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How are you going to bail out landlords then? The money isn't going to come from nowhere.

by anovikov 6y ago

mjevans 6y ago
Those seeking rents should be where the buck stops in a paused economy.
- refurb 6y ago
  Collecting rents is not the same as "rent seeking".
  - bootcampwhere 6y ago
    This is a very important point. Similar to how most Americans think they are capitalists even if they don't have any capital.
  - sooheon 6y ago
    When it comes to land ownership, I'm pretty sure the two are equivalent.
  - jakelazaroff 6y ago
    It's exactly the same. "Rent seeking" means to increase your share of wealth without creating new wealth. https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking
    - refurb 6y ago
      No it's not. "Rent" is not the same as "economic rent". If I buy a piece of land a build a house on it and rent it out, I'm adding value to society by creating value.
      - jakelazaroff 6y ago
        Building the house, specifically, creates value. Renting it out does not.
    - tptacek 6y ago
      It is, kind of obviously, not exactly the same thing, and the 51% of Wikipedians who agreed about the content of that article agree, because it does not support the point you're making. Instead of attempting an axiomatic derivation of the term, you could just link to an actual discussion by economists of the term, most of which make the distinction between the layperson use of the term "rent" and Ricardo and Krueger's definition.
      - jakelazaroff 6y ago
        It’s “the same” in the sense that it’s an example of rent-seeking. Here's another definition [1]: > David Ricardo introduced the term “rent” in economics. It means the payment to a factor of production in excess of what is required to keep that factor in its present use. So, for example, if I am paid $150,000 in my current job but I would stay in that job for any salary over $130,000, I am making $20,000 in rent. Similarly, a landlord charges rent in excess of what it costs to maintain the land and building. Unless I’m misunderstanding Ricardo’s definition, that fits neatly inside of it. [1] https://www.econlib.org/library/Enc/RentSeeking.html https://www.econlib.org/library/Enc/RentSeeking.html
        kasey_junk 6y ago
        By that interpretation any profit making is rent seeking. A landlord is not “rent seeking” just by charging rent. For instance they are providing value in the form of risk arbitrage in most cases. The only case a landlord is purely rent seeking in the economic sense is if they only captured the difference in value of their properties due to external factors.
        tptacek 6y ago
        Right, as I understand it, the "economic rent" (ER) of an apartment lease would be the extent to which the cost of the lease was inflated by artificial scarcity (as opposed to just supply and demand). There are, then, rent-seeking things you could do as a landlord/developer, but in a well-functioning market where you're competing with lots of other landlords, the price of a lease reflects the market value of occupancy and does not include ER. Similarly, one of the classic examples of ER is wage premiums paid to closed-shop union members: the clearing price for the labor involved is, say, $20, but your union bumps that up to $25; the extra $5 is ER. There is directly substitutable labor that could be acquired at a discount to union labor, but closed-shop rules lock in the extra rents.
xenihn 6y ago
I always see the argument of "when all the mom & pop landlords are gone, major corporations will own everything, so we have to protect them". That consolidation is going to happen anyways. It's inevitable. The only factor is how long it takes for it to happen, and how big the payout will be for small landlords when they finally decide to cash out. There's much more at stake for the renters. Forcing small landlords into choosing between selling immediately or facing bankruptcy in the near future is morally preferable to putting the burden on renters. The world isn't really a worse place if a landlord has to liquidate their assets at a 150% net profit now instead of 320% in ten years (after accounting for all rent collected and taxes paid). If they had the capital to afford a commercial property in the first place, this won't be potentially life-ruining. You can't assume the same for a non-chain restaurant or grocer that serves as the owner's livelihood.
- apatters 6y ago
  I don't think that consolidation is inevitable at all, Americans are increasingly disillusioned with big business and there is a slowly growing anti-corporate sentiment being expressed (albeit opportunistically) by politicians as varied as Liz Warren, Ron Wyden, Marco Rubio and Trump. Matt Stoller's Substack is a great resource to learn more: https://mattstoller.substack.com/ https://mattstoller.substack.com/
hcknwscommenter 6y ago
Landlords were/are bailed out in US. Landlords are businesses. MY LLC got a 30 year very low fixed interest loan, first 10K of loan automatically forgiven, based solely on the LLC's income from last year. The loan amount was roughly 60% of last year's revenue. Oddly enough, actual lost revenue was about equal to the loan amount, but the gov't had no way of knowing that and didn't even ask. I'm sure every landlord in the country signed up for that or one of the several other coronavirus relief options. Any wonder why the stock market is up? That's a lot of free money sloshing around.

How are you going to bail out landlords then? The money isn't going to come from nowhere.

mjevans 6y ago

Those seeking rents should be where the buck stops in a paused economy.

refurb 6y ago
Collecting rents is not the same as "rent seeking".
- bootcampwhere 6y ago
  This is a very important point. Similar to how most Americans think they are capitalists even if they don't have any capital.
- sooheon 6y ago
  When it comes to land ownership, I'm pretty sure the two are equivalent.
- jakelazaroff 6y ago
  It's exactly the same. "Rent seeking" means to increase your share of wealth without creating new wealth. https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking
  - refurb 6y ago
    No it's not. "Rent" is not the same as "economic rent". If I buy a piece of land a build a house on it and rent it out, I'm adding value to society by creating value.
    - jakelazaroff 6y ago
      Building the house, specifically, creates value. Renting it out does not.
  - tptacek 6y ago
    It is, kind of obviously, not exactly the same thing, and the 51% of Wikipedians who agreed about the content of that article agree, because it does not support the point you're making. Instead of attempting an axiomatic derivation of the term, you could just link to an actual discussion by economists of the term, most of which make the distinction between the layperson use of the term "rent" and Ricardo and Krueger's definition.
    - jakelazaroff 6y ago
      It’s “the same” in the sense that it’s an example of rent-seeking. Here's another definition [1]: > David Ricardo introduced the term “rent” in economics. It means the payment to a factor of production in excess of what is required to keep that factor in its present use. So, for example, if I am paid $150,000 in my current job but I would stay in that job for any salary over $130,000, I am making $20,000 in rent. Similarly, a landlord charges rent in excess of what it costs to maintain the land and building. Unless I’m misunderstanding Ricardo’s definition, that fits neatly inside of it. [1] https://www.econlib.org/library/Enc/RentSeeking.html https://www.econlib.org/library/Enc/RentSeeking.html
      - kasey_junk 6y ago
        By that interpretation any profit making is rent seeking. A landlord is not “rent seeking” just by charging rent. For instance they are providing value in the form of risk arbitrage in most cases. The only case a landlord is purely rent seeking in the economic sense is if they only captured the difference in value of their properties due to external factors.
        tptacek 6y ago
        Right, as I understand it, the "economic rent" (ER) of an apartment lease would be the extent to which the cost of the lease was inflated by artificial scarcity (as opposed to just supply and demand). There are, then, rent-seeking things you could do as a landlord/developer, but in a well-functioning market where you're competing with lots of other landlords, the price of a lease reflects the market value of occupancy and does not include ER. Similarly, one of the classic examples of ER is wage premiums paid to closed-shop union members: the clearing price for the labor involved is, say, $20, but your union bumps that up to $25; the extra $5 is ER. There is directly substitutable labor that could be acquired at a discount to union labor, but closed-shop rules lock in the extra rents.

xenihn 6y ago

I always see the argument of "when all the mom & pop landlords are gone, major corporations will own everything, so we have to protect them". That consolidation is going to happen anyways. It's inevitable. The only factor is how long it takes for it to happen, and how big the payout will be for small landlords when they finally decide to cash out. There's much more at stake for the renters. Forcing small landlords into choosing between selling immediately or facing bankruptcy in the near future is morally preferable to putting the burden on renters. The world isn't really a worse place if a landlord has to liquidate their assets at a 150% net profit now instead of 320% in ten years (after accounting for all rent collected and taxes paid). If they had the capital to afford a commercial property in the first place, this won't be potentially life-ruining. You can't assume the same for a non-chain restaurant or grocer that serves as the owner's livelihood.

apatters 6y ago
I don't think that consolidation is inevitable at all, Americans are increasingly disillusioned with big business and there is a slowly growing anti-corporate sentiment being expressed (albeit opportunistically) by politicians as varied as Liz Warren, Ron Wyden, Marco Rubio and Trump. Matt Stoller's Substack is a great resource to learn more: https://mattstoller.substack.com/ https://mattstoller.substack.com/

hcknwscommenter 6y ago

Landlords were/are bailed out in US. Landlords are businesses. MY LLC got a 30 year very low fixed interest loan, first 10K of loan automatically forgiven, based solely on the LLC's income from last year. The loan amount was roughly 60% of last year's revenue. Oddly enough, actual lost revenue was about equal to the loan amount, but the gov't had no way of knowing that and didn't even ask. I'm sure every landlord in the country signed up for that or one of the several other coronavirus relief options. Any wonder why the stock market is up? That's a lot of free money sloshing around.