People and jobs? Or wealth? The government has to decide which to prioritise
taxresearch.org.ukThis debate is harder than usual because nobody knows what is happening right now, therefore nobody can claim to know why. How many people are suffering, and what of? What is the supply chain about to do? What are the long term effects? Nobody knows. We're in uncharted territory. Problems can't be solved if nobody knows what they are and why they are happening.
The policies that are implemented in this environment will not be thought out. Until this crisis ends it will be an ugly free-for-all to find out who has political power at the moment and can implement all their long-standing agendas with no special regard for current circumstances apart from some extraordinarily big handouts.
Policies aren’t being “thought out” in the eyes of the status quo of the old system. There’s potentially a great deal of thinking to be done, towards something new. Ugly free-for-all or not, was what was beautiful?
The UK has triple lock pensions. Knew it was time to quit the UK when that happened. Took a while but I managed it.
Pensioners everywhere are powerful. You'll never sacrifice them. They'll eat the young whenever they get a chance. Your only hope is to get in as close to the ground floor and then eat as many young yourself.
If the govt pays pensions (or social security here in the us), they can just print money in the event of an emergency like now. That makes sense. The problem in the us is that we stubbornly refuse to set aside enough money (I mean warring political parties find it advantageous to put off taxing and blaming the other side till later).
I'm not sure if any other governments besides the US can just print their way out of shortfalls.
And the US won't be able to forever either, but our politicians will just keep doing it until it's no longer viable.
US social security is fine as a pension program. It’s disability payments that became a problem. Because high income earners don’t pay for SS, it’s politically very tempting to use that money to pay for vaguely related social programs which then grew over time.
Social security is also being used to subsidize government borrowing (by increasing apparent demand for low interest rate bonds), which makes those vaguely related social programs appear cheaper.
What should be done with social security funds instead? I’ve never heard anyone provide a better option.
Social security could be run more like the large sovereign wealth funds, CalPERS, or as (possibly restricted) private savings accounts. The account statements make Social Security appear to be a private account system, even though it's not true.
I doubt any of these alternatives are politically viable, and I am not sure they are all necessarily better, just suggesting that there are alternatives.
Funds like CalPERS typically have a good chunk of their money invested in real estate. They are the landlords this article is calling for us to sacrifice, along with endowments for charities and universities and probably a whole bunch of other pensions (maybe including personal pensions).
UK state pension is quite small, max ~£175/week.
The "triple lock" just means it's being increased annually by 2.5%, CPI or average earnings growth, whatever is highest. There is talk about scrapping the triple lock - but it doesn't have a huge impact - difference in cost is 1% of GDP by 2060.
It will be a difficult balancing act for the next couple of years, trying to bring the economy back, keep employment up and figure out how to pay for the increased borrowing as a result of the pandemic. I think large scale debt relief will be the only way out of this.
There's a reason why it used to be that only landowners could vote. The powerful typically owned land and they knew if non-landowners could vote, they would outvote the landowners.
When the right to vote became available to everyone/most people, the landowners shifted to using their wealth in order to influence government/politics in their favor. This has worked out well for them, since as a general rule people either are too naive or politically apathetic to come together to outvote the landowners. Despite being grounded into dust by them, the common person still feel that they have much to lose by going against them. This reminds me of a fictional gambling game from an anime I've watched called E Card.
"The game is starts with each player holding five cards, four of which are Citizens and the last being either a Slave or an Emperor. Who holds which card is decided beforehand, and is played like that for three turns before switching. The game lasts for a total of twelve turns, meaning each side gets to play Emperor twice. The players choose one card from their hand (Emperor side lays first) and place them face-down on the table. They are then flipped over to reveal the winner of the match.
The three card types are Citizen, Emperor and Slave.
The Citizen card represents the common man, and cannot defeat the Emperor who sits at the top. It can, however, defeat the Slave, who resides at the very bottom of the system. Two citizen against each other results in a tie.
The Emperor represents the one at the top of society. This card can defeat the citizen, but will lose to the Slave.
The Slave is presented as the one at the very bottom of society. Seeing as how it has nothing to lose, it can overthrow the Emperor in one last attempt at revenge. This card will lose to a Citizen, but will win against the Emperor card."
My thought is that we have a large population of people who have been fooled into thinking they are the Citizen, when they are little more than Slaves. They believe that they are different, more than Slaves. So they have something to lose. Thus they can never go against the Emperor, and in fact, play their role as the Citizen in keeping down the actual Slaves who could do something about that Emperor if they actually got together.
Now do I think people will wake up and realize they are the Slave? Probably not, but there's a non-zero chance, depending on how the government decides to act during this crisis. Most likely though, the Citizens are going to be given some scraps, just enough that they have something to lose and keeps them under the illusion that they are more than a Slave.
I am in the USA, but similar situation.
I believe that if, big if!!, the public would cooperate, that a plan like Hong Kong’s makes a lot of sense. Sure businesses are less profitable and some will not survive, but it would get things restarted quickly.
Trouble in the USA is a lack of patriotism: people are into their own selfish thing and they feel put upon and don’t do what is right for both public health and starting up the economy again.
It seems to be mostly young people in my town who act irresponsibly and will thus likely ruin the economy for a long time.
A long term failed economy is full-stop the fault of people unwilling to be decent human beings and do what needs to be done, and, of course, the fault of our federal government leadership which has so far been poor.
We are just getting started with changing health practices and public interactions and we are just getting started understanding what the long term economic consequences will be. There is no quick fix here.
But for sure, we need less selfish and entitled behavior, and protect people who need extra protection, and be willing to pay a little more to businesses and totally cooperate with more distancing in public places and businesses and of course apply maximum social shaming pressure on people who are so incredibly selfish as to not wear masks when appropriate. It is like some people have no sense of shame.
People in America don’t exactly lack patriotism. They’re quite capable of making sacrifices in the name of their country or their community if need be. It’s just that many were led to believe that they were being forced into something for no reason. This was an active effort. There wasn’t just a lack of leadership, there was leadership in the direction of sabotaging a coordinated response.
You may not agree with my comments, but I agree with yours: federal leadership was so bad that I have to wonder if it were on purpose.
But, that doesn’t exempt people from blame if they don’t do their part.
This is ridiculous. People in NYC stopped going to public places in mass almost a full week before the lockdown order. Had the CDC not lied about masks, they'd have likely used them.
On top of that, the FDA and CDC have 100% botched testing from the beginning.
Americans are highly pragmatic, but we want good information not orders.
Perhaps ridiculous from your experience in NYC.
I live in a small town in Arizona that is a tourist destination. Especially on weekends, we get flooded with people from out of town. I would estimate that less than 10% of out of town visitors wear masks in stores, etc. To a lesser extent, I see lots of locals who also don’t wear masks in stores.
Our governor just reopened the state so I expect people’s willingness to do the right thing will decrease.
I totally agree that WHO and CDC really screwed up on their bogus advice for people to not wear masks.
Yeah, that sucks to hear. Hopefully your town can get on top of it in spite of the state.
Stay safe.
Since the late 70s consumption growth has outpaced productivity growth. The gap was plugged with debt. You cannot roll that debt over forever, even if you are Jerome Powell.
The older people who hector young graduates about paying back their student loans are precisely the people who voted for deficits with no intention of ever paying off the debt.
> Since the late 70s consumption growth has outpaced productivity growth.
Really? It seems more like companies been capturing more of the productivity gains since the 70s, and paying it to shareholders...
Total US debt to GDP was stable at around 150% until 1980 when it began to rise, topping out at 400% in 2009 and settling around 360% since then. This debt increase partially masked both slowing GDP growth due to demographics at the national level, and slowing productivity growth at the individual level.
Regardless of the internal cause of slowing productivity growth, it did slow and maintaining the same debt to GDP ratio as before 1980 would have required accepting a standard of living that rose more slowly than it did. (GDP growth slowdown due to demographics washes out on a per capita basis.)
It seems the most likely cause for the 1970s productivity slowdown was the oil shocks and the most likely cause for the 2000s productivity slowdown is the falling marginal return on research expenditures.
This is a such an epic situation that I'm sure we'll be talking about for the rest of our lives.
Pick two or three groups to save: workers, landlords, bankers, or businesses? Not everyone can be saved, and the political positioning of these classes makes this battle all the more impactful. This author chooses to sacrifice the banks and the landlords, and makes a pretty good case for why.
The wrong answer could spell the end of capitalism, at least as we understand it today. Maybe "wrong" isn't the correct word here, I don't know. I've never seen such huge decisions laid bare like this before.
> This is a such an epic situation that I'm sure we'll be talking about for the rest of our lives.
The word "epic" is overused a lot - but not here. It's chilling to think about how historically significant each passing day is going to be.
This is a bit off-topic, but I've been wanting to speak it for a while...
>The wrong answer could spell the end of capitalism
I've been seeing a lot of Capitalism/Socialism stuff, and 100% of the time it feels like the concepts aren't fully developed in the speakers mind. They aren't binary opposites, they're gradient opposites. Essentially private vs public empowerment.
If I trade vegetables with my neighbor, that's private and therefor capitalist. If the gov builds a road, that's public and therefor socialist. If you add up everything the people and their government do, you'll find where things are on the spectrum.
Every single government is a mix of capitalist and socialist. You literally can not have so much as a tribe before the two begin to exist. Neither of them are going away ever, and they're both good for different things.
Literally the only way for capitalism or socialism to end would be for there to be no communicating humans left.
Workers. Businesses.
The UK doesn't really have capitalism, it has financialisation.
There are a lot of empty hotels, and it seems like prices will need to go down. Who is going to live there?
What is this guy smoking? He presents a false dichotomy of saving "labor" vs "assets". Look, if assets depreciate, it affects balance sheets of everyone, including corporates, and induce a balance sheet recession which reduces reinvestment into the economy. Everyone's fked then, too. It's all connected.
Submission statement:
"Richard Murphy lays out the case for whose interests need to be sacrificed for the economy to have any hope of surviving under the conditions being imposed on businesses to keep workers and customers safe. Unfortunately, his well-reasoned recommendation, that landlords, banks, and pensioners need to take hits to save jobs and businesses, is not likely to find support in official circles. But Murphy’s argument, in essence, is that these groups are toast under any scenario, and they can’t be allowed to weigh down the productive sectors of the economy."
(summary courtesy https://www.nakedcapitalism.com/2020/05/people-and-jobs-or-w...)
The idea that landlords should be bailed out in any fashion seems folly to the extreme and I’m glad to see it argued against here. Collecting rents from people without the capital to own housing, in addition to increases in land value, is about as textbook an example of parasitism as one could imagine. Let them all take a bath and keep people housed.
For rental properties in Australia landlords can 'negative gear' the losses against other income (salary for example). So a common ploy is to buy a house where the mortgage payments are greater than the income (rent) and claim a deduction from salary. The argument made for its validity is that property owners are taking a risk by buying property - property can go down in value, however everything is being done by the govt at the moment to keep rent being paid, so the risk isn't real.
Not only that by having a large number of people buying rental properties it pushes out first home buyers who are forced to rent. Its effectively a wealth transfer from the young to the old who were lucky enough to be around when house prices were cheaper. Not only that, foreign investors (mainly chinese) are forcing up entry level apartment prices, and extracting rent from them.
As well, because a lot of business owners have a mortgage on their house to keep their business going, house prices can't be allowed to drop because it will have a knock on effect, and drag the businesses down with it.
The whole system has been propped up by increased immigration creating demand on housing, this has been government policy for some time. Now there are no immigrants and all the tourists are leaving, its just a matter of time.
The problem is that it’s not folly to those who own the land, who are also typically in a better position to influence this kind of policy.
Is your definition of landlord also includes mom and pop who only own 1 property (on which they rent some of the rooms out)?
We are renting a small flat in London. We would barely afford a mortgage on it despite my income being twice of a nation average.My landlord bought it in 2001 for a price that is less than a half of its today's value,adjusted to inflation. So back then,you could buy it even with a modest income,while now you need to either own a business or be a director to be able to do so.
Due to lack of supply, a lot of such folks are in on the joke.
It's not the supply. It's not that London wasn't packed then and everyone not needed somewhere to live. All the craziness started when banks were allowed to jump on a mortgage bandwagon.It used to be only building societies before that. I'm commenting the UK situation,but I think it's similar in other countries too.
It is supply—restrictions on development, investors and AirBNB snapping up units, which increase vacancy rates.
Yes, low interest rates are also a big factor. Not sure if they have a mortgage tax deduction over there.
More folks want to live in the city these days as well, suburbs have lost some of their appeal. All these factors => very expensive housing.
But that’s not their fault to blame?
That sounds reasonable, but even this little bit causes wealth transfer by setting home ownership just a little bit more off limits to the majority by increasing the supply of slightly too cheap rooms. Thus creating an incentive to the wider more moneyed classes to increase demand on the stock of housing. So while the language used is evokative, the reality is, at scale, all those mom's and pops end up being a very large and powerful group with aligned interests, whose actions also enable even bigger players.
I’m not sure I understand. If I were in their situation I won’t want that to be applied to me. What about you?
Of course people want money, everyone else does. But it doesn't matter what they feel, and it doesn't matter what I would feel, nor how you would feel. What matters is how those who are most vulnerable are treated. It's not fair to say, well those mom's and pops would be worse off, when the people who were already poor would be even worse off otherwise. When rent becomes involved, the system becomes pretty close to zero sum.
This is stale discussion already, but going by that logic, why would you sacrifice the majority mom and pop (average person who also lives paycheck to paycheck) for the minority poor? For example right now in NYC, most people find it really hard to buy their first home (not everyone is SWE in FAANG). It isn't like they have spare money to buy bigger toys. Once they worked hard for that why take that away?
I'm not saying not help the poor. We should treat our most vulnerable people, but economically I think it doesn't work out. The poor will always be there, the sick will always be there, the unemployed will always be there no matter what. Even if you help them, they will always be there.
Well, the poor need the most government handouts, and if you make the people who need the most government handouts have to give away most of their income in this manner, you've essentially just taken government debt and given it to the landlords. That doesn't make economic sense either.
As for discussion being stale, I have children, my ability to monitor threads is impaired. It might not be much of a discussion easily visible to outsiders, but we are both continuing to engage. Or will up to a point.
Yes.
Yes?
Can you explain why this is fair? I might misunderstood your point.
Who would you suggest should own the property instead of landlords? Should all housing be state owned instead?
Without bail outs we have the potential to see many more properties bought by the largest companies, who are often far harsher on tenants then small mom-and-pop owners.
>> Collecting rents from people without the capital to own housing, in addition to increases in land value, is about as textbook an example of parasitism as one could imagine. Let [the landlords] take a bath and keep people housed.
> Who would you suggest should own the property instead of landlords? Should all housing be state owned instead?
Why would state ownership be their first choice? There are obviously other, more moderate options that solve the landlord issue, such as having housing units owned by their occupants.
Where do new houses come from, if occupants aren't paying their share of the labor and material cost that went into them? There are always popular areas without enough space for everyone, who decides who gets to live there? Why single out my landlord to lose everything for choosing a different asset class than I did?
> Where do new houses come from, if occupants aren't paying their share of the labor and material cost that went into them?
Landlords are out to make a profit, so renters are obviously already "paying their share" of the cost of their unit in rent. If they weren't, their landlord would be broke.
> Why single out my landlord to lose everything for choosing a different asset class than I did?
Call it "creative destruction." Like the buggy-whip makers of old, maybe he made a bad choice about what business to get into?
I was replying to "housing units owned by their occupants". From then on who's paying who for what?
Buggy whips are obsolete, it doesn't matter if nobody makes more. Housing is not, and it's important to compensate people that provide it because that's very expensive.
> I was replying to "housing units owned by their occupants". From then on who's paying who for what?
Obviously their (perhaps new) owners, their occupants. It'd be exactly the same situation as owner-occupied housing today.
I don't know what's so hard about this to understand.
You need a reasonable financial buffer (or at least good credit) to be a homeowner to cover the large expenses that invariably come up. If you're not handy and need to call professionals for every minor repair--well, though service calls will add up quick.
Sometimes people need to change their housing circumstances in a hurry (e.g. bad break up or bad neighbor) and negotiating two real-estate transactions would be time consuming.
In short, there are lots of good reasons people don't want the burden of being a home-owner, but still need a place to live. Someone has to own and be responsible for those places.
Wait, I'm stuck with the mortgage indefinitely in your scenario? That's not a solution, that is the problem that landlords solve.
Because many people don't want the responsibilities of home ownership, or to be exposed to the risk. Also makes relocation a lot more complicated.
There's no particular guarantee that land value will continue to increase either, or that market rates for rentals will continue to increase.
Hacker news loves landlords. No faster way to get downvoted on here.
You do realize that many property owners would be rendered homeless if we did as you’re suggesting, right? Why should the owners lose everything they have so that their renters don’t (at least in the short term, until the property gets foreclosed on and everyone is homeless)?
I think it's in the landowner's interest to not have a bunch of people with nothing to lose on the streets.
What does your property value look like after riots, looting, and societal breakdown? How much is your house worth burned down to the ground?
There’s plenty of steady states between looting and universal abundance in which the landlords have abused their power to trick tenants into accepting to remain in a parasitical relationship.
Maybe they should get a job?
They have a job. They rent property.
They should get a second job then. There's no excuse.
That’s not a job. That’s collecting money from someone else who has a job because you own something.
My parents own a small apartment building in a rural area - about 10 units. They’re there several times a week, and when someone moves out it can be days of work. Not to mention paperwork, collecting, occasionally needing to go to court, etc.
Don’t get me wrong, it’s decent money for the time they put in to it, but it also took a large investment and is absolutely a job. That deserves a payoff, just like any other.
Property Management (not the ownership part, but the operations part) is very much a job. And how much of a job depends upon the pool of properties, their level of maintenance/upkeep, and the tenants. Managing repairs, proactive maintenance, the finding and of vetting tenants, accounting, landscaping (if applicable) etc ... all add up.
It’s a pretty simple calculus. The damage caused by kicking everyone out of their homes far exceeds the landlords losing out, from both an individual and public health perspective.
> The political damage caused
Renters outnumber landlords. Easy peasy.
What part of this is calculus?
Yes that's right, they destroy the houses when landlords have to sell up. And then they remove the land. It's just a void.
They'll only lose the rental properties if they cannot afford them, sorry, but everyone will suffer. I'd rather have a landlord lose a property than the family inside being forced to the street. A landlord who cannot afford their own primary home because of this should not have been been so leveraged.
But you’re OK with the landlord being out on the street?
A landlord who is 'out on the street' because they are no longer getting the rent from their investment property is in no different or worse a position than a worker who becomes homeless because they no longer have a job. A landlord with no back-up plan when rent doesn't come in is someone who made a very large and risky investment but did not consider the possible downside to that investment, and should be punished for their poor investment no differently than someone who takes out a loan to buy a risky stock.
I don't think that tenants have an indelible right to live where they are forever, and a land owner has the right to charge what they see fit for rent, but in these types of extenuating circumstances it would be shameful if landlords did not carry some if not the majority of the burden for their risky decisions.
That isn’t at all how it works much of the time. A lot of people rent their basements out because they can’t afford not to. And what do you think happens to the tenant when the landlord fails, regardless of circumstances, and loses their property? If you help the landlord in these extenuating circumstances, both landlord and tenant may keep their homes. If you favor the tenant at the expense of the landlord then both are likely to end up homeless, which makes no sense.
> A lot of people rent their basements out because they can’t afford not to.
Why do they have a mortgage they can’t afford?
Is this question rhetorical? You can’t imagine a situation where one can’t afford their mortgage? Job losses, life changes, catastrophe?
I think it's a moral essential for landlords to be homeless.
Why all landlords? Business arguably is also ruining the world and people’s lives, should all business owners also give their assets away for free in these trying times?
It’s a pure numbers game. There are less landlords than renters, so even if every landlord became homeless (unlikely), the consequences would still be orders of magnitude less damaging than if everyone was evicted.
I'm not okay with anyone being on the street. Lots of people are losing their jobs and homes, and landlords shouldn't have any special protection from that effect than anyone else does.
yes