These businesses should be paid by the landlord to occupy (and therefore maintain) the property for them. This notion that you can own land without occupying it (or paying somebody to occupy it) is an absurdly backwards idea that is responsible for a lot of suffering and exploitation in modern society.
We've constructed a bit of a euphemism for this. "I just want to make a living to put food on my plate". Except it's not the food that's expensive. It's the rent. Which in many places, for low income earners amounts to greater than 50% of their take home pay.
In my city there are dozens of empty stores in the CBD "for lease" as if there is no demand for use of these properties. Absolutely ridiculous. Strangely enough, everyone thinks that renting a home or workplace to occupy is a perfectly normal thing to do.
Building and maintaining commercial properties is absurdly expensive. A landlord takes on the cost, risk, and time of building and maintaining that property in exchange for businesses not having to deal with that.
The idea that a landlord should invest serious capital to build a business park and then pay people to use it is nonsense. In that arrangement zero business properties would be made. People who wish to start a business would have to foot the bill to purchase or build a space for their business.
Besides initial construction you also have maintenance, acquiring tenants, property management, renovations and improvements, etc.
If a company has the means and desire to do all this themselves, there's nothing stopping them from buying the land themselves instead of renting, but it's generally more efficient for a business to focus on what they are good at and leave the real estate issues to a company that specializes in it.
Sounds to me like they're deciding what to do with the land, and then taking on the risk for whether the developed property is economically viable. They should be taxed for the value of the underlying land, but they are absolutely not useless middlemen.
"Taking on risk for whether the property is economically viable" is a funny way of saying "bought a house that a normal person could have purchased and instead charges them a marked up rent"
The developers do not just eat the cost of building a property, they pass it on in the sale price. So yeah, landlords still end up having to deal with it, on top of the day to day maintenance.
The landlords do not just eat the cost of purchasing and managing a property, they pass it on in the lease. So yeah, tenants still end up having to deal with it, on top of the day to day maintenance.
Landlords aren't in the property business. They're in the liquidity business.
I know it sounds weird but that's their function in society, they are one of the many "business lubricant" sellers that allow modern society to work.
A liquidity provider is someone who makes transactions easier. The insurance company will insure you against risk does this. The lender who provides loans does this. The landlord who rents property does this.
You can run an economy without them, but things will cost more and take longer to happen.
liquidity matters to commodity markets that transact often. the flipside of liquidity is instability.
treating real estate as a commodity, not as an intimate necessity of everyday life, helps no one except speculators and rent seekers, at the expense of everyone else doing productive work.
Examine the alternative. Should small businesses purchase the space all out, from developers or brokers? If this is so much more efficient, why don't they do so?
Similarly, you could ask the same of residential renters. What would happen if we simply banned all new rental contracts. Would access improve or diminish?
Owning property is a longterm commitment that limits flexibility and comes with some hefty costs. Rent solves these problems. A small company thats growing might need 2000 sq/ft today and a projected 10,000 sq/ft next year. But if you have to purchases and maintain 10,000 sq/ft for a year, that to be prohibitively expensive to the point that they can't afford to grow that much.
Why then is it ridiculous for me to own 10,000 sq/ft and parcel it out to 5 business that need 2000 sq/ft? I'm taking on the costs of owning and maintaining the property, as will as taxes and other assorted costs. It is fair for me to pass those costs on to the actual tenets of the property for as long as they choose to reside on the premises. They get flexibility and scalability, and I get money for my time and effort to provide their needs.
You're taking on the cost of purchasing the property, which is certainly not nothing. But as a commercial landlord, your tenants pay all the costs of owning and maintaining it, they pay all the taxes, they pay everything. Every commercial lease is structured this way.
You have an outlay of capital to acquire the property up front, and you have a minimal amount of risk if a large portion of the property goes unrented. But even a brand new owner will typically only need to reach 30-40% occupancy by square footage in order to break even, and the unrented portions can be written off for a tax credit.
I would love it if the commercial landlords I've rented from in the past were providing services for the exorbitant checks they were getting every month, but the only different I've encountered between commercial landlords and residential slumlords is that there are generally government protections for the tenants of a slumlord, commercial tenants not so much.
> your tenants pay all the costs of owning and maintaining it, they pay all the taxes, they pay everything
To play devil's advocate, what if the tenants are actually fully compensated for that with a rent that would have been much higher across the entire market if the landlords were paying for all that?
> only need to reach 30-40% occupancy by square footage in order to break even, and the unrented portions can be written off for a tax credit
you seem to imply that commercial landlords are raking it, I think? But, afaik (and I'm admittedly not super-familiar with this), commercial real estate is an open, competitive market? So, given that, why doesn't it get flooded with supply of everyone who rushes in to build and collect those fat margins? Maybe there is still something there that makes it not as lucrative as it seems?
It's not an open or competitive market. It's a fractured, locality-heavy market that's actually operated more like a cartel in many (especially small to mid size) areas. You are never free to just buy a building and do what you want with it - the City has to vote, approve use, permits, etc. All of which conspire against a 'free' market in any sense.
As an example, of the ~30 or so large scale commercial buildings in my local downtown, there's a total of 3-4 owners. You only know this if you know the lawyers who put together the property deals, as each is hidden behind it's own management company and rented through one of 2 commercial real estate management firms (conveniently owned by the same 3 people).
There is no 'rush in to build', as there is no land at all remaining in the city to build new on - any construction requires demolition first. Again, permits, historic district permits, etc. all conspire against the newcomer.
Maybe they pay all the costs, but thats when there are tenants. The landlord is taking on the risk of being the one the bank will come to when a mortgage needs to be paid. And the effort of maintenance (and cost, then there are no tenants). All the tenant needs to do is show up and sign a check, they have no other worries. Thats the trade-off.
A big plus of being a landlord in our current time period is that what you charge the tenants in rent covers: a) the cost of your time b) the cost of maintaining the property c) the cost of paying interest on the loan d) the cost of repaying capital on the loan. After 30 years or whatever once the mortgage is paid off, the landlord's costs will drop significantly, but the amount they charge tenants still takes into account the last two, which is why being a landlord is often seen as a great way to fund retirement.
One way to change that could be to have mortgages that have an unlimited term and are interest only. The way the landlord wouldn't need to charge (d) to tenants and they only advantage to them being a landlord would be (a). But I'm sure if that were to happen capital costs for properties would increase significantly that at the end of the day rents would be exactly the same as they are today.
Triple net leases are quite desirable for landlords but by no means are the sole kind of commercial lease. The most common splits some of the costs of building maintenance (a ‘modified gross’ lease)
Good luck trying to negotiate any gross or modified gross lease when everyone else in the building is on triple net. They're better off taking the tax deduction than cashing your rent check.
You can deduct your actual expenses, but you can’t deduct rent that you didn’t receive because the property was vacant, or get a “tax credit for unrented property” as was claimed.
> I get money for my time and effort to provide their needs.
This is a pretext. You get money, give as little of it as possible to the people who are doing what you claim to be doing (maintaining the property), and pocket the rest. Owner is not a job.
> These businesses should be paid by the landlord to occupy (and therefore maintain) the property for them.
Please, ELI5, how would there be any landlords left if they had to pay their tenants (rather than the other way around)? Or maybe you’re arguing that there shouldn’t be any landlords?
There would be as many landlords left as there were people who had a need to keep up the maintenance of property that they couldn't currently use, but planned to. The same reason why you would pay a housesitter.
I hope you're not implying that society should make rules based on the preservation of the passive income of landowners. Landlords don't add value to anything; they speculatively purchased a title, and are trying to extract value from it.
I'm a libertarian socialist, so while I agree landlords are often evil, I'm also a pragmatist, and don't see the entire system just changing overnight.
A better more practical approach would be guaranteed basic income, and a land value tax that's somehow tied to average rent prices, so if rents go up, the land value tax goes up so much that it probably would've been better to keep rents lower than pay the higher tax.
Since the money from the LVT goes towards GBI, and people's rents are being offset, the one incruing a lot of the costs is the landlord, and they don't just have a free for all.
They need to double the tax though on airbnb and 'hospitality' designated residences that do short-term leases instead of long-term leases.
I'd even say give some lenience for people w/ less than 3 homes (i.e. you get your home/land free/clear and 1 rental you get 10% of normal LTV, instead of the full tax), then maybe graduate it up... 4-10th house you pay 50% on, 10th+ you pay 100% on.
Foreign investors should pay double the tax, if you want investment property in America, then pay other Americans who can't use those homes.
> These businesses should be paid by the landlord to occupy (and therefore maintain) the property for them.
While I do agree that property needs maintenance, why would a landlord pay somebody to occupy their property? What's the incentive to own the property at all then?
I think the argument is, the landlord is not contributing anything productive and is attempting to freeload off of other’s productivity. Most businesses both agree to pay rent and make improvements to the property. When a landlord is demanding both, they are not contributing anything but still seek payment. It is a form of “rent seeking” in the economic sense: https://www.investopedia.com/terms/r/rentseeking.asp#toc-wha...
And so what would be the incentive then to own property? Well if you cannot be productive with it, or otherwise enjoy it for personal reasons, then you wouldn’t have any reason to… which would let people who can do something productive with it the opportunity to do so.
Can a landlord contribute something productive? Sure, but that’s probably more akin to a property management company’s value proposition than a landlord’s.
> the landlord is not contributing anything productive and is attempting to freeload off of other’s productivity
This is patently absurd. Does the Miller not provide anything productive when he brings flour to the Baker? The Landlord provides both a Good and a Service. Just because his contribution is not necessarily concurrent with the Tenet's, does not mean that he is not contributing anything productive.
What does the landlord bring? I think you’re confusing landlord with property manager. The landlord brings nothing and has no productive contribution. They seek only to create scarcity and leech off of others productive output.
Please, list contributions made by the landlord specifically.
They provide the capital so that building exists. If there weren't a chance or probability for it to generate income and to increase in value. A few would pay for it in first place and even then only for personal use. Thus resulting to system where to start business you first must outright build the building with loans or buy from some failed place. As no one would build for you to rent.
So their role is increasing the scarcity/cost of property?
Remember a landlord is not a developer or builder - they generally buy property that already exists.
I think what you are saying is that the property wouldn't be available to rent, BUT would be available to buy at a potentially lower price (as buyers wouldn't be competing with rent extractors/landlords)?
I know we are talking commercial property here, but look at the market in Sweden, where renting property to live in for more than a month is illegal in most cases. The cost for a young person to buy their first flat (often with family support) is low. The country operates fine with very limited rental. People still build property, young people still get to live.
>While I do agree that property needs maintenance, why would a landlord pay somebody to occupy their property? What's the incentive to own the property at all then?
To live in or use? That seems like a way better situation!
That doesn't answer the question. An 18 year old who has literally never worked a day in his life can not afford an apartment no matter what the price, inflated or not. Should land owners be obligated to lower the price to $0.25 so that this teenager can buy the property with a coin he finds on the street? Should it be $20 so that his first paycheck can be used to buy lodging? Should all plumbers and electricians offer their services for a couple dollars so that every teenager can keep their new property maintained?
You have created a false reality, and then cried foul when real life didn't play ball.
>Should land owners be obligated to lower the price to $0.25 so that this teenager can buy the property with a coin he finds on the street?
Wouldn't a reality where land is only held by those using it and you can buy land for a quarter be better? I don't even mean to be funny or anything but that seems like a much better situation that our current one.
This 18 year old can get a loan, they can pool together with a group of flatmates to purchase a property together or they can live in staffed accommodation, such as a dorms, motel, hotel or hostel. They can purchase a room in a boarding house. They can stay with friends and family. Plenty of options.
Landlords buying land does not unilaterally inflate the cost of land. Arguably in the long-run, the price of land just reflects the discounted cashflow of its future rental value. City centre land is expensive not because of landlords, it's expensive because so many different parties are able to derive so much utility from occupying it, and are willing and able to bid large amounts to capture that utility.
Arguably there are two big problems with the market for land/housing, and landlords aren't one o them:
#1 Increases the value of land due to neighbourhood effects accrue to the owner when they do little to deserve it (you can tackle this with land-value taxes).
#2 Various planning controls inhibit the market's ability to respond to high accomodation prices with the construction of more accomodation, keeping rents at a higher level than they would otherwise be without this government intervention.
Land is a finite resource, and developed land in a useful location all the more so. While speculation might skew an areas value somewhat, the cost of purchasing, developing, and maintaining a property would definitely not be zero if renting were abolished. There are still going to be lots of people who can't afford to buy outright even if costs went down several percent.
Land should be a public commodity, nobody should be able to own the land, or the resources under them, or the lakes, or the sky, etc.
Buildings should be 'permitted' to be built on land, and people can own the land insomuch as they pay land value taxes for the utilization of the land. If it's a primary purpose and they don't get income from it, then the tax would be nil, if it's a second home they'd get 90% off as they're still a 'small fry', maybe 3-10 homes is 50% of full tax, and 10+ is the full tax.
LVT can then be funneled into housing programs, housing assistance funds, or straight up basic income.
Land value tax is the tax of the value the owner gets from the land, so if you're airbnb'ing you'd pay more if you make 10k per month in airbnb, then if you're renting long-term for 2k/month. If you still have a mortgage, you could maybe have some sort of deduction - but again that's only if you're owning 3 or less homes, anyone leveraging credit for 10+ homes should be able to afford mortgage out of their normal cash-flows, or they're over-levereged and need to dump a property or two.
So someone who uses land very inefficiently and thus gets very little value out of the land should have it for close to free, whereas someone who would use it efficiently and thus derive lots of value from it should have to pay large sums to keep using it that way?
What incentive is there to develop properties then? So you spend millions on building a commercial property and then… you pay people to occupy it? What about rewarding people for building things? This is an asinine comment.
The incentive is to sell the developed property for a profit. The state would be responsible for determining what the reasonable occupancy rates are on properties for sale or under development. A paid occupier (perhaps a real-estate agent) can be placed onsite for the reasonable amount of time in order to avoid any default occupancy fees by the state.
Why would anyone invest anything for something that doesn't produce profit? Developed properties sell because they are expected to generate profit. And in future higher such. If they didn't it would make more sense just to sit on pile of cash instead of deteoriting building.
> These businesses should be paid by the landlord to occupy (and therefore maintain) the property for them.
Maintaining the property and occupying the property aren't the same thing. It doesn't make sense to equate the two.
Landlords are responsible for maintaining the property. Maintaining commercial real estate is actually quite expensive.
It's definitely less expensive to own and maintain an empty property than to own and maintain a property with $0 renters who are putting wear and tear on it.
Many, if not the majority, of commercial leases, including mine, are Net leases, which have the business maintaining the property (and paying the property taxes in the case of a triple Net lease). And many, if not most, commercial leases are not year to year, but over three or five years.
Right. The failure rate for restaurants is (depending on who you believe) up to 60% in the first year. That's the kind of business that would simply cease to exist if prospective business owners had to convince lenders to fund large capital costs.
Renting property dates back to ancient times. It certainly long predates the modern restaurant. We have records of rent contracts 300 years older than the first known instance of a place where people could buy freshly prepared meals.
This is literally the reification of property-cum-captial. Like when people talk about social constructivism, this is what they're talking about. Please don't.
> This notion that you can own land without occupying it (or paying somebody to occupy it) is an absurdly backwards idea that is responsible for a lot of suffering and exploitation in modern society.
That's called an occupancy tax and it stops most of the idiocy in the commercial renting sector really quickly.
Agree. Imagine if someone claimed dominion over a chunk of the sky or an acre of water. You'd call him a fool and ignore him. The only way land is different is that it's easier to demarcate.
Nations, but people and corporations aren't nations. Can apply institute a no fly-zone over their HQ?
Edit: meaning land, air, water should belong to the people of said nation, and should be taxed as such and divided out to the people as guaranteed basic income.
I'd say the purpose of a nation is to manage resources, which are often natural resources.
Some locales have deeds for land have time limits; you don't own the land, you have been granted rights to it.
Sometimes the FAA will limit airspace usage for private property, for instance restricting airspace around stadiums during sporting events.
You're right that a corporation can't unilaterally declare the airspace over their land their headquarters sits on as a no-fly zone. But the government may still work with them on policy.
Yours is a very strange idea indeed. I guess if you're alright with this then you agree to negative interest for deposits (you pay the bank to keep your money).
Yes rent is a major cost for businesses that depend on foot traffic, so landlords take advantage of that to extract more money. It's just the way capitalism works.
That's 100% the case actually. With the added subtlety we agree that the bank can pay itself by leveraging the money. Or more precisely, the competitive bank will tell you "I keep it for free and will even give you interests" cause it knows it can pay itself by leveraging the money.
Yes but capitalism can also work to make things much much cheaper to almost no cost at all. You simply increase the amount of land available and make regulations that allow for cheaper buildings. 200 years ago, humanity had no problem at all making buildings cheap. Why now all the sudden we're so obtuse that we won't allow it any more.
the problem is: we require people to either own land or pay someone else that owns land.
That alone wouldn't be an issue without the second requirement: You can't have any land because all of it belongs to the government. Even CA, one of the most overpopulated states in the US has more acres of land than people.
We need to start opening up land for development: mainly by starting cities in new underdeveloped states and creating incentives for companies to move there. Once people spread out a bit more, we'll see that there's enough land for everyone and it doesn't need to cost a huge amount to own land or real estate.
We also need to stop building homes w/ 1900s tech and methods.
You can build just as sturdy/sound a home for 10k using earthbags as you can 200k w/ a contractor, albeit there's a lot of hard work, but if you can do it, then you should be allowed to, but zoning laws don't always look favorable on homesteading.
There's a family on youtube who has like 5 homes (1 for each kid, more like little studio apartments as their bedroom), and a big office. All built for <10k each.
Imagine if you could buy 20 acres of land, and put a bunch of outside-the-box homes and apartments and charge minimal fees (like maybe 300/month HOA).
You could build homes using: Earthbags, earthship, dome/concrete, containers, etc.
Any home that uses earth also has the huge advantage of it being an awesome insulator. Earthship homes manage to fluctuate between 50/80 regardless of location or climate (winter/summer respectively).
Creative homing I think could be a big solution to the problems if more people team up and build their own rentals on co-op'd land, then rental prices would go down a lot because demand would go down, or landlords would simply go broke because nobody will rent from them.
random thoughts about this without too deep consideration:
When you rent a place out some portion of the rent should be legally required to go toward an ownership stake. The landlord should have to buy you out if you leave, and you should have the option to buy the landlord out as well. Empty properties should slowly fall into public domain and be re-sold to the public at a low cost based on a lottery system or similar. While renting-collecting-systems aren't necessarily bad, they're usually bad and we should really seek to limit the ability of people to create them.
> As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.
and
> No sooner is the exploitation of the labourer by the manufacturer, so far at an end, that he receives his wages in cash, than he is set upon by the other portions of the bourgeoisie, the landlord, the…
> Nevertheless in the most advanced countries, the following will be pretty generally applicable. 1. Abolition of property in land and application of all rents of land to public…
I don't think that's what Adam Smith was getting at. He was saying that gathering food that grew freely shouldn't be taxed by people who put a fence round it and did nothing to make it grow.
Generally there's a building that's useful and the local government have designated that people are allowed to live there.
Unless you mean by landlords "people who own campsites" - that's probably the closest thing to what Adam Smith was describing. Although even they supply amenities.
Believe whatever you want to believe about Adam Smith but he definitely didn't like landlords.
‘The wood of the forest, the grass of the field, and all the natural fruits of the Earth, which when land was in common, cost the labourer only the trouble of gathering them, come, even to him, to have an additional price fixed upon them.’ Adam Smith
‘He must [nowadays] then pay for the licence to gather them; and must give up to the landlord a portion of what his labour either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land.’ Adam Smith
‘Civil government as far as it is instituted for the protection of property is in reality instituted for the defence of the rich against the poor, or against those who have some property against those who have none’ Adam Smith
The main difference is that Adam Smith wrote about real land, i.e. natural resource, while current discourse about rent is focused on buildings/apartments - human produced capital.
I think the argument still applies even if you don't go past the land itself. The land itself is the primary cost of housing. This is why we were able to build most of our most famous skylines in much poorer economies than the the people currently struggling to afford to to buy or to rent those same properties.
>> "More than half say their rent is at least 10% higher than it was six months ago, and in seven say rents have increased at least 20%."
And it's not just businesses of course. we all know how high rents have gotten in residential.
but, what really gets me is that it does NOT have to be this way. I've been reading Henry david thoreau a writer from 200 years ago and I was stunned about how much higher their standard of living was for shelter.
Here are some figures from thoreau's book walden:
Unskilled labor was paid 1$ per day
Skilled labor 1.50$ to 2$ per day
Land was 8$ per acre
Average Houses cost 800 days of unskilled labor (800$)
Rent for a "Spacious apartment" with lots of bells and whistles was 50$/yr (25-100$/yr) so about 50 days of labor per year.
Now, look how far we've fallen in the last 200 years:
at 100$ a day for unskilled labor
The average house now costs 3000 days of unskilled labor plus another 2000 days for property taxes over 50 years. -> that's 5000 days almost 6 times more than 200 years ago.
Apartments: for 50 days of unskilled labor, thats 5000$ a year, you couldn't even rent a room for that much.
* The spacious apartment Henry described included the following: "Rumford fireplace, Venetian blinds, Copper pump and many more things"
Our standard of living for providing shelter has dropped so significantly, that now it takes 30 years to pay off a house whereas back then it took only 10 years, with higher interest rates too! thoreau felt even this was too long and too much of burden, so we went off into the woods and built himself a nice little cabin for just 28$ (cost of building material)
And yes, they didn't have electricity and some of the things we have today. so, there are some differences.
Did we simply get worse at building shelter? No, of course not. The problem is all regulation and zoning and land use policy. Are our regulations so precious that we would give up so much?
Shelter and housing whether its for business or residential doesn't need to be so scarce or hard to come by: it's a political choice people have made.
I agree it's those damn regulations like lousy "worker protections" and boring stupid taxes like SS and "unemployment" back in my day you'd show up to a group of men pick out the 5-10 strongest and give em 5 bucks at the end of the day if they survived. I don't understand why we can't go back to that, I mean I hear people complaining about lead all the time but I drank out of lead plumbing all my life and am fine.
I mean seriously this minimum wage crap to makes things so expensive, plus I lost half my workforce when I couldn't send 12 year olds down to the mines anymore.
Like I am sympathetic to your argument but to compare the standard of living between now and Therou using one variable and then blaming it on regulations is absurd.
Also you say no electricity very flippantly I don't know about you but the thought of not having to start a fire in the morning when it is 3 degrees outside in order to have warmth is appealing toe.
EDIT:
I think you're saying that the overall compensation for workers was lower then (due to fewer sick days, all the things you mentioned etc) than now due to lack of regulation. What the stats say, is that compensation was actually much higher back then than now. You got paid 1/800th of a house per day whereas today, you get paid 1/5000th of a house per day.
The regulations I'm talking about that account for the cost of housing are things that allow builders to provide more cost effective buildings. Afterall what other inputs are there: land, cost of labor, building materials and the cost of dealing with regs (non-labor related).
I mean if I could get a mid 1800s house for 800 days of unskilled labor (~80k) and hire someone to wire it for electricity (~20k) that would be an excellent deal compared to what's available.
don't forget, these days, that once you "pay for it", you'll pay another 50-100% of it's value in rent to the gov "property taxes" over the next 50 years.
> The problem is all regulation and zoning and land use policy
I don't think that's it. There is more than enough affordable housing and developable land in the US, but it's in places that nobody wants to live - because the local economy is crap. It's crap because jobs there are gone. They all moved to dense expensive cities.
The answer shouldn't have to be that we need to cram more people in those cities, and then require everyone there to get a masters in CS in order to live well.
Is it regulation though? Back then there were far fewer people and major social changes were happening - agriculture was rapidly transforming, industrialisation was was just starting, America was a frontier.
Now there are too many people trying to live close to available jobs, agriculture has mechanized meaning there are fewer jobs in rural locations, America industrialised then peaked and de-industrialised a bit, companies are automating processes. All these changes, I don't think you can confidently point to regulation as a single or primary issue.
Rather than look that far to the past, it would probably be better to identify policy that can help in the present and future. Sure, the past can provide lessons, but we can't idealize it or just transfer what worked when there were only 9 million people in the USA.
it's true, population growth is a huge burden to prosperity. but i think it could be mitigated by building more and smaller cities, say in the 10k to 50K range. all you need is to provide companies with incentives for the first 10 or 20 years. Once the jobs go out there, the population will follow.
but it's also alot more than just population growth. you'd think there would have been at least some technological advancements in the last 200 years that could drive down the cost a little bit and instead we're up x2 to x3 or more in some areas. Something has gone seriously wrong.
House size must also play a factor. I did a quick search and it appears to play a major factor and house sizes have gone up massively. Takes longer, more material, more people to build those McMansions with all the crazy gables.
Prefab houses can go up pretty quickly but they don't seem that popular. If they were more popular then maybe they'd gain a scale that would make them a much cheaper option.
You understand that the relatively low cost of living until the last 50 years or so was built on the systematic oppression of minorities and women, right?
That's an interesting theorey. If it's correct that could explain it.
But, I just checked the demographics in Massachusets in the 1800s and it shows that there were 0 slaves. And it looks like minorities were in very very small numbers:
https://en.wikipedia.org/wiki/1800_United_States_census
I don't think the labor supply of oppressed minorities was influential enough to drive down the cost of labor. Yes, for railroads sure but not for construction of buildings.
Oppression is not localized. A country or company that profits from plantations can reap the benefits from far away. As a simple example, think of sugar plantations in the Caribbean being exploited by men across the ocean.
Are you claiming there are no other sources of price changes between now and 200 years ago than the social changes for women and minorities? And that the changes from the last 50 years or so caused the 6x price increase in housing?
Maybe that would be an explanation for USA, except that the same phenomenon occurs in many other countries, all over the world, where the current generation is no longer able to buy houses as easily as their grandparents, even if in those countries it cannot be said that 50 years ago or 80 years ago there was any kind of systematic oppression of minorities and women, which could have affected in any way the ratio between house prices and salaries.
> In September, rent delinquency was at a six-month low, as optimism for Q4's earning potential was high and some small business owners reported increased sales.
> But now, a month later, 37% of small business owners in the U.S. were unable to pay their rent in full and on time in October, compared to just 30% in September.
So 30% was a six-month low, and 7% more is a record surge. This implies that a surprisingly large percentage of small business owners are always behind on rent.
Another thing to remember is that the landlord gets paid last - if you miss a wage payment to your staff the local government will crawl right up your arse and explode, if you miss a tax payment the IRS will do something similar (though a bit later). If you start stiffing your suppliers you'll have nothing to sell, and if you fall behind on utilities you'll get them cut off.
But if you stiff the landlord he's not going to evict you right away, especially if you make a partial payment (note the "in full") and he has nobody better to rent to, anyway.
> But if you stiff the landlord he's not going to evict you right away, especially if you make a partial payment (note the "in full") and he has nobody better to rent to, anyway.
I'm not shedding tears for landlords. Most of them charge exorbitant rent while still enjoying absurdly low interest rates of the last decade on their loans and doing the bare minimum (or none at all) of maintenance or investment into improvements (e.g. bring electricity and water grids or insulation up to code).
I seriously hope that the current market crash brings down rents massively to affordable prices, but as long as landlords can get tax advantages for un-rented units especially large corporations don't have an incentive to lower rents - it will take a lot of no or partial payments to force their hands. An alternative would be vacancy taxes, but these are hard to pass if half the legislators are bought off by large real estate investors and their banks.
Commercial landlords are often renting triple net to big companies, and smaller businesses sublease from the larger ones (those stores you see inside Walmart are an example, but the stores stuck on the outside of larger stores are often that way, too).
It's part of the reason every valuable downtown is now coffee shops, banks, and lawyer's offices, nothing else can pay the rent (best use? probably from a money perspective, not from any other).
> It's part of the reason every valuable downtown is now coffee shops, banks, and lawyer's offices, nothing else can pay the rent (best use? probably from a money perspective, not from any other).
The problem is now that there are no actual shops left because they can rent, community centers end up dead in a vicious cycle as when large traffic attractors leave, the smaller shops that would catch random passersby don't have passersby any more.
To make it worse, city governments usually don't have any way (e.g. via zoning) to regulate what precise kind of commercial activity is allowed in a property - the result is what you describe.
That's a matter of enforcement and audits. The problem is IRS [1] (and their equivalents in other Western countries, e.g. Germany [2]) are horribly understaffed which means that small businesses get hit the hardest by audits, while large-scale tax fraud gets ignored routinely - simply because fighting a large corporation is more expensive for the IRS as the effort required to sift through the data is way higher and the corporations have a ton of very expensive lawyers on retainer that can drag out cases for years.
There's an easy way to go about it – keep increasing funding while every incremental dollar still has a positive ROI, and then stop. There's probably no other government agency where you can measure the value of an employee so objectively. By all measures we are very far from that limit.
Suppose each new IRS agent costs $100K all-up. If they bring in just $100,001 (across direct enforcement and secondary compliance), is that a good expansion of the federal government?
What if each agent cost $100K and was bringing in $900K? Would that be worth it to you? Because that's what the Congressional Budget Office's estimate actually is. https://www.cbo.gov/publication/57444
> What if each agent cost $100K and was bringing in $900K?
From the first paragraph of your link: CBO estimates that portions of the Administration’s proposal to increase funding for the IRS by $80 billion over the 2022–2031 period would increase revenues by approximately $200 billion over those 10 years.
Later in the article is the argument that the IRS says previous multiples were 5-9x at peak and then immediately goes into why those numbers would not hold for future incremental investments in enforcement.
So, no, CBO doesn't estimate that it's a 9:1 return.
~2.5:1 is a far cry from your $100,000 cost with $1 return though, and GPs point still stands: increasing funding, even if just until the return is ~1.5:1 (less than the guesstimated ~2.5:1), is clearly a sound investment.
Even a 1.1:1 ROI is still a sound investment - non-compliance with taxes usually closely coincides with other criminal activity like wage fraud, employing undocumented people, selling re-labeled expired meat or environmental crimes like improper waste disposal.
By regularly auditing especially large employers, the incentive for companies to commit these crimes because they'll get away with it suddenly also goes away. Simply said, if you can make an extra million dollars a year in profit, your company will be fined 100k if caught, and your company has an audit chance of 1 in 20 years, you can expect 19.9 million dollars in extra profit over that timeframe. Now, assuming an audit every five years, you're at only 4.9 million dollars of extra profit and the high chance of getting caught again and getting a harsher sentence as a repeat offender.
Regular tax audits have far-reaching side effects.
That wasn’t my estimate of the actual IRS plans but rather a clarifying/rhetorical question of an up-thread hypothesis that we should expand the IRS until there is de minimus marginal income. Your issue is with their idea, I think.
I am somewhat sympathetic to your view, but I wonder if these are simply the annualized costs or a more accurate reflection of net present value. Do they take into account pensions and promotions?
If we hire 10k novice IRS agents, I imagine their annual cost will be quite low for the the first years and/or decades. however, At some point it will go negative.
> If we hire 10k novice IRS agents, I imagine their annual cost will be quite low for the the first years and/or decades. however, At some point it will go negative.
We can extrapolate their cost though. Payment rosters and pension contributions for government jobs are public, which means you can do a worst-case estimate and go with the cost basis of the highest-paid position that they can reasonably achieve in their career.
Additionally, a lot of them are replacements for people who will go into retirement or quit, so as people get promoted, other people leave, freeing up their salary budget for the new promotee. (Pension budgets are a different beast because they obviously depend on how long the person lives)
I absolutely believe it can be done no question. I was just wondering if the number is actually reflect that. The cynic and me suspects that depends on whose numbers and which side of the opinion they are on.
That said, I think for the most part this is a political issue because of the taxpayers. Many if not most people find taxes stressful and don't want more Auditors looking into theirs.
You can say that they will only audit corporations or high value returns, but the little guys will always worry that it frees up more resources to go after them
A chunk of the 87k are simply replacement for old IRS staff retiring or quitting. And is it really an "expansion" when the IRS historically has had that amount of staff, got intentionally bled dry by Republican presidents to prevent the IRS from investigating their donors and friends, and is now only returning to the prior norm (and even then, likely not enough to actually fulfill the duties)?
And the employment payments increase by close to $10B/yr from this expansion alone plus the number of employees (and therefore families prone to vote for expansion of federal employees and/or pay/benefits also increases).
The federal government gets larger as a result of this. That might be OK, but we shouldn’t pretend it’s not the case.
Whatever is needed to do their job in a fair manner, obviously. Current plans are at 87.000 new employees [1], although a bunch of that is replacement for workers aging out or quitting due to being overworked [1]. The IRS actually used to have 117k employees back in 1992 with fewer taxpayers [2] (both due to population growth and due to women entering the workforce as a result of the breakdown of gender roles / SAHMs). It's estimated that bringing the IRS up to decent staffing levels could bring in 204 billion dollars at a profit of 124 billion dollars - so the ROI on each new agent or staff is about 50%. That's a margin way better than most companies have!
At least to me, a partial cause for that is the Scientology "church" in the 1970s and later [1]. When the IRS backed down due to their threats instead of hitting them with fines, that sent a very bad signal: if you're big and aggressive enough, we'll let you continue making a joke out of the tax code and focus on smaller fishes instead.
That awful track record has a lot to do with priorities driven by political talking points and who has the power to complain about the IRS.
The book _Perfectly Legal_ by David Cay Johnston has a good chapter on this. (The book as a whole has its ups and downs, but the history of IRS management I found particularly interesting.)
I can't speak for all business owner, but as a business owner I signed a 5 year lease with an option to renew...so I know my rent price 10 years out. My price only changes at the 5 year market and I knew it when signing the lease.
Who are these people where their rent changes 6 months? When we looked around these are fairly common terms...
I mean technically our rate increased last year so we are part of some, statistics but it's meaningless.
Isn't this testing the elasticity of rent prices? Some of what's going on inflation wise is that companies are finding their prices to be more elastic than they previously thought. It seems that we are entering the edge of elasticity with the potential that the whole thing might snap.
Just 3 weeks ago people were mocking me about the incoming recession [1]. These companies that can't pay their bills are going to lay-off staff just to stay afloat. Unemployment is about to skyrocket.
> These companies that can't pay their bills are going to lay-off staff just to stay afloat.
Companies have been aggressively cutting staff for a very long time, often requiring a single person to do the work of two of three people. How much can they lay people off and stay in business at all?
Black Friday is typically the day when business' get 'into the black' for the year. Things typically get tight in October with having to both prepare for a November increase while being a lean month.
This doesn't seem all that different than the position all of the startups and small businesses I have worked at or had insight into from the past.
What is different is the Fed, media, and large corporations are trying really really hard to talk down the economy into a fear based recession this time, complaining loudly about the growing cost of labour and how that is the end of the world, yet bragging about record profits taken 'under the guise of inflation' on their earnings calls.
I'll go with consumer sentiment and historical knowledge over an artificial narrative and fake hysteria along with a Fed push intended to increase unemployed to keep down labor costs for companies posting record profits in this horrible (yet record setting) economy.
The commercial real estate market is basically nothing like what anyone not in the commercial real estate market thinks it is.
Everything that applies to single family home rentals and even much that applies to apartment/multi family rentals is out the window. (Though arguably triple net leases would make sense in many cases vis-a-vis home rentals.)
Vacancy taxes would also be the easiest thing in the world to get around, you'd just blanket the world with Spirit Halloween stores.
My understanding is that you don’t get Spirit Halloween everywhere precisely because of some of the commercial-specific idiosyncrasies like being able to postpone bank payments for unrented properties + equity being based on the current lease price (or last lease price if unrented), both of which encourage keeping commercial rents from lowering and incentivize keeping them unrented if the alternative is lowering prices
"Just" seems to be doing a lot of work in that last sentence. I'm sure you know the idea behind vacancy taxes is to incentivize owners to offer rents that not only serve nominal purposes in making finance/accounting work but actually get takers so the space is productively used and mitigate any weird dynamics where there's simultaneously empty space there's no takers on and would-be renters who can't find anything they can afford, a situation which presents an apparent market failure.
If Spirit Halloween or whatever equivalent you're imagining is offered a rent they're willing to pay, then there is no market failure and policy is working.
How does that represent "getting around" the vacancy tax? Are we imagining that owners are creating Shell Game Seasonal Retail Inc™ and renting to themselves?
Spirit Halloween, small churches, etc all rent at far below market rates for various reasons, one of which would be "avoiding vacancy taxes". The key is they're always month-to-month and can be booted quickly if a "real" client shows up. I was with a smallish business that rented the other half of our building this way as temporary warehouse space, for something like 10% what we were paying for the warehouse space on "our side of the fence".
I think they could be structured in such a way as to at least help the situation, but they'd for certain be gamed.
My (relatively uninformed) understanding is that they are only able to charge these markups because of a similarly "all time" lack of inventory, leading to scarcity of vehicles to sell. The increase in transaction value isn't making up for the decrease in transaction volume.
why ?
I think people have the right to start a small venture, like out of all the things to hate, why would you hate people not serving megacorporations ? I am genuinely baffled and would like to know where this opinion comes from.
1. Small businesses under a certain size avoid many labor/work related laws - for example, the requirement to buy healthcare doesn't apply below 20(?) employees.
2. Small businesses almost always have actually worse support overall, but they get away with it because they can "fire" customers. Walmart has a better return policy than almost anything else in the retail world, for example, because they can eat the costs related to idiots scamming them.
3. Small businesses often get away with treating their employees worse than larger ones, because nobody is going to care of Jane's Coffee Shop stiffed a waitress on tips on Wednesday, but if it happened at a Starbucks it'd be on the national news that night.
4. Small businesses enable people and families to be relatively independent of "large control" which is absolutely not desired by certain groups.