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> I benefit without producing any utility for the economy at all. You provide the tenants the opportunity to have housing without the risks of ownership (the

> I benefit without producing any utility for the economy at all. You provide the tenants the opportunity to have housing without the risks of ownership (the down payment and risk of declines. See 2008, for example). It's not for everyone, and moving to ownership may be more beneficial long-term, but it is needed for some and at some times.

neonological 6y ago
I didn't own property, then I went to a bank to apply for a loan. Now my tenants pay for that loan with rent. They are paying the bank interest and money for my loan on a property I never lived in nor have the money to purchase without a loan.
- kbutler 6y ago
  Did you compel them to make that deal? Did you deceive them to make that deal? You had the credit and financial resources to commit to that purchase. Some reasons they may choose to rent instead: - lack capital - lack credit rating - not willing to commit for the long-term - not want to be responsible for maintenance - not willing to assume risk in the real-estate market I know people who are financially literate and have capital who choose to rent. I chose to purchase, but came to realize that “home ownership” is two-way — to some extent you’re also owned by the home.
  - neonological 6y ago
    I didn't say the transaction wasn't "fair." Fairness depends on your definition of fair and it's fine if you think this transaction is very fair. What I am saying is that usually in an economic transaction somebody contributed something to the economy. A product was distributed or created. A service was offered or provided. I offered nothing to the economy. I am simply gaining money by doing nothing. Also I'm referring to my specific situation where the rental costs are covered fully by rent. If you take on the loan yourself with your own money.. well that's a different situation. >I know people who are financially literate and have capital who choose to rent. I also rent. I also never said there was anything wrong with renting. I'm just saying that rent is an economic black hole. No energy was expended to increase GDP in exchange for rent money. I benefit by doing nothing and so does the person who rents to me.
    - kbutler 6y ago
      You’ve just stated that you choose to rent. Your landlord is thus providing a service you value (adding to the economy). You are providing a service your tenants value. In your case, this may be mostly the assumption of risk - what if your tenants stop paying, and the government says you can’t evict? What if rental prices drop dramatically? Or real estate prices drop dramatically? What if your tenants move out and it takes X months to rent? You are still on the hook for your payments to the bank, and your equity and credit rating are at risk. The bank lending you capital in exchange for interest (rent) is also providing you a valuable service - and you are providing a valuable service to them, giving them a return on their capital (with an acceptable risk of default). That’s the “invisible hand” of free market exchanges - each party gives what they value less to obtain what they value more, so both parties are better off (if they didn’t feel themselves to be better off, they would not make the exchange).
      - neonological 6y ago
        > You’ve just stated that you choose to rent. Your landlord is thus providing a service you value (adding to the economy). The land existed before my landlord was alive. It's the equivalent of charging me to breath air because someone owns it. >You are providing a service your tenants value. In your case, this may be mostly the assumption of risk - what if your tenants stop paying, and the government says you can’t evict? What if rental prices drop dramatically? Or real estate prices drop dramatically? What if your tenants move out and it takes X months to rent? Sure you could say that I take on the risk, but that's also dependent on data. Historically for the last century the risk is highly minimal. I could also, If I wanted pay off the entire loan. Then there would be no risk. It would essentially become the economic equivalent of me charging people for breathing air that I own. >You are still on the hook for your payments to the bank, and your equity and credit rating are at risk. I can afford to pay on my own. Additionally I can sell the property at anytime as well. Of course there is still risk in depreciation but I already know the risk is minimal based off data. >The bank lending you capital in exchange for interest (rent) is also providing you a valuable service - and you are providing a valuable service to them, giving them a return on their capital (with an acceptable risk of default). Yeah, a service in exchange for what? For interest. Interest that I don't pay for. The exchange is more between the tenants and the bank and I function as a middle man leaching from the tenants. It is their blood sweat and tears that will be fronting the loan and the house that I will own. >That’s the “invisible hand” of free market exchanges - each party gives what they value less to obtain what they value more, so both parties are better off (if they didn’t feel themselves to be better off, they would not make the exchange). The invisible hand is an outdated concept. The world has moved beyond Adam Smith as the data shows that economic systems are far more complicated. The current status quo belief argues that the average return on investment outpaces productivity-based income by a wide margin. So basically not only does owning property allow me to gain money from it without an ounce of work. But investments on all forms of capital from property to human capital is responsible for much of the wealth inequality that exists today. Such capital ownership allows people to have incomes that far exceed what any one human individual is capable of generating through productive labor.

neonological 6y ago

I didn't own property, then I went to a bank to apply for a loan. Now my tenants pay for that loan with rent. They are paying the bank interest and money for my loan on a property I never lived in nor have the money to purchase without a loan.

kbutler 6y ago
Did you compel them to make that deal? Did you deceive them to make that deal? You had the credit and financial resources to commit to that purchase. Some reasons they may choose to rent instead: - lack capital - lack credit rating - not willing to commit for the long-term - not want to be responsible for maintenance - not willing to assume risk in the real-estate market I know people who are financially literate and have capital who choose to rent. I chose to purchase, but came to realize that “home ownership” is two-way — to some extent you’re also owned by the home.
- neonological 6y ago
  I didn't say the transaction wasn't "fair." Fairness depends on your definition of fair and it's fine if you think this transaction is very fair. What I am saying is that usually in an economic transaction somebody contributed something to the economy. A product was distributed or created. A service was offered or provided. I offered nothing to the economy. I am simply gaining money by doing nothing. Also I'm referring to my specific situation where the rental costs are covered fully by rent. If you take on the loan yourself with your own money.. well that's a different situation. >I know people who are financially literate and have capital who choose to rent. I also rent. I also never said there was anything wrong with renting. I'm just saying that rent is an economic black hole. No energy was expended to increase GDP in exchange for rent money. I benefit by doing nothing and so does the person who rents to me.
  - kbutler 6y ago
    You’ve just stated that you choose to rent. Your landlord is thus providing a service you value (adding to the economy). You are providing a service your tenants value. In your case, this may be mostly the assumption of risk - what if your tenants stop paying, and the government says you can’t evict? What if rental prices drop dramatically? Or real estate prices drop dramatically? What if your tenants move out and it takes X months to rent? You are still on the hook for your payments to the bank, and your equity and credit rating are at risk. The bank lending you capital in exchange for interest (rent) is also providing you a valuable service - and you are providing a valuable service to them, giving them a return on their capital (with an acceptable risk of default). That’s the “invisible hand” of free market exchanges - each party gives what they value less to obtain what they value more, so both parties are better off (if they didn’t feel themselves to be better off, they would not make the exchange).
    - neonological 6y ago
      > You’ve just stated that you choose to rent. Your landlord is thus providing a service you value (adding to the economy). The land existed before my landlord was alive. It's the equivalent of charging me to breath air because someone owns it. >You are providing a service your tenants value. In your case, this may be mostly the assumption of risk - what if your tenants stop paying, and the government says you can’t evict? What if rental prices drop dramatically? Or real estate prices drop dramatically? What if your tenants move out and it takes X months to rent? Sure you could say that I take on the risk, but that's also dependent on data. Historically for the last century the risk is highly minimal. I could also, If I wanted pay off the entire loan. Then there would be no risk. It would essentially become the economic equivalent of me charging people for breathing air that I own. >You are still on the hook for your payments to the bank, and your equity and credit rating are at risk. I can afford to pay on my own. Additionally I can sell the property at anytime as well. Of course there is still risk in depreciation but I already know the risk is minimal based off data. >The bank lending you capital in exchange for interest (rent) is also providing you a valuable service - and you are providing a valuable service to them, giving them a return on their capital (with an acceptable risk of default). Yeah, a service in exchange for what? For interest. Interest that I don't pay for. The exchange is more between the tenants and the bank and I function as a middle man leaching from the tenants. It is their blood sweat and tears that will be fronting the loan and the house that I will own. >That’s the “invisible hand” of free market exchanges - each party gives what they value less to obtain what they value more, so both parties are better off (if they didn’t feel themselves to be better off, they would not make the exchange). The invisible hand is an outdated concept. The world has moved beyond Adam Smith as the data shows that economic systems are far more complicated. The current status quo belief argues that the average return on investment outpaces productivity-based income by a wide margin. So basically not only does owning property allow me to gain money from it without an ounce of work. But investments on all forms of capital from property to human capital is responsible for much of the wealth inequality that exists today. Such capital ownership allows people to have incomes that far exceed what any one human individual is capable of generating through productive labor.