5 ms·

> providing the minimum level of work necessary Is that how you measure the value of the business?

by ColanR 6y ago

HarryHirsch 6y ago
Yes, landowners and the maintenance they to or fail to do has massive impacts on the lives of their tenants. In an "as-is-where-is" state the only recourse when the roof leaks is to move out. That is expensive and disruptive, and you can't even recover the funds. This fantasy of shareholder value, where everyone takes care of himself, consequently everyone is taken care of is just that: fantasy.
klodolph 6y ago
Obviously not—it’s not the amount of work done, but the value which the work provides. Landlords contribute a small amount of value relative to how much they are paid, compared to other businesses. Most of the value is provided by the land itself, and the landlords merely have a monopoly on it. So I am less inclined to be sympathetic to PMCs which are suddenly being paid less, since they are generally overpaid. We have to be careful to distinguish rent from actual productive economic activity, because rent provides no value and requires no work. Speaking here of “rent” in the Adam Smith sense of the word.
- WalterBright 6y ago
  If PMCs are overpaid, then the property owners wouldn't employ them. And if landlords didn't do much work, property owners wouldn't pay PMCs to do that work for them.
  - klodolph 6y ago
    I’m not being perfectly precise in my terminology, and you’re spitting out a compiler error in response. Landlords/PMCs are overpaid because tenants pay rent not only for the services provided by the landlords/PMCs, but also for access to the land which they own. This happens because the property owners have a monopoly on that piece of land. The rent will increase in accordance with the contributions of the people using the land, and yet the money will be paid instead to the people owning the land. The Wealth of Nations is on Gutenberg. Skip to Chapter XI in Book 1. http://www.gutenberg.org/files/3300/3300-0.txt http://www.gutenberg.org/files/3300/3300-0.txt > The rent of land, therefore, considered as the price paid for the use of the land, is naturally a monopoly price. It is not at all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take, but to what the farmer can afford to give.
    - WalterBright 6y ago
      If you've ever rented out land, you'd know that the price you can charge is not at all set by what the tenant can afford. Like other prices, it's set by supply and demand. For an obvious example, if I tried to rent my house out to Bill Gates for $50 billion, which he can afford, how far do you think I'd get with that?
      - klodolph 6y ago
        The key insight here is that demand is driven by what the tenants in an area can afford. For an obvious example, the rent in Manhattan is higher than the rent in Tulsa because the salaries in Manhattan are higher.
    - coreyp_1 6y ago
      [EDIT: formatting & #7] Comparing rent on farm land is not the same as rent on housing. I own a rental house. What does the rent go to? Well, I pay a mortgage, taxes, utilities, and upkeep. That is, I'm saving up now for a roof and a retaining wall (to give better access on one side of the driveway). What value do the renters receive? 1. No risk. They can walk away, but I still have a 30-year mortgage. The plumbing can fail. The roof can leak. The electric can degrade. The building can crumble. I, the owner, have to fix it IF it happens. The renter does not assume any of that risk. 2. No commitment. Aside from a short lease (which they agree to the terms), the renter has no long-term obligation to that property. I, as the owner, have committed to maintaining the property for decades. 3. Access to the property and all of its features. If you don't think that that is value, then try being homeless. 4. Furthermore, I, as the owner, DO NOT have access to the use of the property. Perhaps for decades. 5. Monopoly? I cannot think of a single example of a monopoly in land ownership other than the government itself and the threat of eminent domain. If you don't like my terms for lease, then go next door. Different owner, different terms. Or buy your own. 6. Initial Investment. I, as an owner, had to save for years to consolidate the capital for the down payment of that property. That means that, for years, I did not party, buy the latest technology, eat at moderately-priced restaurants, go on vacation, buy a shiny new vehicle, purchase concert tickets, etc. I deprived myself of entertainment and luxery to, instead, work multiple jobs, with the intent of having a rental property. 7. Improvement. I improve the property. If I do not pay someone to do it, then it is me doing it myself. I refinished the hardwood floors. I fixed drywall and painted. I removed old ductwork. I provide appliances. I provide furnishing (I rent to students, after all). I put the labor into the property, further depriving myself of other more enjoyable activity. I'm sorry, but I completely disagree with your restrictive definition of what of "rent" represents. Rent is compensation for my years of preparation and self-denial of the reward for my own personal labor. Rent is the fee that the renter pays for not having done the same. Rent is never pure profit. Rent is a continual financial planning for the upkeep and sustaining of the investment. Do I benefit from my investment? Yes. Do I feel guilty about it? No. Should I feel guilty about it? Never. If you are mad at a landlord for having to pay rent, then dig yourself out of that situation. What if it takes years? Welcome to the club. Do it anyway. So what if you have to move? Again, welcome to the club. Do it anyway. So what if the landlord is wealthy? Wealth has to come from somewhere, and if your current financial strategy isn't making you wealthy, then change it. It will probably take a lifetime to do, but then again, that's probably what your landlord did (or is in the process of doing).

> providing the minimum level of work necessary Is that how you measure the value of the business?

by ColanR 6y ago

> providing the minimum level of work necessary Is that how you measure the value of the business?

Yes, landowners and the maintenance they to or fail to do has massive impacts on the lives of their tenants. In an "as-is-where-is" state the only recourse when the roof leaks is to move out. That is expensive and disruptive, and you can't even recover the funds. This fantasy of shareholder value, where everyone takes care of himself, consequently everyone is taken care of is just that: fantasy.

klodolph 6y ago

Obviously not—it’s not the amount of work done, but the value which the work provides. Landlords contribute a small amount of value relative to how much they are paid, compared to other businesses. Most of the value is provided by the land itself, and the landlords merely have a monopoly on it. So I am less inclined to be sympathetic to PMCs which are suddenly being paid less, since they are generally overpaid. We have to be careful to distinguish rent from actual productive economic activity, because rent provides no value and requires no work. Speaking here of “rent” in the Adam Smith sense of the word.

WalterBright 6y ago
If PMCs are overpaid, then the property owners wouldn't employ them. And if landlords didn't do much work, property owners wouldn't pay PMCs to do that work for them.
- klodolph 6y ago
  I’m not being perfectly precise in my terminology, and you’re spitting out a compiler error in response. Landlords/PMCs are overpaid because tenants pay rent not only for the services provided by the landlords/PMCs, but also for access to the land which they own. This happens because the property owners have a monopoly on that piece of land. The rent will increase in accordance with the contributions of the people using the land, and yet the money will be paid instead to the people owning the land. The Wealth of Nations is on Gutenberg. Skip to Chapter XI in Book 1. http://www.gutenberg.org/files/3300/3300-0.txt http://www.gutenberg.org/files/3300/3300-0.txt > The rent of land, therefore, considered as the price paid for the use of the land, is naturally a monopoly price. It is not at all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take, but to what the farmer can afford to give.
  - WalterBright 6y ago
    If you've ever rented out land, you'd know that the price you can charge is not at all set by what the tenant can afford. Like other prices, it's set by supply and demand. For an obvious example, if I tried to rent my house out to Bill Gates for $50 billion, which he can afford, how far do you think I'd get with that?
    - klodolph 6y ago
      The key insight here is that demand is driven by what the tenants in an area can afford. For an obvious example, the rent in Manhattan is higher than the rent in Tulsa because the salaries in Manhattan are higher.
  - coreyp_1 6y ago
    [EDIT: formatting & #7] Comparing rent on farm land is not the same as rent on housing. I own a rental house. What does the rent go to? Well, I pay a mortgage, taxes, utilities, and upkeep. That is, I'm saving up now for a roof and a retaining wall (to give better access on one side of the driveway). What value do the renters receive? 1. No risk. They can walk away, but I still have a 30-year mortgage. The plumbing can fail. The roof can leak. The electric can degrade. The building can crumble. I, the owner, have to fix it IF it happens. The renter does not assume any of that risk. 2. No commitment. Aside from a short lease (which they agree to the terms), the renter has no long-term obligation to that property. I, as the owner, have committed to maintaining the property for decades. 3. Access to the property and all of its features. If you don't think that that is value, then try being homeless. 4. Furthermore, I, as the owner, DO NOT have access to the use of the property. Perhaps for decades. 5. Monopoly? I cannot think of a single example of a monopoly in land ownership other than the government itself and the threat of eminent domain. If you don't like my terms for lease, then go next door. Different owner, different terms. Or buy your own. 6. Initial Investment. I, as an owner, had to save for years to consolidate the capital for the down payment of that property. That means that, for years, I did not party, buy the latest technology, eat at moderately-priced restaurants, go on vacation, buy a shiny new vehicle, purchase concert tickets, etc. I deprived myself of entertainment and luxery to, instead, work multiple jobs, with the intent of having a rental property. 7. Improvement. I improve the property. If I do not pay someone to do it, then it is me doing it myself. I refinished the hardwood floors. I fixed drywall and painted. I removed old ductwork. I provide appliances. I provide furnishing (I rent to students, after all). I put the labor into the property, further depriving myself of other more enjoyable activity. I'm sorry, but I completely disagree with your restrictive definition of what of "rent" represents. Rent is compensation for my years of preparation and self-denial of the reward for my own personal labor. Rent is the fee that the renter pays for not having done the same. Rent is never pure profit. Rent is a continual financial planning for the upkeep and sustaining of the investment. Do I benefit from my investment? Yes. Do I feel guilty about it? No. Should I feel guilty about it? Never. If you are mad at a landlord for having to pay rent, then dig yourself out of that situation. What if it takes years? Welcome to the club. Do it anyway. So what if you have to move? Again, welcome to the club. Do it anyway. So what if the landlord is wealthy? Wealth has to come from somewhere, and if your current financial strategy isn't making you wealthy, then change it. It will probably take a lifetime to do, but then again, that's probably what your landlord did (or is in the process of doing).