The Wealth Drain: Why lowering rent won’t ease the cost of living
Housing Crisis Perspectives #6
Further Reading Complete Yourself, Save Us All: Heretic Online
Wealth is not money; it’s the tangible value that we create through our work. However, as the baby boomers retire, they stop producing wealth yet continue to consume it. They have saved for retirement in money, not wealth, and now compete with working-age people for the limited resources available. The result? A falling standard of living for the working population, as the wealth they create is spread thinner and thinner.
According to recent data from the American Community Survey (ACS) by the US Census Bureau, housing unaffordability has become a critical issue in the US, with half of renters paying over 30% of their income towards gross rent. This is a 14% increase from 2019, and median gross rent was unaffordable in approximately 47% of surveyed counties in 2021. And who benefits from these high rents? Retirees, who are consuming wealth without contributing to its creation.
This imbalance is not easily rectified. Introducing rent controls may free up renters’ money, but it would simply cause a shift in the problem. The extra cash would chase other scarce resources, causing prices to rise and taxes to increase as more retirees become dependent on government support. The end result would be no improvement in living standards overall.
The consequences of this wealth drain are far-reaching. The fertility rate has been falling since the late 2000s, as resources that could have been used to raise children are instead consumed by the elderly. This demographic shift exacerbates the problem, setting the stage for an even more significant crisis in the future.
Additionally, chronic underrepresentation of working-age people in government could lead to disenchantment with democracy and a shift towards dictatorship. And most concerning of all, the young can and will leave for countries with better demographic profiles, leading to a spiral of decay for aging societies.
Ultimately, we must confront the uncomfortable truth: the standard of living for working-age people is falling, and it’s because their income is being siphoned off through rent to support the growing number of elderly. Rent controls and other cost-of-living interventions may provide temporary relief, but they only transfer the problem to other areas, such as higher taxes or increased prices for other products. The real solution lies in addressing the root causes of this wealth drain and finding ways to create a more balanced, sustainable society.
The difference between a philosopher and an ideologue, is that a philosopher’s ideas are not mutually exclusive.
This was one explanation of the housing problem.
Here are five others:
