Then you imagine why I’m pissed off about the idea of “landlords get free money” or RE seriously debating how amoral is private property (I can understand the idea from a intellectual standpoint, but people at RE are talking about it like everything is a housing crisis in the middle of San Francisco).
I don't really give a fuck about RE and if you understand it from an intellectual standpoint then I guess I don't have to explain it
Probably because you are making jokes about leeches.
ok I guess I do have to explain it.
- when a good is scarce, the price is determined by supply demand equilibrium. If there are 5 bananas and 50 people who would pay $1 or more for that banana (and the other 45 people want it for like 50 cents or whatever) then the price of the banana is $1. Thus price solves the question of distribution of scarce goods.
- price - cost = profit. Profit margins around 5-10% are normal for competitive markets. The higher the profit margin is, the more likely people are to come into the market and undercut existing suppliers, which will bring the cost down to production. Voila, free market capitalism.
- but this is only if the suppliers can increase supply to match the total demand! Some goods will always be scarce, like land, or uranium. These kinds of goods will still be subject to supply demand equilibrium pricing, and thus, well above cost. Great news for the producer, bad news for the consumer.
- What's the cost in housing? It's the cost of building the house or apartment building or whatever. That's what rent pays for - development.
- But once the cost of building is paid for, the property still continues to generate revenue. And it will always generate revenue as long as someone lives in it that doesn't own it. That's the definition of rent-seeking: continuously extracting money without producing something new.
- So what determines the price of rent? The income of the renters living in the area. And that goes for property prices, too - they're determined by the amount of money you can extract from the people living there.
- Rent seeking is cost above production and cost above production is wasted money. Rent is a giant tax from the working class (which produces things) to the property owning class (which does not produce anything). It is a 20 - 30% income tax on the productive members of society. In urban centers especially it is an anvil on people's necks.
- THAT'S why you're a leech. You're not doing anything for that money. You're not producing a good or a service, money is falling out of the sky for you because you happen to be the property owner. I don't care how much you're personally struggling or if you're losing money or whatever, this is purely about the abstract relationship between consumption, production, and property rights.
- If housing was socially owned then housing would only cost society whatever it costs to build the housing, plus maintenance.
- Housing would still be scarce, but society could choose to use a different distribution mechanism. It could tie this to employment ("you're allowed to move here if you have a job offer") and build new housing through the issuance of bonds (because why would you build new housing if you didn't expect growth?). You could also auction apartments based on a monthly "rent", so the most sought after housing is still allocated to the most productive people, but they wouldn't actually have to lose this money. Maybe it goes into a sovereign wealth fund, or a public bank that funds loans for local projects, and when you leave you can get all your money back (people don't frequently move out of the city they live in). Bonus: if rents are high because people want to live there, there's a lot more money laying around in the fund for new housing. There is a lot of room for experimentation.
- You'd also solve involuntary homeless.
The long term goal of socialism is the total elimination of private property and meeting everyone's needs. But long before that you could totally socialize housing alongside a free market capitalist society and meet everyone's
housing needs based on proportionate contribution... just like how in most developed countries we've already socialized primary/secondary education, healthcare, utilities, and even higher education. It's not about free shit for lazy people, it's about 1) society only paying for goods
at cost, not at cost + profit and 2) achieving abundance wherever it is possible.
