5 ms·

That’s not a cartel, that’s a free market. It’s not as if two or three landlords run the show.

claudeganon 7y ago
If you bother to read the article, it makes heavy reference to Adam Smith’s opposition to landlords and their rent-seeking because of the heavy drag they place on markets. They capture and enclose too much capital that could otherwise be used for dynamic and productive investment. He was as right then as he is now.
- solidsnack9000 7y ago
  That does not describe a cartel -- it describes predatory pricing.
  - hn_throwaway_99 7y ago
    The cartel comes from the fact of how much wealthy landlords control local governments, who then make it onerously difficult to build the amount of housing that is actually needed. I don't know if this is the case in Vancouver but it is absolutely the case in California, with its absurd cases of a run-down laundry mat being declared a "historical property" to block redevelopment.
    - deleted 7y ago
      [deleted]
  - scarejunba 7y ago
    How is that predatory pricing? Landlords aren't driving alternative landlords out of business by dropping their prices too low for others with shallower pockets to compete.
    - solidsnack9000 7y ago
      You are correct, and I am incorrect. Predatory pricing, also known as undercutting, is a pricing strategy in which a product or service is set at a very low price with the intention to achieve new customers (Loss leader), or driving competitors out of the market or to create barriers to entry for potential new competitors. https://en.wikipedia.org/wiki/Predatory_pricing https://en.wikipedia.org/wiki/Predatory_pricing I should have called it "price gouging" or perhaps "profiteering". https://en.wikipedia.org/wiki/Price_gouging https://en.wikipedia.org/wiki/Price_gouging There isn't really a great word for long-term exploitation of an easy structural advantage, though. Landlords don't have to form a cartel, since (a) everyone has to buy from them, (b) land is limited in supply and (c) the barrier to entry is high. Maybe it's a "natural cartel".
      - scarejunba 7y ago
        Fair enough. I believe they call that behaviour "rent-seeking" (in the Adam Smith sense) https://en.m.wikipedia.org/wiki/Rent-seeking#Description https://en.m.wikipedia.org/wiki/Rent-seeking#Description Most of the value of the land is from work done not by the property owner, which is just an interesting situation.
gimboland 7y ago
"Free market" is supposed to mean "free from rentiers", i.e. exactly what this does not describe.
jdc 7y ago
Let's review the definition of cartel: "a combination of independent commercial or industrial enterprises designed to limit competition or fix prices" So a cartel doesn't have to be any particular size. https://www.merriam-webster.com/dictionary/cartel https://www.merriam-webster.com/dictionary/cartel
- claudeganon 7y ago
  Exactly. And using your money and influence to control development in a way that limits competition and keeps prices/rents artificially high (as is the case in real estate across the North America) is textbook cartel behavior. While there are some subset of developers pushing for increased development, as was pointed out downthread, the largest real estate lobbying group in the US works tirelessly against higher density development. It’s funny how people can observe cartels in other basic inputs into the economy, like energy, but miss them entirely for the equally basic input of land/housing.
Mikeb85 7y ago
In city centres, there often is a group of only a few landlords who own entire blocks, then a few housing/investment companies who own most of the development projects (apartments). They collude and conspire with each other and local government to lower their own taxes, have the city improve streets near their properties, restrict supply/development permits, etc...
tryptophan 7y ago
But for a certain piece of land, its a complete monopoly. And unlike with goods or services, you can't go somewhere else to get that exact piece of land. In my opinion there are two issues: #1: Land owners are not taxed for the un-earned value of their land. Making lots of money for just owning a piece of land is absurd. Normally this doesn't matter due to how large the USA is, but you can see its ugly result when land is very constricted like in major cities. #2: Land owners are very limited by what they can build on their land by local laws and such, which prevents development of high density buildings, which would lower rents due to the increased number of units and efficiency at which these can be built. A land tax would even necessitate this sort of construction so that it would be profitable for the landlord to even keep the land.

If you bother to read the article, it makes heavy reference to Adam Smith’s opposition to landlords and their rent-seeking because of the heavy drag they place on markets. They capture and enclose too much capital that could otherwise be used for dynamic and productive investment. He was as right then as he is now.

solidsnack9000 7y ago
That does not describe a cartel -- it describes predatory pricing.
- hn_throwaway_99 7y ago
  The cartel comes from the fact of how much wealthy landlords control local governments, who then make it onerously difficult to build the amount of housing that is actually needed. I don't know if this is the case in Vancouver but it is absolutely the case in California, with its absurd cases of a run-down laundry mat being declared a "historical property" to block redevelopment.
  - deleted 7y ago
    [deleted]
- scarejunba 7y ago
  How is that predatory pricing? Landlords aren't driving alternative landlords out of business by dropping their prices too low for others with shallower pockets to compete.
  - solidsnack9000 7y ago
    You are correct, and I am incorrect. Predatory pricing, also known as undercutting, is a pricing strategy in which a product or service is set at a very low price with the intention to achieve new customers (Loss leader), or driving competitors out of the market or to create barriers to entry for potential new competitors. https://en.wikipedia.org/wiki/Predatory_pricing https://en.wikipedia.org/wiki/Predatory_pricing I should have called it "price gouging" or perhaps "profiteering". https://en.wikipedia.org/wiki/Price_gouging https://en.wikipedia.org/wiki/Price_gouging There isn't really a great word for long-term exploitation of an easy structural advantage, though. Landlords don't have to form a cartel, since (a) everyone has to buy from them, (b) land is limited in supply and (c) the barrier to entry is high. Maybe it's a "natural cartel".
    - scarejunba 7y ago
      Fair enough. I believe they call that behaviour "rent-seeking" (in the Adam Smith sense) https://en.m.wikipedia.org/wiki/Rent-seeking#Description https://en.m.wikipedia.org/wiki/Rent-seeking#Description Most of the value of the land is from work done not by the property owner, which is just an interesting situation.

gimboland 7y ago

"Free market" is supposed to mean "free from rentiers", i.e. exactly what this does not describe.

jdc 7y ago

Let's review the definition of cartel: "a combination of independent commercial or industrial enterprises designed to limit competition or fix prices" So a cartel doesn't have to be any particular size. https://www.merriam-webster.com/dictionary/cartel https://www.merriam-webster.com/dictionary/cartel

claudeganon 7y ago
Exactly. And using your money and influence to control development in a way that limits competition and keeps prices/rents artificially high (as is the case in real estate across the North America) is textbook cartel behavior. While there are some subset of developers pushing for increased development, as was pointed out downthread, the largest real estate lobbying group in the US works tirelessly against higher density development. It’s funny how people can observe cartels in other basic inputs into the economy, like energy, but miss them entirely for the equally basic input of land/housing.

Mikeb85 7y ago

In city centres, there often is a group of only a few landlords who own entire blocks, then a few housing/investment companies who own most of the development projects (apartments). They collude and conspire with each other and local government to lower their own taxes, have the city improve streets near their properties, restrict supply/development permits, etc...

tryptophan 7y ago

But for a certain piece of land, its a complete monopoly. And unlike with goods or services, you can't go somewhere else to get that exact piece of land. In my opinion there are two issues: #1: Land owners are not taxed for the un-earned value of their land. Making lots of money for just owning a piece of land is absurd. Normally this doesn't matter due to how large the USA is, but you can see its ugly result when land is very constricted like in major cities. #2: Land owners are very limited by what they can build on their land by local laws and such, which prevents development of high density buildings, which would lower rents due to the increased number of units and efficiency at which these can be built. A land tax would even necessitate this sort of construction so that it would be profitable for the landlord to even keep the land.