2023-02-12: The Trouble With Rent
Them dang ol' contradictions are at it again.
Them dang ol' contradictions are at it again.
Even from a liberal capitalist lens, it makes no sense to allow rents to get so out of control as they have in so many north american cities.
Most businesses, as it turns out, have to pay rent too - and when their rent goes up, they have to either eat shit, cut costs, or pass the additional costs onto their customers. The first option is bad for the business, the second option is bad for the workers, and the third is bad for their customers. As rents continue to rise, these problems amplify.
Soon, this increase in the cost of goods, combined with the increasing cost of housing, renders most people in the city unable to afford necessary goods and services. If rents remain inflated, businesses can only lower prices so much before the production of those goods and services become unprofitable. When this happens, two "solutions" present themselves…
Solution A: move a bunch of rich people into the city. This is what basically every major North American city is doing right now. As rents increase to the point where most of the city's original residents can no longer afford to live there, wealthier households move to this now highly desirable city. Since the new residents bring far more money with them, business can return to usual. For now.
As economic activity returns to a booming state, landlords see this as an opportunity to increase their own profits. So, they continue to raise rents and, the cycle repeats - rents raise, costs of living and doing business increase disproportionately to average income, current residents are displaced, more monied people move in, and so on and so on.
To paraphrase Margaret Thatcher, the problem with capitalism is that you eventually run out of other people's money. Once costs of living and production become so high that not enough people can occupy the city, "solution" B forces itself into reality.
Solution B is to die. I predict that, if things continue on the path they're on, the economies of every major city in North America will utterly collapse. Capitalism depends on people actually being able to produce goods and services. If nobody can be a capitalist, the system can't function at all. You've just sold your car engine for gas money. So why isn't anything being done about this?
The other problem with capitalism is that if you try and do something responsible, but less profitable, you risk a competitor taking the opportunity to be irresponsible and become more profitable — and now the irresponsible thing has been done, and you're behind in the market. Because of this, the only way to reliably force positive change is to have people in power who are as personally disconnected from the market as possible.
We don't have that here. An astonishing portion of North American politicians have huge personal stakes in the real estate market, whether that be through investments in companies like Blackrock or through owning a bunch of properties for sale and/or rent themselves. Because of this, any countermeasures against skyrocketing real estate prices directly hurt their personal wealth. And besides, they're mostly old farts who'll be long dead by the time this whole sham goes up in flames, so what do they care? Conflict of interest? What's that?
As always, the solution is Communism. Thanks for reading.