8 ms·

haven't economists talked about how, in general, charging rent is not really creating economic value? patent trolls, landlords, rich investors, for example... a

haven't economists talked about how, in general, charging rent is not really creating economic value? patent trolls, landlords, rich investors, for example... all to some degree just rake it in based on what they already have. of course there is some strategy involved, and there is work too. but maybe the point is that the way things are set up now, the reward for the work goes on indefinitely, which makes no sense. you inherited a family property and are able to profit off it your entire life, since the cost of maintenance and property taxes is offset by rent you earn from some agency renting out your house? i dont see how you are personally contributing anything. some investors already have vast sums of money, so they are able to earn vastly more sums by putting it in an index fund? also not fair, though i suppose you are "taking a risk", but i dont really find that all too compelling. you just sit there and rake in dividends and ~3% roi. suing a company for using tech that they invented but didnt patent? you are just a pure minus on society in that case. these things are all rent-seeking behaviors, i dont see how they really do anything for the greater good. i think we need to tell people who try to make money by charging rent to basically fuck off. not that you are a bad guy for doing it in many cases, but we should recognize it for the unfair practice it is.

jcoffland 10y ago
> landlords, rich investors, for example... all to some degree just rake it in based on what they already have. This is a simplistic view that is demonstrably incorrect. For example, I rent out part of my house but do so to help pay the mortgage. So technically I do not fully own the property I rent. Furthermore, maintaining a property and assuming liability are not free.
- the_cat_kittles 10y ago
  sure. not you personally then. but a lot of landlords.
eof 10y ago
The argument would be that the right to seek rent from your capital goods, whether created, bought, or inherited, is what drives people to create these rent-creating systems in the first place. If people didn't have the right to seek rent from the houses they build or inventions they come up with, why would they expend the effort in the first place? (note, I don't take that view exactly, I believe motivation comes from a whole lot of places)
- lr4444lr 10y ago
  Not your view exactly, perhaps, but cuts to the heart of Efficient Market Hypothesis.
- the_cat_kittles 10y ago
  yes, its a good point to make. and not wrong, but i wouldn't say its the whole story. people have been creative and ingenious long before money existed. i certainly dont have enough historical knowledge, evidence, or thinking to make a compelling argument that money doesn't inspire creativity, but i really do have a suspicion that most good stuff comes from people who do it "just because", not to get rich. look at the incredible academics, artists, writers etc throughout history that weren't ever rich, nor really made the effort to be. but, for lots of day to day stuff, i do think money keeps the gears turning. so, i guess "why would they expend the effort in the first place?" ... because its fun.
frgtpsswrdlame 10y ago
Support the estate tax! And do it vocally, it will be coming under fire soon.
- mcbruiser2 10y ago
  i.e. support double taxation. no thanks.
  - frgtpsswrdlame 10y ago
    All taxation is double (triple, quadruple, etc) taxation.
    - mcbruiser2 10y ago
      all taxation? what do you mean? like, my net income is taxed again with sales tax?
    - mcbruiser3 10y ago
      like sales tax on net income?
runeks 10y ago
Charging rent does have economic value. Example: a retiree, using his retirement savings, purchases an apartment building. Now, he has a steady income, that he can use to pay for his expenses indefinitely -- as opposed to knowing he will run out of money at some point. The tenants benefit as well, because they have little savings, but an income instead (because they are still able to work, as opposed to the retiree). By exchanging income for wealth, the tenants and the retiree mutually satisfy each other's interests without harming anyone.
- tsunamifury 10y ago
  Rent is almost always higher than a mortgage payment but that requires a downpayment (i.e. not being poor) -- thereby they are saving less than if they can own. Basically the point of this article -- poor people who have to rent are subsidizing this retiree's retirement... its profitable.
  - runeks 10y ago
    An income is not a profit (capital gain). Retirees aren't profiting from their ability to convert their wealth into income, they're simply surviving. I'm not talking about rich retirees. I'm talking about hundreds of millions of people all over the world, who've saved up something and therefore, when they come to the point where they are unable to work, they purchase an asset with a yield -- it can be anything: a bond, shares in companies that rent out apartments, stocks, land lease etc. -- in order to convert their savings into an income. The more your savings, the higher the income, but when you are no longer physically able to work, you have no choice left (unless you're lucky enough to live in a country where there's someone to help you). Also, who do you think is the recipient of mortgage payments? People who've deposited money with the bank in question, eg. retirees. A mortgage is an exchange of wealth for income using a bank/credit union as an intermediary.
lr4444lr 10y ago
Charging rent is the means by which the owner is compensated for managing the risk of the asset for the sake of the inhabitant, dealing with local regulations, and checking the depreciation. The other examples are just abstractions, but the principle is the same: value isn't static. The underlying asset often has to be managed and its risks reevaluated. There is no guarantee that you just get to "sit there and rake in dividends".
- the_cat_kittles 10y ago
  that is true and your point is well taken. i think the crux of my point is that its out of scale with what i feel is fair. that is, the risks do not seem big enough to warrant the returns. i get that the returns are determined by the market, but i dont think thats a compelling argument in favor of fairness.
  - mcbruiser2 10y ago
    obviously you are not a landlord. there are many, many risks and costs to owning property, which is why not all landlords even make any money at all.
    - the_cat_kittles 10y ago
      are you really disputing the fact that there are some people who make a shit ton of money owning property that dont really deserve it? thats crazy.
      - mcbruiser2 10y ago
        deserve it? what do you mean? if they own the property and someone is willing to pay the rent, then yes, absolutely they "deserve it". don't be jelly, dude.
      - mcbruiser3 10y ago
        if they own the property and someone is willing to pay the rent then yes, absolutely they deserve it. are you suggesting we take away property rights?
snarf21 10y ago
If you don't rent, then you have to buy. Now you are paying money to the banks who "just rake it in". If you can't save up for the 5% downpayment, you have no choice but to rent. There will always be a percentage of people who don't have the capital to buy and need renting options. Note: I'm not saying slumlords are good. I'm saying people need to have a place to live. People need to have jobs. The economy will always have to encourage people who provide housing and jobs as it is so critical to everything. It seems like you are most upset about people who inherited money using it to their advantage. I think the biggest problem is not poverty but how the middle class is forced to pay for it. The powers that be tell the middle class that it is the lazy poor people's fault so they get the blame while the rich get richer.
andrewmutz 10y ago
But housing only exists because of the economic incentives provided by the rent. The act of building housing takes significant resources: lots of labor, purchase of physical building materials, purchase of equipment. The investor takes on the risk that pouring money into construction efforts will ultimately be paid back in the form of valuable housing that can be sold or rented. If not for the returns provided by rent, no one would put up the investment in order to build more housing. (just to clear things up, the act of charging rent is different than what economists refer to as rent-seeking behavior https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking)
- the_cat_kittles 10y ago
  i dont dispute that getting rich has motivated people. but its worth mentioning that houses existed before money, as have many other valuable things.
tbrownaw 10y ago
haven't economists talked about how, in general, charging rent is not really creating economic value? patent trolls, landlords, rich investors, for example... all to some degree just rake it in based on what they already have. When economists talk about rents and rent -seeking behavior, that's somewhat different from the common meaning of "rent". So for example you can get a monopoly rent by having all your (smaller) competitors regulated our of existence even if nothing is being rented in the traditional sense, while a landlord renting out properties in a healthy competitive market won't receive any economic rent.

jcoffland 10y ago

> landlords, rich investors, for example... all to some degree just rake it in based on what they already have. This is a simplistic view that is demonstrably incorrect. For example, I rent out part of my house but do so to help pay the mortgage. So technically I do not fully own the property I rent. Furthermore, maintaining a property and assuming liability are not free.

the_cat_kittles 10y ago
sure. not you personally then. but a lot of landlords.

eof 10y ago

The argument would be that the right to seek rent from your capital goods, whether created, bought, or inherited, is what drives people to create these rent-creating systems in the first place. If people didn't have the right to seek rent from the houses they build or inventions they come up with, why would they expend the effort in the first place? (note, I don't take that view exactly, I believe motivation comes from a whole lot of places)

lr4444lr 10y ago
Not your view exactly, perhaps, but cuts to the heart of Efficient Market Hypothesis.
the_cat_kittles 10y ago
yes, its a good point to make. and not wrong, but i wouldn't say its the whole story. people have been creative and ingenious long before money existed. i certainly dont have enough historical knowledge, evidence, or thinking to make a compelling argument that money doesn't inspire creativity, but i really do have a suspicion that most good stuff comes from people who do it "just because", not to get rich. look at the incredible academics, artists, writers etc throughout history that weren't ever rich, nor really made the effort to be. but, for lots of day to day stuff, i do think money keeps the gears turning. so, i guess "why would they expend the effort in the first place?" ... because its fun.

frgtpsswrdlame 10y ago

Support the estate tax! And do it vocally, it will be coming under fire soon.

mcbruiser2 10y ago
i.e. support double taxation. no thanks.
- frgtpsswrdlame 10y ago
  All taxation is double (triple, quadruple, etc) taxation.
  - mcbruiser2 10y ago
    all taxation? what do you mean? like, my net income is taxed again with sales tax?
  - mcbruiser3 10y ago
    like sales tax on net income?

runeks 10y ago

Charging rent does have economic value. Example: a retiree, using his retirement savings, purchases an apartment building. Now, he has a steady income, that he can use to pay for his expenses indefinitely -- as opposed to knowing he will run out of money at some point. The tenants benefit as well, because they have little savings, but an income instead (because they are still able to work, as opposed to the retiree). By exchanging income for wealth, the tenants and the retiree mutually satisfy each other's interests without harming anyone.

tsunamifury 10y ago
Rent is almost always higher than a mortgage payment but that requires a downpayment (i.e. not being poor) -- thereby they are saving less than if they can own. Basically the point of this article -- poor people who have to rent are subsidizing this retiree's retirement... its profitable.
- runeks 10y ago
  An income is not a profit (capital gain). Retirees aren't profiting from their ability to convert their wealth into income, they're simply surviving. I'm not talking about rich retirees. I'm talking about hundreds of millions of people all over the world, who've saved up something and therefore, when they come to the point where they are unable to work, they purchase an asset with a yield -- it can be anything: a bond, shares in companies that rent out apartments, stocks, land lease etc. -- in order to convert their savings into an income. The more your savings, the higher the income, but when you are no longer physically able to work, you have no choice left (unless you're lucky enough to live in a country where there's someone to help you). Also, who do you think is the recipient of mortgage payments? People who've deposited money with the bank in question, eg. retirees. A mortgage is an exchange of wealth for income using a bank/credit union as an intermediary.

lr4444lr 10y ago

Charging rent is the means by which the owner is compensated for managing the risk of the asset for the sake of the inhabitant, dealing with local regulations, and checking the depreciation. The other examples are just abstractions, but the principle is the same: value isn't static. The underlying asset often has to be managed and its risks reevaluated. There is no guarantee that you just get to "sit there and rake in dividends".

the_cat_kittles 10y ago
that is true and your point is well taken. i think the crux of my point is that its out of scale with what i feel is fair. that is, the risks do not seem big enough to warrant the returns. i get that the returns are determined by the market, but i dont think thats a compelling argument in favor of fairness.
- mcbruiser2 10y ago
  obviously you are not a landlord. there are many, many risks and costs to owning property, which is why not all landlords even make any money at all.
  - the_cat_kittles 10y ago
    are you really disputing the fact that there are some people who make a shit ton of money owning property that dont really deserve it? thats crazy.
    - mcbruiser2 10y ago
      deserve it? what do you mean? if they own the property and someone is willing to pay the rent, then yes, absolutely they "deserve it". don't be jelly, dude.
    - mcbruiser3 10y ago
      if they own the property and someone is willing to pay the rent then yes, absolutely they deserve it. are you suggesting we take away property rights?

snarf21 10y ago

If you don't rent, then you have to buy. Now you are paying money to the banks who "just rake it in". If you can't save up for the 5% downpayment, you have no choice but to rent. There will always be a percentage of people who don't have the capital to buy and need renting options. Note: I'm not saying slumlords are good. I'm saying people need to have a place to live. People need to have jobs. The economy will always have to encourage people who provide housing and jobs as it is so critical to everything. It seems like you are most upset about people who inherited money using it to their advantage. I think the biggest problem is not poverty but how the middle class is forced to pay for it. The powers that be tell the middle class that it is the lazy poor people's fault so they get the blame while the rich get richer.

andrewmutz 10y ago

But housing only exists because of the economic incentives provided by the rent. The act of building housing takes significant resources: lots of labor, purchase of physical building materials, purchase of equipment. The investor takes on the risk that pouring money into construction efforts will ultimately be paid back in the form of valuable housing that can be sold or rented. If not for the returns provided by rent, no one would put up the investment in order to build more housing. (just to clear things up, the act of charging rent is different than what economists refer to as rent-seeking behavior https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking)

the_cat_kittles 10y ago
i dont dispute that getting rich has motivated people. but its worth mentioning that houses existed before money, as have many other valuable things.

tbrownaw 10y ago

haven't economists talked about how, in general, charging rent is not really creating economic value? patent trolls, landlords, rich investors, for example... all to some degree just rake it in based on what they already have. When economists talk about rents and rent -seeking behavior, that's somewhat different from the common meaning of "rent". So for example you can get a monopoly rent by having all your (smaller) competitors regulated our of existence even if nothing is being rented in the traditional sense, while a landlord renting out properties in a healthy competitive market won't receive any economic rent.