11 ms·

For some reason I'm reminded of the old joke: a Keynesian and a rat-ex theorist are walking down the street. "Look," says the Keynesian, "A twenty dollar bill!"

by HillRat 11y ago

For some reason I'm reminded of the old joke: a Keynesian and a rat-ex theorist are walking down the street. "Look," says the Keynesian, "A twenty dollar bill!" "Can't be," says the other economist. "If it were there, someone would have picked it up already." Here's the thing: being a slumlord is profitable. Yes, your tenants don't pay much, but if you don't improve your property, ignore complaints, refuse basic maintenance and throw everyone on the street if they're a day late on the rent, your margins are excellent, far better than you'll make with decent apartments where people demand things like legally-conformant housing and nonabusive contracts. These are tenants who don't have recourse, or at least not easy recourse, to the legal system, so cold water flats, no A/C or furnaces, black mold, and rats and roaches are part and parcel of the slumlord experience. Of course, all this is illegal, but slumlords tend to have a lot of free cash to throw at local politicians and attorneys, and if they own a large number of single-family dwelling it's hard to track down and deal with every nonconformant property.

tamana 11y ago
You made a huge leap from "running a trailer park" to "being a slumlord", and you also implied but haven't answered the question of who is to pay for mold remediation etc when the tenants can't afford to make it profitable. Surely landlords can't be compelled into their own poverty , forced to rent units below cost. Such a price has to be paid by society/government overall, or not at all.
- j1o1h1n 11y ago
  Forced to rent below cost, no, but if they can't make a profit out running a business that works within the law they shouldn't be engaging in the business.
- HillRat 11y ago
  No one is forcing these property owners to "rent units below cost;" they set the rents on their houses and apartments. The issue is that many of these people buy properties that are out of code with no intent to improve them, and then rent them anyway. Yes, it's not economically-rational to rebuild them. No, it's not the government's fault that the slumlord's business model depends on flouting code and safety violations. The simple answer is that if I can't afford to maintain a minimal level of environmental and residential standards, I'm not allowed to rent out my property. Likewise, I can't buy an empty lot, fail to maintain it to code, and then offer a defense that it's too expensive to keep it up. Governmental police powers are quite adequate to compel compliance. All this is quite separate from the other point you bring up, which is that affordable and decent housing is going to require socializing costs. In fact, there's no reason government shouldn't engage in more public-private partnerships to help fund affordable housing as part of mixed-income residential planning. But I don't buy the argument that minimal living standards are an unwarranted intrusion on the liberty of rentiers -- and I dont think you do, either. If payday loans can be deemed predatory, can't "environmentally hazardous" rental units also be?
  - gozur88 11y ago
    >The simple answer is that if I can't afford to maintain a minimal level of environmental and residential standards, I'm not allowed to rent out my property. That's all well and good, but what happens to the people who are renting there, and what happens to the people who can't afford a place with "minimal level of environmental and residential standards"? Will those people be better off sleeping rough?
    - gradstudent 11y ago
      > Will those people be better off sleeping rough? Everyone should have access to basic housing. If they do not that's a failure of government to provide a sufficient social safety net.
      - mantas 11y ago
        What is basic housing? Today's poor housing would look like a damn luxury 100 years ago. Today's luxury housing will probably look bellow standards after 100 years
        jernfrost 11y ago
        Adam Smith, father of free market economics, pointed out already 300 years ago the fallacy of this argument. He has a passage about how an Englishman was expected to wear leather shoes while a frenchman could walk barefoot without being ashamed. Further he talks about how in his day a linen shirt if considered a necessity even for the poor while the ancient greeks and romans could do well without it. So the point is that following your reasoning there is really no end to the depravity you can reach and somebody would still be able to claim that is all fine, because only rich people in the stone age could afford such luxury. The point Smith made was that poverty is always a relative phenomenon. What is a necessity is always defined in terms of the society you live in. There is no such thing as a universal definition of necessity. I had an interesting conversation about this with my wife's American parents. Despite the fact that her parents were noticeably better off economically in their childhood than my parents, they felt a severe stigma of poverty my parents never felt. My parent grew up in a country where they were much the same as everybody else. In fact a little better off. They did not feel poor at all. They had a happy childhood both of them. But one of my wife's American parents had a bad childhood, plagued by a strong feeling of being lesser than everybody else. Never having people over on visit out of shame over their own poverty. She was used to seeing everybody else being better off and internet the idea they they were somehow lesser people. Today my home country is richer than America by GDP per capita but comparisons of wealth and of people's feeling of wealth or poverty is difficult. Many of my american relatives enjoy bigger houses and cars than I do, but one always gets the feeling that their life is much more of a struggle than mine. I live in a smaller house and have no car. But I have no financial worries like them. I have long vacations, I am not constantly overworked. I don't worry about health care insurance, saving for college education to my kids, getting fired. So I think one should have some respect for the desperation and despair the poor in America feel. Knowing that a surprising car repair or medical bill could send you onto the street in no time. Even poor in much less wealth western countries have to deal with quite that level of insecurity.
darawk 11y ago
Don't get me wrong, i'm not saying it's not plenty profitable. I only mentioned the higher rents thing to illustrate the point that the landlord does not have an interest in keeping these people poor. This article is suggesting that these landlords are causing poverty, but then it goes on to not even try to make that case. They may be making money from poor people, and they may even not provide them the level of service they are legally required to, but this article makes no actual case for them causing or being any real part of the poverty cycle. Unless of course you think that the mere fact of asking that their rents be paid is the problem - and if you do, fine, but you're then tasked with proposing an alternative way of housing these people.
- TheOtherHobbes 11y ago
  >This article is suggesting that these landlords are causing poverty The landlords are causing poverty by increasing rents to the maximum level the market will bear, removing money from the system and - usually - moving it offshore. Because slum property is so immensely profitable, there's no incentive whatsoever to invest the profits in anything riskier. So you end up with wasteful non-projects like this: http://www.dailymail.co.uk/news/article-3490220/The-Ghost-House-Sussex-40m-mansion-built-property-baron-friend-Robert-Mugabe-31-years-work-started.html http://www.dailymail.co.uk/news/article-3490220/The-Ghost-Ho... Meanwhile renters see their disposable income - in fact their economic freedoms - eroded until they can barely afford housing and food. You now have a deflationary cycle where it becomes harder to find customers for new businesses, and harder to find investment because investors don't believe customers are easy to find. Of course it's not just landlords. But generally economic cultures are designed to be favourable to either increasing or decreasing economic freedom for the low-paid. And if it's the latter, the predictable result is massive inequality and a deflationary uncontrolled descent into terrain which not only does the poor a lot of damage, but also eats away at the sustainable economic value of the assets of the rich.
  - forgetsusername 11y ago
    >usually - moving it offshore Usually? Yeah, your local slumlord has a Swiss bank account.
NoGravitas 11y ago
Also, you always get to keep the security/cleaning deposit, and if you have a lot of churn, you get to collect an extra month's rent every few months -- another great incentive to evict people.

by HillRat 11y ago

tamana 11y ago

You made a huge leap from "running a trailer park" to "being a slumlord", and you also implied but haven't answered the question of who is to pay for mold remediation etc when the tenants can't afford to make it profitable. Surely landlords can't be compelled into their own poverty , forced to rent units below cost. Such a price has to be paid by society/government overall, or not at all.

j1o1h1n 11y ago
Forced to rent below cost, no, but if they can't make a profit out running a business that works within the law they shouldn't be engaging in the business.
HillRat 11y ago
No one is forcing these property owners to "rent units below cost;" they set the rents on their houses and apartments. The issue is that many of these people buy properties that are out of code with no intent to improve them, and then rent them anyway. Yes, it's not economically-rational to rebuild them. No, it's not the government's fault that the slumlord's business model depends on flouting code and safety violations. The simple answer is that if I can't afford to maintain a minimal level of environmental and residential standards, I'm not allowed to rent out my property. Likewise, I can't buy an empty lot, fail to maintain it to code, and then offer a defense that it's too expensive to keep it up. Governmental police powers are quite adequate to compel compliance. All this is quite separate from the other point you bring up, which is that affordable and decent housing is going to require socializing costs. In fact, there's no reason government shouldn't engage in more public-private partnerships to help fund affordable housing as part of mixed-income residential planning. But I don't buy the argument that minimal living standards are an unwarranted intrusion on the liberty of rentiers -- and I dont think you do, either. If payday loans can be deemed predatory, can't "environmentally hazardous" rental units also be?
- gozur88 11y ago
  >The simple answer is that if I can't afford to maintain a minimal level of environmental and residential standards, I'm not allowed to rent out my property. That's all well and good, but what happens to the people who are renting there, and what happens to the people who can't afford a place with "minimal level of environmental and residential standards"? Will those people be better off sleeping rough?
  - gradstudent 11y ago
    > Will those people be better off sleeping rough? Everyone should have access to basic housing. If they do not that's a failure of government to provide a sufficient social safety net.
    - mantas 11y ago
      What is basic housing? Today's poor housing would look like a damn luxury 100 years ago. Today's luxury housing will probably look bellow standards after 100 years
      - jernfrost 11y ago
        Adam Smith, father of free market economics, pointed out already 300 years ago the fallacy of this argument. He has a passage about how an Englishman was expected to wear leather shoes while a frenchman could walk barefoot without being ashamed. Further he talks about how in his day a linen shirt if considered a necessity even for the poor while the ancient greeks and romans could do well without it. So the point is that following your reasoning there is really no end to the depravity you can reach and somebody would still be able to claim that is all fine, because only rich people in the stone age could afford such luxury. The point Smith made was that poverty is always a relative phenomenon. What is a necessity is always defined in terms of the society you live in. There is no such thing as a universal definition of necessity. I had an interesting conversation about this with my wife's American parents. Despite the fact that her parents were noticeably better off economically in their childhood than my parents, they felt a severe stigma of poverty my parents never felt. My parent grew up in a country where they were much the same as everybody else. In fact a little better off. They did not feel poor at all. They had a happy childhood both of them. But one of my wife's American parents had a bad childhood, plagued by a strong feeling of being lesser than everybody else. Never having people over on visit out of shame over their own poverty. She was used to seeing everybody else being better off and internet the idea they they were somehow lesser people. Today my home country is richer than America by GDP per capita but comparisons of wealth and of people's feeling of wealth or poverty is difficult. Many of my american relatives enjoy bigger houses and cars than I do, but one always gets the feeling that their life is much more of a struggle than mine. I live in a smaller house and have no car. But I have no financial worries like them. I have long vacations, I am not constantly overworked. I don't worry about health care insurance, saving for college education to my kids, getting fired. So I think one should have some respect for the desperation and despair the poor in America feel. Knowing that a surprising car repair or medical bill could send you onto the street in no time. Even poor in much less wealth western countries have to deal with quite that level of insecurity.

darawk 11y ago

Don't get me wrong, i'm not saying it's not plenty profitable. I only mentioned the higher rents thing to illustrate the point that the landlord does not have an interest in keeping these people poor. This article is suggesting that these landlords are causing poverty, but then it goes on to not even try to make that case. They may be making money from poor people, and they may even not provide them the level of service they are legally required to, but this article makes no actual case for them causing or being any real part of the poverty cycle. Unless of course you think that the mere fact of asking that their rents be paid is the problem - and if you do, fine, but you're then tasked with proposing an alternative way of housing these people.

TheOtherHobbes 11y ago
>This article is suggesting that these landlords are causing poverty The landlords are causing poverty by increasing rents to the maximum level the market will bear, removing money from the system and - usually - moving it offshore. Because slum property is so immensely profitable, there's no incentive whatsoever to invest the profits in anything riskier. So you end up with wasteful non-projects like this: http://www.dailymail.co.uk/news/article-3490220/The-Ghost-House-Sussex-40m-mansion-built-property-baron-friend-Robert-Mugabe-31-years-work-started.html http://www.dailymail.co.uk/news/article-3490220/The-Ghost-Ho... Meanwhile renters see their disposable income - in fact their economic freedoms - eroded until they can barely afford housing and food. You now have a deflationary cycle where it becomes harder to find customers for new businesses, and harder to find investment because investors don't believe customers are easy to find. Of course it's not just landlords. But generally economic cultures are designed to be favourable to either increasing or decreasing economic freedom for the low-paid. And if it's the latter, the predictable result is massive inequality and a deflationary uncontrolled descent into terrain which not only does the poor a lot of damage, but also eats away at the sustainable economic value of the assets of the rich.
- forgetsusername 11y ago
  >usually - moving it offshore Usually? Yeah, your local slumlord has a Swiss bank account.

NoGravitas 11y ago

Also, you always get to keep the security/cleaning deposit, and if you have a lot of churn, you get to collect an extra month's rent every few months -- another great incentive to evict people.