4 ms·

> A [person] that just extracts capital by capturing real state and collecting rent is a great example, this person is a large net loss for the country. Even t

• junon 4mo ago
  Genuine question: how so? I'm not familiar with the economics of this.
  • embedding-shape 4mo ago
    The general feedback loop is "have lots of money === easier to make more money", and doing so via passive approaches like "own property, rent it out" basically spirals out of control to a few owning a lot, unless you try to restrict it somehow. Add in that "vacation rentals" is hugely interesting for real estate owners as you get so much more per owned property, and suddenly local residents are even harder hit by property not being available even for long-term rent anymore. Final drop being that the real estate owner doesn't even live, work or spend their money in the country of the property itself, and suddenly it's basically all downside for the country and the people living there.
    • nradov 4mo ago
      The notion of earning "passive income" as a landlord is a total fantasy. The reality is that it takes a lot of work. Otherwise tenants, vendors, and property managers will wreck the assets and rob you blind.
      • embedding-shape 4mo ago
        > The reality is that it takes a lot of work. You can outsource pretty much the entire thing, and just be a name on a paper, and receive money in your bank account, that's as close to "passive income" as you can get. Lots of people do this today, pretty common for landlords to do so in Spain for example, and I'm sure all around the world.
        • alistairSH 4mo ago
          100% this. My parents had a beach house for a while. It was rented May-Sept every year. They'd visit for a week in each shoulder season, spend half the time doing major cleaning/fixing, and left the day-to-day during rental season to a management company (same one that managed bookings for the house). It wasn't 100% passive, but it was about as close as you can get as a retired upper-middle-class couple.
          • broken-kebab 4mo ago
            >100% this >wasn't 100% passive Apparently it's not passive, then. It's a seasonal job essentially.
            • alistairSH 4mo ago
              Sure but not “a lot of work” as nradov suggested above. And they could have outsourced that as well, but at some point it made sense to do some light maintenance while they were on-site.
        • everforward 4mo ago
          I tried this once and it wasn’t great. It was a single home, and in a college neighborhood (house was cheap, ergo rent was low). The rent paid the mortgage, but that was about it. Repairs were more or less out of pocket. I gave it up because I didn’t live locally and got raked over the coals on repairs a couple times. I finally quit because the property managers had an “emergency repairs” clause where they could do repairs without my approval and bill me. One of the renters clogged the toilet at 11pm on a Saturday, moron decided to call the property management because I guess plungers are confusing, they decided that was an emergency, and I got a $700 bill to send a plumber out at midnight to plunge a toilet. Like not even a roto rooter or something, just a generic grocery store plunger. Became clear I was either a) going to have to be much more involved, or b) accept that the returns are basically just equity in the house on a 15 year mortgage, minus overpriced repairs.
          • 4mo ago
    • junon 4mo ago
      https://news.ycombinator.com/item?id=48541141 https://news.ycombinator.com/item?id=48541141
      • embedding-shape 4mo ago
        Did you miss the last part? > suddenly it's basically all downside for the country and the people living there
        • junon 4mo ago
          For the target country, i.e. the country with the rental. The comment I'm responding to implied it's also bad for the extractor's own home country, and I was asking how that could be if the money is being injected into their local economy.
  • toss1 4mo ago
    The short answer is this an exemplar of the distinction between generating income by producing vs generating income by rent-seeking. Producing something, goods, services, useful information, etc. is a net plus for society, adding value for both the producer and the consumer, making the society overall richer. Rent-seeking is purely extractive - it extracts value from the consumer, and in the cases where the extractor is outside of the society, e.g., a foreigner or oligarch-type, it extracts value from the society, leaving the society poorer.
    • junon 4mo ago
      I understand why it's not great for the target country. I'm asking why GP said it was bad for the home country.
      • margalabargala 4mo ago
        It's bad for wherever the person happens to be operating.
        • junon 4mo ago
          Which is the target country. Not what I'm asking about.
          • margalabargala 4mo ago
            The implication is that the person in question is also extracting rents from their home country in addition. They're already bad for their home country, they additionally become bad for the target country as well.
    • nradov 4mo ago
      Efficient capital allocation is a net positive for society.
      • toss1 4mo ago
  • ecshafer 4mo ago
    Rent extraction is bad, since it hurts productivity. Ill admit I am an unabashed Georgist, but the book Progress and Poverty by Henry George is pretty accessible. But basically this: Capital and Capitalists are good, they have money, then lend it for ownership, this creates innovation. Labor is good, you need workers, they work, they produce, its good. But Rent (extracting value from land, patents, etc.) is just a negative drain, labor has to pay rent, capital has to pay rent, but they don't really innovate and grow the economy.
    • junon 4mo ago
      But what about their home country?