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1905

Abstract

y valuable production. The first three are also zero-sum games.</p><p id="aab3">In the long term, these activities hurt the economy in two ways.</p><h2 id="255e">Way One</h2><p id="a064">Let’s take the example of a landlord.</p><p id="3acd">Mr. L. goes to the bank and borrows one million dollars. He buys a series of brand-new units and rents them out to students.</p><p id="2562">Mr. L. pays back his loan with the rent and he even has enough to be able to live without having to work.</p><p id="cd2a">Now Mr. L. lives at the expense of his renters; he doesn’t produce anything.</p><p id="8cd9">Because this system exists, society loses the value that Mr. L. would have been compelled to produce had he not been able to be a landlord.</p><h2 id="32cd">Way Two</h2><p id="ea32">A young graduate recently got a job where he earns €2000/month. He stayed in Mr. L.’s student accommodation that he rents out for €500/month all-in.</p><p id="cf41">Our graduate enjoys hence €1500/month to spend on food, transportation and leisure provided by other businesses.</p><p id="b888">One day, Mr. L decides he doesn’t have enough money and increases the rent to €1200/month.</p><p id="0b5f">Now the young graduate only has €800 to spend in society; he consumes less as a result, and the businesses he spent his money at earn less and suffer. The state earns less taxes too.</p><p id="c2cd">In this way, Mr. L., who isn’t a productive member, appropriated himself €700 that could have gone to reward productive members of society.</p><h2 id="3c32">Conclusion</h2><p id="dbd7">Economically speaking, landlords are a dead weight in society. They don’t produce anything on the one hand, and prevent productive members of society from fully enjoying the fruits of their labor on the other, impacting the amount of money circulating in the economy.</p><h1 id="fc73">Ethics</h1><p id="9166">Kantian ethics comes down to thi

Options

nking about the nature of an action through the consequences of its universalization.</p><ul><li>Eg: stealing bread. If everyone stole bread, would society work well? No. In fact, everyone would go hungry. Stealing bread is therefore unethical.</li><li>Eg: producing bread. If everyone baked bread, would society work well? Yes. We’d have a lot of bread and no one would go hungry.</li></ul><p id="7e79">The same exercise can be applied to being a landlord.</p><ul><li>If everyone decided to be a landlord, would society work well? No. A society of landlords would be a society of unproductive rent-seekers living at the expense of other people.</li></ul><p id="0b7a">It is, literally, <i>slavery.</i></p><p id="9496">The young graduate works hard at the office during the day so that Mr. L. can watch Netflix at 14h00 on a Tuesday.</p><p id="dd44">Society would collapse if we all became landlords.</p><p id="b4ca"><i>Therefore</i>, being a landlord should not be allowed.</p><h1 id="858b">Conclusion</h1><p id="2e11">The economic and social costs that a tiny minority of landlords imposes on society are high.</p><p id="6a05">Society as a whole would benefit by either:</p><ul><li>Imposing bans on landlording.</li><li>Restricting the number of properties one can own and rent out.</li><li>Limiting rent prices.</li><li>Providing a higher supply of units to decrease rents.</li></ul><p id="7f5c">Note that for the sake of brevity, we haven’t even talked about the distortion of value in the RE market created by a tiny number of individuals with disproportionate capital and who impose a high housing cost on the rest of society.</p><p id="2263">A real, fair, and productive capitalist society would allow people to earn money <b>only through the production and exchange of goods or services</b>.</p><p id="2cd2">Since renting out does not qualify as such, it should not be allowed.</p></article></body>

Why Landlords Are Not Good For the Economy

And why renting should be discouraged.

Renting (out) your place is detrimental to the economy and to the well-being of all economic actors — except the landlords.

This short article uses economics and ethics to demonstrate why.

Economics

Capitalism is often understood as whatever Blackrock and Monsanto do to the people and to the planet; but this is mistaken.

The strict definition of capitalism is the free exchange and production of goods and services.

I grow tomatoes for you and you bake bread for me. My work is simplifying your life and your work is simplifying mine.

That’s capitalism. It entails the production of valuable work exchanged against someone else’s valuable work by means of currency.

You produce for me; I produce for you.

Unfortunately, a lot of people earn money without producing anything in our economic system; resultantly, it cannot be called capitalism.

Activities like trading (buying low, selling high without added values), real-estate investing (any investing, for that matter), poker games, or lending money would be banned in a real capitalistic system because they don’t entail any valuable production. The first three are also zero-sum games.

In the long term, these activities hurt the economy in two ways.

Way One

Let’s take the example of a landlord.

Mr. L. goes to the bank and borrows one million dollars. He buys a series of brand-new units and rents them out to students.

Mr. L. pays back his loan with the rent and he even has enough to be able to live without having to work.

Now Mr. L. lives at the expense of his renters; he doesn’t produce anything.

Because this system exists, society loses the value that Mr. L. would have been compelled to produce had he not been able to be a landlord.

Way Two

A young graduate recently got a job where he earns €2000/month. He stayed in Mr. L.’s student accommodation that he rents out for €500/month all-in.

Our graduate enjoys hence €1500/month to spend on food, transportation and leisure provided by other businesses.

One day, Mr. L decides he doesn’t have enough money and increases the rent to €1200/month.

Now the young graduate only has €800 to spend in society; he consumes less as a result, and the businesses he spent his money at earn less and suffer. The state earns less taxes too.

In this way, Mr. L., who isn’t a productive member, appropriated himself €700 that could have gone to reward productive members of society.

Conclusion

Economically speaking, landlords are a dead weight in society. They don’t produce anything on the one hand, and prevent productive members of society from fully enjoying the fruits of their labor on the other, impacting the amount of money circulating in the economy.

Ethics

Kantian ethics comes down to thinking about the nature of an action through the consequences of its universalization.

Eg: stealing bread. If everyone stole bread, would society work well? No. In fact, everyone would go hungry. Stealing bread is therefore unethical.
Eg: producing bread. If everyone baked bread, would society work well? Yes. We’d have a lot of bread and no one would go hungry.

The same exercise can be applied to being a landlord.

If everyone decided to be a landlord, would society work well? No. A society of landlords would be a society of unproductive rent-seekers living at the expense of other people.

It is, literally, slavery.

The young graduate works hard at the office during the day so that Mr. L. can watch Netflix at 14h00 on a Tuesday.

Society would collapse if we all became landlords.

Therefore, being a landlord should not be allowed.

Conclusion

The economic and social costs that a tiny minority of landlords imposes on society are high.

Society as a whole would benefit by either:

Imposing bans on landlording.
Restricting the number of properties one can own and rent out.
Limiting rent prices.
Providing a higher supply of units to decrease rents.

Note that for the sake of brevity, we haven’t even talked about the distortion of value in the RE market created by a tiny number of individuals with disproportionate capital and who impose a high housing cost on the rest of society.

A real, fair, and productive capitalist society would allow people to earn money only through the production and exchange of goods or services.

Since renting out does not qualify as such, it should not be allowed.