buying sufficient voting stock in a company then telling it to shut down operations.
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On June 07 2019 21:36 Sbrubbles wrote:Show nested quote +On June 07 2019 21:27 Acrofales wrote:On June 07 2019 11:26 Sbrubbles wrote:On June 07 2019 09:19 pmh wrote:On June 07 2019 00:05 xDaunt wrote:On June 06 2019 19:19 Acrofales wrote:On June 06 2019 18:03 Velr wrote:
Forbidding to make a profit from land/property you own seems a bit extreme to me.
I'm fully on board with hard regulations that make property owners responsible to keep their stuff in a good condition, just offering an appartment for rent and letting it go to shit while making a profit should be plain illegal.
Raising rents just for the sake of generating more rent also shouldn't be allowed, if you want to raise the rent on an appartment you own, you should need a reason aside from "more profit" to do it. It's completely absurd that people can buy up real estate and make a living off the rent. It has 0 added value. Worse still, in some cities it isn't even worth renting out the real estate, so it sits there empty until the time is right to sell it again, at a "healthy" profit, of course. I never expected to see this kind of post from you. Zero added economic value? That is sheer economic illiteracy. Residential, commercial, and industrial stock has tons of added value. These are some of the most expensive capital investments that one can make. And it's not just the initial expenditure to build a building. Ongoing maintenance and renovation are very expensive. This shit doesn't just happen on its own. Homes don't magically regenerate. Someone has to do it, often at great cost. And that's before we even touch the issues of the risk associated real estate investing. There are all sorts of things that can go wrong when you invest in and lease property. Bad tenants are a thing. Property investors should absolutely be allowed to earn a profit off of their real estate investments given all of these costs and risks. Interesting discussion. Buying a house and renting it out adds zero value to the economy. You are not building a new house,you are not adding to the stock of houses. Exactly what value is added when you buy a house and rent it out? I am open to all explanations but if you look at it in an abstract way then it should be possible to see that it doesn't add anything of value. If you build a house,develop a property,then you add value to the economy. The stock of houses does increase. Simply buying a house on the market and renting it out doesn't add to the stock of houses. Its only a transition. The stock of houses that are for sale decreases and the stock of houses that are for rent increases. But its the same amount of houses in the end. On the surface, it's the same value as people trading stocks: none. It's just assets being shuffled around. But this ignores that the former owner of the house now owns whatever was given in trade for the house, be it cash or a promise of future payment, and he/she can put it to productive use. Also, there in inherent value in having contributed to liquidity in the housing market, both in giving the opportunity for those who want to sell, to sell, and in making house value clearer to those who want to build. There's a fundamental difference between real estate and stocks, though: stock has no inherent use. Speculation in it is mostly irrelevant, except maybe if a company needs stock for the purpose of voting rights, when speculation can be damaging. But mostly stocks are a financial product that has the single function to be traded. Real estate is developed to be used. In the case we're talking of for living space, but any real estate has this property. Buying real estate primarily as an investment creates a perverse incentive to either not use it as a living space at all. Or in the case you do, to extract profit from your "investment". The fact that people are moving to some cities in particular means real estate is desirable there, which causes the prices to rise, which makes it a good investment, which causes people to buy real estate with no intention of moving there, which now puts further pressure on the real estate price, which just makes it more attractive for investors: these are not people who want to live there, or even build a company from owning and maintaining real estate. They just want to flip real estate for a profit in the exact same way that they would flip stock for a profit. From an economic point of view this may be fine, but from a "hey, let's keep our cities liveable" perspective it is awful. There is 0 added value in this process and it should be stopped. Real estate is for using, and if you don't use it, you lose it, imho. I'll look into RvB's suggestion. It sounds like it may be a good idea. His ideas often are. But treating real estate as a financial product is definitely a terrible development. I recognize this problem, and I mentioned my preferred solution for it (an "idle property tax", like São Paulo has been doing since 2014) a few pages ago. What I don't agree was the claim that "Buying a house and renting it out adds zero value to the economy.". This is a different claim than "Buying a house and purposefully keeping it empty adds zero value to the economy.". Keeping it empty is obviously wasteful, much like buying sufficient voting stock in a company then telling it to shut down operations.
The only value being added to the economy is the initial building of said property. After that, the economy receives nothing further. These are basically person to personally transactions. Where does the economy profit from this interaction? once something is built, the value added in a monetary sense is done. It may raise appreciable rates in the neighborhood, but the value has been added and accounted for.
If people buy houses as investments and rents them, the value doesn't go to the economy. It goes to the owner.
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On June 07 2019 22:02 ZerOCoolSC2 wrote:Show nested quote +On June 07 2019 21:36 Sbrubbles wrote:On June 07 2019 21:27 Acrofales wrote:On June 07 2019 11:26 Sbrubbles wrote:On June 07 2019 09:19 pmh wrote:On June 07 2019 00:05 xDaunt wrote:On June 06 2019 19:19 Acrofales wrote:On June 06 2019 18:03 Velr wrote:
Forbidding to make a profit from land/property you own seems a bit extreme to me.
I'm fully on board with hard regulations that make property owners responsible to keep their stuff in a good condition, just offering an appartment for rent and letting it go to shit while making a profit should be plain illegal.
Raising rents just for the sake of generating more rent also shouldn't be allowed, if you want to raise the rent on an appartment you own, you should need a reason aside from "more profit" to do it. It's completely absurd that people can buy up real estate and make a living off the rent. It has 0 added value. Worse still, in some cities it isn't even worth renting out the real estate, so it sits there empty until the time is right to sell it again, at a "healthy" profit, of course. I never expected to see this kind of post from you. Zero added economic value? That is sheer economic illiteracy. Residential, commercial, and industrial stock has tons of added value. These are some of the most expensive capital investments that one can make. And it's not just the initial expenditure to build a building. Ongoing maintenance and renovation are very expensive. This shit doesn't just happen on its own. Homes don't magically regenerate. Someone has to do it, often at great cost. And that's before we even touch the issues of the risk associated real estate investing. There are all sorts of things that can go wrong when you invest in and lease property. Bad tenants are a thing. Property investors should absolutely be allowed to earn a profit off of their real estate investments given all of these costs and risks. Interesting discussion. Buying a house and renting it out adds zero value to the economy. You are not building a new house,you are not adding to the stock of houses. Exactly what value is added when you buy a house and rent it out? I am open to all explanations but if you look at it in an abstract way then it should be possible to see that it doesn't add anything of value. If you build a house,develop a property,then you add value to the economy. The stock of houses does increase. Simply buying a house on the market and renting it out doesn't add to the stock of houses. Its only a transition. The stock of houses that are for sale decreases and the stock of houses that are for rent increases. But its the same amount of houses in the end. On the surface, it's the same value as people trading stocks: none. It's just assets being shuffled around. But this ignores that the former owner of the house now owns whatever was given in trade for the house, be it cash or a promise of future payment, and he/she can put it to productive use. Also, there in inherent value in having contributed to liquidity in the housing market, both in giving the opportunity for those who want to sell, to sell, and in making house value clearer to those who want to build. There's a fundamental difference between real estate and stocks, though: stock has no inherent use. Speculation in it is mostly irrelevant, except maybe if a company needs stock for the purpose of voting rights, when speculation can be damaging. But mostly stocks are a financial product that has the single function to be traded. Real estate is developed to be used. In the case we're talking of for living space, but any real estate has this property. Buying real estate primarily as an investment creates a perverse incentive to either not use it as a living space at all. Or in the case you do, to extract profit from your "investment". The fact that people are moving to some cities in particular means real estate is desirable there, which causes the prices to rise, which makes it a good investment, which causes people to buy real estate with no intention of moving there, which now puts further pressure on the real estate price, which just makes it more attractive for investors: these are not people who want to live there, or even build a company from owning and maintaining real estate. They just want to flip real estate for a profit in the exact same way that they would flip stock for a profit. From an economic point of view this may be fine, but from a "hey, let's keep our cities liveable" perspective it is awful. There is 0 added value in this process and it should be stopped. Real estate is for using, and if you don't use it, you lose it, imho. I'll look into RvB's suggestion. It sounds like it may be a good idea. His ideas often are. But treating real estate as a financial product is definitely a terrible development. I recognize this problem, and I mentioned my preferred solution for it (an "idle property tax", like São Paulo has been doing since 2014) a few pages ago. What I don't agree was the claim that "Buying a house and renting it out adds zero value to the economy.". This is a different claim than "Buying a house and purposefully keeping it empty adds zero value to the economy.". Keeping it empty is obviously wasteful, much like buying sufficient voting stock in a company then telling it to shut down operations. The only value being added to the economy is the initial building of said property. After that, the economy receives nothing further. These are basically person to personally transactions. Where does the economy profit from this interaction? once something is built, the value added in a monetary sense is done. It may raise appreciable rates in the neighborhood, but the value has been added and accounted for. If people buy houses as investments and rents them, the value doesn't go to the economy. It goes to the owner.
Value added in this case is indirect and comes from the added liquidity to the housing market. Higher liquidity means those who want to sell or buy will either be able to wait less for a fair deal or will pay less of a premium for their impatience, and also means that prices are clearer for those who wish to build. To make this second point clear, it's much riskier building a house with the intent to sell in a market where one house gets sold every two years than a market where one is sold every six months.
Like I said, it's the same as buying a company or buying stock in a company. I would even go further, and say a house is nothing more than a capital good that produces "housing services". If the house is unnocupied, these services go to waste.
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Uhm, it allows more persons to live in the area. These new Inhabitants will consume more goods from local business so local companies get an economic benefit, they will pay taxes...
I really don't see a problem with this as long as the market is regulated by laws/taxes so blatant profiteering isn't possible (or at least not easy to do).
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EPT
