| > They may trivially capture some of the resources available for others housing by buying up the housing supply and renting for more than the cost of the mortgage while fighting to maximize the value of investment by limiting the supply of new housing. You're focusing on accounting, which is fine and all, but there are two scenarios here: (1) There are 10 houses, 10 people live in them. Everyone owns their own house. (2) There are 10 houses. 10 people live in them. All the houses are owned by 1 person. 9 people rent. From an inequality perspective, obviously one scenario here is grossly less equal than the other. From a what-is-phyiscally-happening perspective, these situations are roughly identical. The $2.5 million mansion you mention is potentially a nice house that is the same physical size as a $700k house in the country. My point here is although the situation may be grossly unequal, but part of the issue here is what actual, physical resources do we want the rich not to be using? Eg, do we want to take away vacation homes from people and subdivide it into government housing? How much stock does that create? Is that going to solve housing affordability in, say, SF? This isn't me being disingenous, I'm just genuinely curious why people think inequality is the problem since I personally favor that wealth creation is being strangled by hostile political forces. Inequality is a problem; it is a symptom of things going badly wrong. But that doesn't mean that reducing inequality cures the disease - it is easy to reduce inequality by forcing everyone to have nothing. We all want to reduce inequality be creating more wealth. Houses, stuff, fun experiences, etc, etc. Is that possible? Is redistribution a valid route? Maybe. It does work sometimes. |
The idea that one person can own everything and everyone is equally well off as if they all owned equal shares is wrong on its face.
In practice in an environment that isn't deeply unequal the landlord creates value by investing capital in maintaining housing stocks that renters may lack or not want to invest. They trade both current money and foregone future wealth for increased flexibility and predictable costs.
In an increasingly unequal one renters have no options because nearly 100% of the value they create for society is captured by others including the landlord or go to pay for their increasingly lackluster survival. In many cases they may end up creating less total value for society and themselves because they can't invest the time and money to maximize their own value.
Your 9 renters example is too small in scale. Back in reality some portion are pushed onto the street, some live substantially poorer lives, families barely see one another because one party or both is gone 60-70 hours per week, people die sooner due to substandard health care, people don't go back to school because they can't work 60 hours to support their family AND go to school. People don't take chances that would improve themselves because they can barely afford to live now. They live in the ghetto because that's all they can afford.
Having an increasing share of the wealth means trivially mathematically that others have less. Only for the upper middle class does that mean they have just as nice a house in a less desirable neighborhood.
Meanwhile in reality in the last several decades 25% more than previously, people take a look at life ahead of them and put a gun in their mouth,forego going to the doctor and end up dying of an infected tooth, or ration their insulin and wind up dead.