Landlords And Bankers Are Killing The Real Economy
The great Russian novelist Leo Tolstoy’s last words have always struck a deep chord with me:
But the paupers… how do the paupers die?
I ask myself a similar question on a nearly daily basis: How will we all afford to live in the 21st century?
Because the math makes zero sense to me:
- The minimum wage hasn’t increased in 12 years.
- Purchasing parity is the same as 1978.
- Real inflation is skyrocketing.
- Rent is unaffordable in every single state in the union.
- The real estate market is at an all-time high.
- And debt never stops compounding.
If income flatlines and housing costs keep ballooning, how will we live?
And where will we live?
The Gravy Train
“As soon as the land of any country has all become private property, the landlords love to reap where they never sowed, and demand a rent even for its natural produce.” — Adam Smith
It’s quite ironic that a worker works all month to pay their landlord or banker, while a landlord or banker doesn’t work all month and gets paid anyway.
The problem with landlording (and banking), as the popularizer of capitalism points out, is that it’s passive, not creative. It skims wealth off the real wealth-creators. It holds back the productive economy. It’s like trying to swim with a parachute.
Unfortunately, passive skimmers view reality in the exact opposite way. Last week, I saw this incredibly heartless post on LinkedIn:
To which I responded:
And that’s the problem, isn’t it? The rich are far too removed from the poor.
We’re all guilty of this, of course.
Think: child-mined minerals in electronics.
Think: emissions-emitting cars.
Think: sweatshop-made clothing and sneakers.
But let’s not pretend the rich aren’t guilty of injustice on a far greater scale.
America’s 1.9 million bankers and 23+ million landlords are a major problem, but companies like Airbnb are going to make it even worse. With a grow-forever business model, where does Airbnb stop? The answer: When every house on earth is an Airbnb. (Check out their IPO documents.)
I live in a cute little village that’s being destroyed by holiday rentals. Recently, I was sick and tired of seeing all these empty houses just sitting there all week long, then being filled with rowdy, messy, uncaring strangers on the weekend.
So I wrote four letters. I humbly asked the house owners to sell their houses to real families, so that our local school won’t get shut down.
One lady wrote back, furious. She told me that she inherited the house and knew it was detrimental to the village to keep it as an Airbnb but didn’t care. But do you know what? She did the right thing. A few weeks later, a real family moved in, and within a month, three of the four houses became homes for families.
But we can’t write our way out of this housing crisis, can we?
We’re facing one of two futures
- All the people own all the houses.
- Landlords and banks own all the houses.
Between banks, Airbnb, vacation rentals, small-time landlords, big-time real estate companies, REITs, and hedge funds, we’re leaning hard toward #2.
Now toss in automation, eliminating 85 million jobs in the next four years.
Where do the underpaid, underemployed, and unemployed live when they can no longer afford to buy or rent?
(And why are the rich surprised that Los Angeles is covered in houseless people? They mathematically engineered the economy to do just that.)
One million people.
That’s how many people are moving into slums every single day.
Right now, 1 billion people live in slums.
Within 30 years, that number is expected to rise to 3 billion.
Three billion men, women, and children. In poverty, for life.
And the rest of us will struggle to make ends me.
But don’t worry — we’ll have 5,000 billionaires by then.
The False Solution
Some people argue there’s a market solution to this problem: To allow more rentals to be built so supply outstrips demand and the price of rent falls.
While I certainly think we should build more owner-occupied eco-houses, building a market-flipping amount of landlord-controlled properties obviously won’t work for two major reasons:
- With holiday rentals growing exponentially and the global population projected to grow by 3 billion in the next 80 years, we’d need to at least double the current global housing stock to put renters in the power position to negotiate for cheaper rents — which would be an environmental nightmare. Even if it was doable from a resource /materials perspective, builders would face the near-impossibility of getting zoning boards to approve the expansion. Landlording is profitable precisely because it’s a rigged game.
- Even if we did magically double the global housing stock, if automation wipes out 40% of all jobs in the next 15 years, there’s no way the social security system will be able to support everyone, and I don’t know any landlords who are willing to rent to people with zero sources of stable income. I’ve been to Transnistria, friends — it has plenty of empty apartment buildings… and plenty of houseless people because they have zero fiat money to pay landlords.
In all likelihood, society will sadly continue with the current status quo, thus, the need for creative people to do the right thing and strip the profit motive from basic human needs like shelter.
The Real Fix
Do we write letters to landlords and bankers and ask them to do the right thing? Do we keep voting for Democrats and Republicans and hope they’ll suddenly turn their backs on their corporate backers and do the right thing? Or do we create a society where landlords and bankers don’t exist and the ownership of an affordable home is available to everyone?
Right now, people have two options for shelter:
- Overpay a landlord every month for life.
- Risk a colossal amount of credit and pay a banker every month for 25–40 years.
But I subscribe to a different belief about housing:
Shelter shouldn’t cost us our lives.
150 years ago, Henry David Thoreau thought the same thing:
“I thus found that the student who wishes for a shelter can obtain one for a lifetime at an expense not greater than the rent which he now pays annually.”
We need to create “economic refugee camps” for renters and buyers who can no longer afford to support their landlords and bankers. We need to create communities for people who are tired of slaving just to make rent or keep their massive mortgage afloat.
We need governments, counties, municipalities, charities, groups, and individuals to create zero-fiat-currency places for billions of us to live.
- Not-for-profit private cities, towns, and villages
- Tiny home parks
- Modern monasteries
- Co-op condo towers
- #VanLife neighborhoods
- Work-for-housing initiatives
- Farms and kibbutzim
- Low-tech eco-villages
- Intentional communities
Instead of spending our lives working to pay for shelter, we could use our work to make a real contribution to the common good and the flourishing of humanity.
There won’t be much profit in it, aside from saving society from collapse.
These community-builders will be the real heroes of the 21st century, and we’ll need more of them than there are Marvel characters.
It’s either that, or slums and struggle for everybody.