Having people in the economy with a strong incentive to provide additional housing is a very good thing. It was just before 2 a.m., and it was fucking cold. ), then all those labourers can be paid with (merely a small portion of) the aggregate tenant money that would otherwise have gone to rent payments to the landlord, and then they can simply skip having to pay the rent and keep the remainder of the money for themselves (or for their community). Adam Smith was keen on the fact that landlords are parasites. There is a word for someone that only takes, but doesn’t give back: a parasite. But hey, wait a second — what about the paperwork? Which leads into a very strange, often overlooked compatibility between Vladimir Lenin and another historical figure of political economy (it’s not a coincidence, as much of Marx’s work builds upon this man’s ideas) who was critical of financial capitalism, and landlords in particular. Entire states and the cities, like New York State and New York City, are being squeezed. It’s the repairman and groundskeeper who did the labour, provided the value, and completed the work, and were paid with a wage or salary or per a contract, but a fixed amount or rate proportional to the labour done, and all of the money to pay them comes ultimately from the wealth extractions of the landlord! and only really needs the deed of ownership to expect state institutions to back up his position, with force. Chapter 24 Doctrine of Adam Smith concerning theRent of Land “Such parts only of the produce of land,” says Adam Smith, “can commonly be brought to market, of which the ordinary price is sufficient to replace the stock which must be employed in bringing them thither, together with its ordinary profits. Economics. Such effects are particularly likely to impact the kind of landlords who rent out small numbers of properties, which could concentrate the market even further around less flexible corporate entities. That’s what planning and insurance is for. From the "father of capitalism" himself. He also though landlords were parasites.... libertarians have to actually read smith. If — IF — the Fed were doing its job, not only would employment be higher, but banks would be so flush with money they would be more than willing to lend money to landlord or restaurant owner going through a rough patch.  Even given the Fed’s failure, if we had an unemployment insurance system that replaced a substantial portion of lost income the eviction problem would hardly exist. Even under those rare occasions where a peasant or group of peasants rise to nobility, the vast majority of their fellow serfs would still remain in serfdom for all their lives, again, much the same as can be said for the landlord-tenant relationship. Classical Economics after Adam Smith •David Ricardo (1772-1823) •Thomas Malthus (1766-1834) •Malthus vs. Ricardo on the problem of stability of capitalism •Ricardo –contributions to methodology of economics, theory of value, international trade theory, public finance, distribution theory etc. Just like the landlords, they too are trying to get a free lunch out of the works and labours of the tenants — with many of the landlord class serving as the sleazy middlemen for financial institutions, when they themselves don’t have sufficient capital to operate as independent owners. This is where the phrase “economic rent” originates. You write, “Adam Smith long ago remarked that profits often are highest in nations going fastest to ruin. Or what about if the landlord is the one who mows the lawn or fixes the plumbing? And this, the act of landlording, is done with the full (and necessary) backing of the state: it is the state’s police enforcer-repressors will evict a tenant who does not pay, and the state’s courts will rule the letter of the law in the landlord’s favour to uphold his property relationship. The tenants still owe him the rent at the first of each month. Yes, like groundskeeping and repairs, it actually is, but there’s two problems. (spoiler: of course not!). If these lower landlords can no longer effectively keep the rent extractions pumping for the banks, their assets will simply be captured and forfeit to the financial sector — like Agar.io the largest financial blobs go around absorbing the smaller ones. And it’s causing additional harm to us as well. The term rent-seeking was coined by the British 19th-century economist David Ricardo, but only became the subject of durable interest among economists and political scientists more than a century later after the publication of two influential papers on the topic by Gordon Tullock in 1967, and Anne Krueger in 1976. This relationship has nothing to do with the construction or production of the house. They are the ones with the guns, and the ones making the rules, and they aren’t going to let themselves be the ones to take a financial hit for the good of the masses —indeed, it will be exactly the opposite. As an Amazon Associate, Econlib earns from qualifying purchases. queue that predator handshake meme with adam smith and karl marx agreeing that landlords are parasites Arm the Poor You Fucking Coward There is no choice other than renting to be had for anyone needing a home, outside of the small (globally), wealthy minority with capital who have the ability to own. This raises a number of legal, ethical, and logistical questions, not least of which is whether a public health agency staffed by non-elected officials even has the authority to effectively command specific people to provide free housing for other specific people for any amount of time. His only recourse is to have the state enforce and uphold his property relations and claim on ownership. "Sell your stuff! For the masses of home-needing tenants, we are imposed with that false dichotomy — ‘buy a home’ (from a bank, essentially) or ‘rent from a landlord.’. Much of the work done by economists from Adam Smith until the late 19th century was all about finding and identifying “rent-seeking”. He would much rather that be financed by the state through taxation — there is a reason why a great many landlords have no problem with bloated police budgets, as long as none of the money is wasted on the other segments of society. Without the state, he has no tool for eviction to enforce the collection of his rents. The landlord does not need to be the purchaser, the original property claim holder, and especially today, does not even need to directly be the owner — the landlord is simply an obstructionist; a vile troll blocking the pathway between human beings and shelter. In doing so he was to some extent the champion of the capitalists. To be social parasites who don’t even deserve rights. And as any landlords wealth extractions go on, they inevitably hire others (trained repairmen and groundskeepers, property managers, etc) to take over these labourious tasks for them. Member. there is involuntary unemployment.  Firms who wish to operate and employ workers, and apartment dwellers who wish to remain in there apartments and pay rent, (or supermarkets who wish to sell eggs and TP), are not able to do so. As a CPA, I encounter many small landlords who have 1 or 2 rental homes. Adam Smith vs. Crony Capitalism The Scottish philosopher's suspicions about business people were well-founded. “As soon as the land of any country has all become private property,” he writes, “the landlords…love to … A familiar and common historical scenario — should a feudal serf refuse to service his lord and refuse to share the grain upwards, the lord would come round with his knights and force the serf off the land. What fucking Millenial even has one of those? If landlords “don’t create value” then why does anyone rent? Like owners of other resources, landlords are sometimes considered to have not really earned their money. Classical Economics after Adam Smith •David Ricardo (1772-1823) •Thomas Malthus (1766-1834) •Malthus vs. Ricardo on the problem of stability of capitalism •Ricardo – contributions to methodology of economics, theory of value, international trade theory, public finance, distribution theory etc. Well, no actually. We could do it all on Zoom! The act of landlording is the regular interval wealth extraction in which the tenants must pay the landlord from a chunk of their work produced (or worse, their savings, or worse still, via debt) during that interval, as an unending upkeep to simply have shelter/a home — something that is a human necessity as far as finding work, raising a family, self-improvement, or having any sort of life with dignity goes. This leaves the groundskeeper, the repairman, etc all just as well off as before, and leaves the tenants with more of their own wealth, since they no longer need to pay rent to live in a building that is already constructed, and now maintained by the repairmen and groundskeepers, and others, that they hire themselves as needed. Landlords being beholden to banks and financial powers above them does not absolve them, it’s only offers further criticism of their existence. The whole idea of classical economics from Quesnay’s Tableau Economique all the way through Adam Smith and John Stuart Mill was to look at the finance sector, the landlord sector and monopolies as unnecessary. It originally described a no value-ad landlord. Even less the property manager and repairs and maintenance and taxes, the remaining rent extractions are all still pure profit for the landlord, regardless of any material contributions that they put in, and with a competent property manager (or entire property management business) running things, landlording becomes nothing but regular extractions for the landlord. It is the denial of access to the already existing shelter. Economic Paradigms Adam Smith, Conservative Liberal Radical / … It says what the classical economists said was unproductive – parasitism – actually is the real economy. The value is in the material thing that exists — the physical house made of wood and brick and concrete and whatever else. The increase in rental prices makes it worthwhile for financially capable individuals to seek out additional land that could be rentable, or to rent land that was previously held idle because the going rate couldn’t cover the bother of renting it out. Of course the analysis of why the eviction moratorium is bad is correct, but I notice that it fails identify the problem and to propose solution, treating rather like an exercise in price theory in which an arbitrary distortion is introduced by power-hungry bureaucrats into a market in equilibrium.  This rather misses the point. Isn’t that providing value and doing a service? In Wealth of Nations Smith makes the case that landlords and banks are parasitic institutions upon an economy, and in order to make the national capitalist economy more efficient, we must reduce the profits of these financial parasites down to zero. We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. God I hated my landlord. Isn’t mandated rent-free housing a variant of rent control? Adam Smith on Profit: “But the rate of profit does not, like rent and wages, rise with the prosperity and fall with the declension of the society. The landlords are ultimately needless middlemen, who have thrown themselves into the process to allow banks to mitigate their liability, and in order to cut themselves a slice of the rent extractions that the bank is imposing (directly onto the landlords through payments and interest, but absorbed by their tenants paying rent — as they are making straight profit less the costs of the aforementioned gardeners and repairmen). And there’s a reasonable chance that even a medium sized group of tenants could defeat or overwhelm the landlord and whatever private security the landlord was willing to muster. Adam Smith provides them with ample support. The landlords doing work would be properly rewarded for their labour! “Banks hold mortgage and loan claims over landlords — they feel the pressure too, just like the tenants they exploit!” There are, of course, numerous problems with this. - "/int/ - International" is 4chan's international board, for the exchange of foreign language and culture. Reply. But because financial capitalism has overrun and conquered industrial capitalism, in this the era of late imperialism, the problematic and fully parasitic existence of the landlord is just another welcome tool of wealth extraction in the capitalist arsenal. In Wealth of Nations Smith makes the case that landlords and banks are parasitic institutions upon an economy, and in order to make the national … They are still operating on all cylinders because they do not need to produce anything, they just need to keep collecting on their ownership claims. I’m reminded of my colleague Chris Coyne’s argument for adopting a constrained vision when trying to help others, taking seriously the limits of what can be achieved given the inevitability of scarce resources and imperfect people: Jayme Lemke is a Senior Research Fellow and Associate Director of Academic and Student Programs at the Mercatus Center at George Mason University and a Senior Fellow in the F.A. Eliminating economic rent is the main objective of Smart Taxes. For most of the world, as nearly all humans need and require housing and shelter, there are no other options — not because the masses lack ingenuity or fail to work hard, but because nearly all the property and land has already been claimed. Am I going to unleash Chairman Mao upon them? Tater. It wasn’t necessary. On the rare occasions when landlords do speak negatively of banks, it is rarely of the institution, nor of capitalism, but more commonly conspiracy theories of bankers (read: racist scapegoating of Jews). just like how some small amount of peasants became nobles, lords, or even Emperors, does not even need to directly be the owner, And it’s causing additional harm to us as well, Utilitarianism And Much More, Explained by J. S. Mill. The serf would then have to seek out another available plot of land to work, but would quickly find that lords have already extended their claims across nearly all the available plots of land. They wanted to free society from the legacy of feudalism – to get rid of land rent, to take money creation and credit creation into the public domain. Just to clear things up-- I don't believe "Landlords are Parasites" is a direct Adam Smith quote (Although, OP, if you have a source please share it). The actual “service” part of what is ‘provided,’ is not some offering of shelter from the landlord to the shelter-less public, it is the opposite! This would result in the landlord being properly and fairly rewarded for the work that they put in with (solely) the hourly wage, multiplied by the number of hours of work they did (they can clock in and out under tenant supervision to ensure that the landlord is cleaning and not leaning). The landlords most certainly need the tenants, for without them they have no incomes to extract from, but this essay shall examine the inverse — without the landlords would there then be no housing? The first and most obvious of which is that you virtually never see the landlords attempting to ‘punch upwards’ by using their power or voice to fervently go after the banks — they much prefer the safer strategy of focusing their punching downwards, applying the same pressure applied to them back down upon the tenants. Even if the landlord wants to insist that they deserve recompense for their labours of repair or groundskeeping, this arrangement could certainly be made by the tenants. The landlord is not being paid for the work that they do (there is no wage or salary), they are being paid via the wealth extractions from rent — a decidedly different form of payment that is utterly contingent on the societal property relations at the base, that is (in its current form): capitalism. The classical economists were reformers. Some few might (just like how some small amount of peasants became nobles, lords, or even Emperors); most will not.  Unemployed renters are in the same disequilibrium position as their former employers (and it of course it would have been been suboptimal for the CDC issue a moratorium on withdrawing their labor services to firms that could not pay them). Unless the serf was somehow lucky and resourceful enough, under the right historical circumstances, and/or able to maneuver into a position to become a lord himself (a rather uncommon but not at all impossible historical occurrence), the serf would have to submit himself to another lord, and be placed in a similar arrangement again, to work the land. Anyway, I'm very pleased that I'm living in my own apartment now. From "The Wealth of Nations" (1776) by Adam Smith. One option is to own, which is impossible for any but the wealthiest (the capitalist class and some labour aristocrats) to purchase a home outright, but for most others ownership will be conditional upon a type of loan (usually called a mortgage), coming from a bank or similar financial institution. Overwhelmingly we do not need to weep for these small predators, who themselves likely carried out a great number of evictions upon tenants and collected rents well beyond the minimum for basic upkeep. This value was created by the people that made the building (the construction workers, contractors, etc). If I were to own the land between an aqueduct and the town downriver, which derives its water from said aqueduct, and then I were to place a gate to block access to the water and keep it closed unless the town pays me a “water rental fee” — I have not created value. There is no new value being created, all of the value was already created and already exists prior to the landlord. Adam Smith, Mill, Marx, Veblen – they all developed their economic theory to reform the world. The tenants can then live rent free, and all instead proportionally chip in to ensure that the landlord is fairly and properly paid for each hour of his life was committed to producing and providing actual value for the building through his toil and labour. If it is rent, the interest of all other landlords will naturally prompt them to prepare more land for the raising of this commodity; if it is wages or profit, the interest of all other labourers and dealers will soon prompt them to employ more labour and stock in preparing and bringing it to market.”, “Adopting a constrained vision is not to accept the status quo regarding human suffering but rather is the recognition that an array of constraints limit what is possible and that any proposed or actual change in the status quo must be achieved relative to those constraints… while the claims stemming from this vision are not as extravagant as those coming from the man of the humanitarian system, they are more realistic and go further towards achieving our shared goal of relieving human suffering and improving the human condition” (, social parasites who don’t even deserve rights, Epistemology, Economics, and Conspiracies. There’s a long history of antagonism towards landlords in the popular imagination. Hopefully the fact that housing prices are currently down in some of the country’s most expensive markets will help prevent this order from being too painfully binding. Here, not so good. Markets rents will adjust to, implicitly, include an insurance premium that renters pay to landlords to compensate landlords for “moratorium risk”. But what about the banks role in all of this, the landlords decry. All the laws — the property relations under capitalism — are fully upheld even in the landlord spends the entire month in bed, playing video games, or at the golf course. Most people cannot buy a home — and for those that might be able to, it is something left to the discretion of that other great parasite on the economy — the banks — who also produce no virtually value, make their money almost exclusively on money, and, like landlords, extract their wealth out of actual work done by others. Yes, the landlord could (only for smaller property claims, really) be the same person who makes the repairs and maintains the property, but in doing so he is not fulfilling the role of the landlord, but rather the role of the repairman or the groundskeeper. Marx wrote of them as parasites. All this is saying is that it can be convenient as a member of the petty bourgeoisie (the ownership class) to have sufficient capital (and trust from the banks) to wedge yourself between the banks and the soon-to-be renters. The landlord provides none of the value — they ain’t the makers, they the takers. ), but for those few of us who have actually bothered to read (at least some of) The Wealth of Nations, these are among the topics that Adam Smith discusses. To be social parasites who don’t even deserve rights. As already described, the state is an institution under their control, working in their interests, and upholding their property relations. And we have landlords out here saying the dumbest, most vile things like "Well just tap into your 401k!" The people “can find another landlord” as much as they like, yes some might be less terrible than others, but that doesn’t absolve any of them from being terrible. The potential for long chains of unintended consequences abounds. For you see, the house exists independently and separately from the landlord. But if we, the tenants, can free ourselves of this system of property relations, we can create a world where tenants don’t owe their wealth extractions to landlord or financial institutions. Still headaches, but a different kind. nuclear bomb on my business", said one landlord who owns 150 apartments New York property barons lose grip on state DIDISOMEONE a) ADDICTED TO CAPITALISMO – popular memes on the site ifunny.co There are not choices available to most of the world, or even much of the first world labour force about where they can live, where there are jobs, and what can be done about this property relationship. For the landlords who engage in their landlording through loans and mortgages, there is still no value being provided from the landlord. New rent control legislation has been passed in New York. Perhaps the example of a robust unemployment insurance program solves this another way. But what about if the landlord is the one who built the home? A system that normalises calling poor people parasites and landlords vailliant purveyors of shelter is fucked from the start. The answer is, of course, yes, but the problem is that none of that is the act of landlording. The river existed without me, the access to water was there prior to my blocking of said access, and even when the “water rental fee” is paid, the payers are receiving nothing different and nothing improved and no new service exists from when I first arrived and blocked access. However, love ‘em or hate ‘em, Smith also recognizes that landlords and other resource owners play an important part in the process of bringing much-needed resources to the market: In other words, if for any reason there is a temporary shortfall of a product—whether because of increased demand or some kind of shock to the existing stock or productive capacity—the price is going to go up. In Wealth of Nations when Adam Smith explains about how markets bring freedom — but the discourse that is quietly removed in all capitalist discussion of Smith is that the freedom he is talking about is freedom from forms of rent extraction. There is no situation where all the serfs can become lords, as their feudal system would collapse with no one to do the necessary labour. The only way for the pressure to be alleviated would be for the rent collectors to eat the loss — but that would mean less money (dramatically so in many cases) for the banks and certainly less money for the landlords. Further, if enforceable, such an edict has the potential to cause some serious long term damage that could wind up hurting renters. You may have noticed, for example, during our ongoing COVID-19 epidemic, that the sales for small business and even most manufacturers has dropped considerably, reducing their profits, and many people have lost their jobs, but the banks have not lowered their fees or interest rates, and the landlords have not (for the most part) reduced or eliminated their rent extractions. If the ordinary price […] Contrary to the liberal view of the state (which sees the state as it’s own separate institution, unto itself), the Leninist view of the state sees it merely as an institutional tool — albeit the most powerful of tools — wielded by the class that controls it, to administer various societal functions in their interest. Which leads into a rather important connection point between capitalism and the state. But something tells me that the landlords would not prefer this just and fair arrangement for their contributions of groundskeeping and repairs. They wanted to free society from the legacy of feudalism – to get rid of land rent, to take money creation and credit creation into the public domain. — are in disequilibrium. He did seriously believed that landlords were doing working farmers a favour by taking part of their incomes as rent, since this turned their land into a commodity. What little tenant protections exist in places in some few parts of the world were the result of organized collective action and the result of the effort of decades of working class movements to create minimal regulations and protections (many of which are being eroded, ignored, or rolled back). So they are falling more deeply into debt. Even Adam Smith hated those fucks. It turns Adam Smith upside down. These lazy landlords and bankers are not doing any production to earn their cash — they make all their rent money just sitting on their asses. In part of the great irony of all of this, much of the criticism in this essay doesn’t originate from Karl Marx. What happens if non-payment of rent is going to prevent them from paying their own mortgage? A much fairer way to determine the fate of landlords, should such an upheaval of the property relations occur (again), would be to have landlords face a tribunal of all their tenants, past and present, and be judged by their experiences. There is already a serious problem with the exorbitant price of housing in urban markets, and I can’t imagine that this action by the CDC is going to encourage anybody who is on the fence to start renting out additional property. But at the end of the day, any political action that makes offering rentals more difficult could wind up creating a lot more harm than good for renters. The resources required to construct the house existed (and were mined, collected, refined, processed, transported, delivered, and then used) all entirely independently and separately from the landlord. In contrast I was imagining a solution that lent money to renters who cannot currently pay their rent. These classical economists didn’t want to overthrow capitalism, they wanted to free it from the “rent-seeking” parasites. For all the work of repairs and groundskeeping (and whatever other upkeep or maintenance) the landlord did not provide the value here. And, as a capitalist and businessman, he would not have (nor want to waste) the billions required for equipment and weapons and even tanks and helicopters and bombs that would tip the balance so overwhelmingly in his favour. In the price of corn, for example, one part pays the rent of the landlord, another pays the wages or maintenance of the labourers and labouring cattle employed in producing it, and the third pays the profit of the farmer. It was a bold statement that would put a middle-aged Welsh public sector worker in intellectual allegiance to Keir Hardie, Adam Smith, and Mao Zedong. That was unearned income. Hayek Program for Advanced Study in Philosophy, Politics, and Economics. I respect and understand the need for sympathy and forgiveness for those who struggle to make ends meet under capitalism, and had few alternatives, but the fate of their tenants must also be taken into consideration, each one just as much as the landlord themselves. If the price of bread is high, it is not because land rents are high; but land rents will be high because the price of bread is high. I’m not sure you can say no one planned for a possible economic shock lasting 6-12 months. And in much the same way, there is no possibility that all (or even most of) the world’s tenants can go on to become landlords — someone would have to pay the rent. Description. And all they need to do is own (or otherwise insert themselves as middlemen to banks or larger landowners), upholding the extractions of value from the tenants, who exist under threat of state-backed eviction should they ever fail to pay. With contracts being over-ridden by legislation (California) or executive order (Trump Administration), they are holding off engaging in new contracts because the State won’t uphold them.

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