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Landlords do not assume risk in their role as landlords. The land is there regardless of whether anyone "takes on the risk." Landlords often take on risk in t

Landlords do not assume risk in their role as landlords. The land is there regardless of whether anyone "takes on the risk." Landlords often take on risk in their role as property managers or developers. They should be rewarded more for that, and not at all for their simple ownership of land, which again: would be there regardless of whether someone else or no one at all owned it.

smallmancontrov 5mo ago
We need to draw a box around the property owner, the previous owner, the owner before that, etc, because the current property owner does take price risk, but only by virtue of the payment they made to the previous property owner and so on. The intra-chain P&L distribution is not a legitimizing factor if you believe the entire ownership structure is an exercise in rent seeking (in the economic sense -- as you point out, development and management are not economic rent and I'd add abatement to that list). Equivalently, we can just pretend that there has only ever been one owner.
fooker 5mo ago
The risk inherent in the ownership of land is having too much of your wealth concentrated in it, and having used leverage to purchase the land. Both are true for a large fraction of landlords in the world. A real estate bubble bursting or anything that makes your area unappealing to live in would suddenly be really problematic and in the case of leverage get you negative equity.
- estearum 5mo ago
  Just because you can lose money does not mean you are "taking on risk" in the way a bank or insurer does. If they didn't "take on that risk," the land is still right there being land. That is not true for banks or insurers, where if no one was willing to hold that risk then the inverse product wouldn't exist.
  - fooker 5mo ago
    Banks hold money for you, the cash would still be under your mattress if the bank did not hold it. I'm sure you have a philosophical point here, but this is exactly how the modern economy prices risk. Your understanding of the semantics of risk is not being questioned here.
    - estearum 5mo ago
      Uhhh... banks do not "hold money for you." You think banks pay you interest to have the privilege to... hold your money? No. They pool deposits and they lend it out, taking on the risk of doing so with the guarantee they will make their depositors whole. This is called "taking on risk," and they are paid for this service (among the other instrumental services they provide in order to make this happen). Without banks providing this set of services, these deployable pools of capital would not exist. This is absolutely not the same as the price risk that any asset holder has, and it is not what landowners are paid for. It's not a philosophical point. It is literally a question of who is getting paid what, and why?

smallmancontrov 5mo ago

We need to draw a box around the property owner, the previous owner, the owner before that, etc, because the current property owner does take price risk, but only by virtue of the payment they made to the previous property owner and so on. The intra-chain P&L distribution is not a legitimizing factor if you believe the entire ownership structure is an exercise in rent seeking (in the economic sense -- as you point out, development and management are not economic rent and I'd add abatement to that list). Equivalently, we can just pretend that there has only ever been one owner.

fooker 5mo ago

The risk inherent in the ownership of land is having too much of your wealth concentrated in it, and having used leverage to purchase the land. Both are true for a large fraction of landlords in the world. A real estate bubble bursting or anything that makes your area unappealing to live in would suddenly be really problematic and in the case of leverage get you negative equity.

estearum 5mo ago
Just because you can lose money does not mean you are "taking on risk" in the way a bank or insurer does. If they didn't "take on that risk," the land is still right there being land. That is not true for banks or insurers, where if no one was willing to hold that risk then the inverse product wouldn't exist.
- fooker 5mo ago
  Banks hold money for you, the cash would still be under your mattress if the bank did not hold it. I'm sure you have a philosophical point here, but this is exactly how the modern economy prices risk. Your understanding of the semantics of risk is not being questioned here.
  - estearum 5mo ago
    Uhhh... banks do not "hold money for you." You think banks pay you interest to have the privilege to... hold your money? No. They pool deposits and they lend it out, taking on the risk of doing so with the guarantee they will make their depositors whole. This is called "taking on risk," and they are paid for this service (among the other instrumental services they provide in order to make this happen). Without banks providing this set of services, these deployable pools of capital would not exist. This is absolutely not the same as the price risk that any asset holder has, and it is not what landowners are paid for. It's not a philosophical point. It is literally a question of who is getting paid what, and why?