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No one, rich or poor, should be paying more taxes until we get responsible government. Solyndra, "Fast and Furious", Fannie Mae/Freddie Mac, are all examples of why you should not contribute one more dime to this irresponsible clown car government.
Hi jimmyP,
No way out. You are paying taxes through wage deflation and finance inflation. The Wall Street owned guberment just takes money. They financed their campaigns and bought the dollar maker. That is why I insist the only hope is state governments. The Fed is lost. Credit = sovereignty so state charted banks are the best way out.
You are being fooled. You think mortgaging your house gives you money. You paid into the house to build equity. You also paid more for the house because you had to bid against people who don't even have money because they can go into debt. If the house was not inflated in price, you would have had your money without having to borrow.
One of the reasons why your property is worth what it is is because you "borrowed" against it. The bank prints money, and then you buy it. So you basically bought it with money neither of you had so you just caused inflation. That will inflate other homes which will start the process all over again. Since the highest bidder will win, it will generally be the one who goes into debt owing on most of the house. That means that finance collects rent, printing money on an asset where you are responsible for the losses. That did nothing but make them landlords because they have a bank charter. This is generally with no risk to the bank because the house is collateral. However the banks got so greedy, that they starting using fraud so that their own collateral was a lie. What value are these land lords adding? Nothing.
What are you talking about? I don't own my primary residence, nor do I have a mortgage on my home. I rent a fair priced condo in Chicago. I own only investment properties. I own apt. buildings and commercial buildings and I use the income stream to finance my business which sells products which creates capital which is used to pay employee salaries and benefits. My property is an income stream only and my primary goal is not to build equity (it's just nice if it happens). I get income from property so I may reinvest it in business and other properties. I also do not overbid against other people. I have bought distressed properties and approach owners on my own to buy their property - no other competitive bidders or agents involved.
Yes, I borrow money to invest in and run my business. It has been to my (and my workers) financial advantage to do so. Because of my cashflow/receivables and collateral property, I am able to borrow money at a very competitive rate, renegotiating whenever the rates go down. I have used that borrowed money to build a successful American business. My ability to borrow money has been to the financial advantage of my employees to whom I pay a salary. It is also to the advantage of my vendors - American manufacturers from whom I buy parts which helps them pay their employee salaries.
As I said before, many "land lords" are self-made entrepreneurs providing quality properties at fair market price and assuming the maintenance cost and risk for those unable or unwilling to do so. Many "land lords" are reinvesting their earnings into building local businesses and paying salaries which improve local economies. And yes, printing more money causes inflation with the risk of raising the cost of money for small business employers (who employee the most Americans). Less financing available for small business investment leads to the hiring of fewer workers. And small business financing and assets are often tied to real estate.
What are you talking about? I don't own my primary residence, nor do I have a mortgage on my home. I rent a fair priced condo in Chicago. I own only investment properties. I own apt. buildings and commercial buildings and I use the income stream to finance my business which sells products which creates capital which is used to pay employee salaries and benefits. My property is an income stream only and my primary goal is not to build equity (it's just nice if it happens). I get income from property so I may reinvest it in business and other properties. I also do not overbid against other people. I have bought distressed properties and approach owners on my own to buy their property - no other competitive bidders or agents involved.
Your rental income does not produce capital when you earn it. You simply decide to purchase capital with it. You could just sleep in all day. It does not change the affect of land rents in the economy.
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Yes, I've borrow money, but it has been to my financial advantage to do so. I've only borrowed at very low interest rates, refinancing whenever the rates go down. It has also been to the financial advantage of my employees to whom I pay a salary. It is also to the advantage of my vendors - American manufacturers from whom I buy parts which builds capital used to pay their employee salaries and benefits.
Again, all things being equal, the highest bidder will be the ones who take on debt. That is what's happened and the last one in defaults because asset prices which don't produce any capital will always stall. It does not matter how responsible the last one in is. Printing money to buy real estate will always lead to this equity draining boom, bust cycle. It must end in some level of foreclosure and more land lords.
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As I said before, many "land lords" are self-made entrepreneurs providing quality properties at fair market price and assuming the maintenance cost and risk for those unable or unwilling to do so. Many "land lords" are reinvesting their earnings into building local businesses and paying salaries which improve local economies. And yes, printing more money will raise interest rates which will raise the cost of money for small business employers (who employee the most Americans) like me. We will then have less financing available for business investment thereby hiring fewer workers.
You made your money as a capitalist and you are purchasing your way into the rentier class. You are mixing apples and oranges because you are a member of two classes. Your assets are also artificially inflated because they may be purchased through finance. See how valuable they will become at 20% interest rates. Eventually labor and capital will not be able to purchase their way into the rentier class. Americans used to own their own land so it was largely unnoticed, unlike Europe were the laws of primogeniture consolidated land and maintained feudalism. Its nothing new, it keeps happening. Same thing happened in Japan. Rental overhead keeps rising and its being funneled to the FIRE economy.
This is not my idea. This has been observed for quite some time from the foundations of western economic thought in classical economic literature.
Michael Hudson / Real Estate, Technology and the Rentier Economy: Pricing in excess of Value, producing Income without Work (http://www.cooperativeindividualism.org/hudson-michael_the-rentier-economy.html - broken link)
Analyzing growth in labor and capital productivity, William Baumol he has calculated that innovation carried out since 1870 accounts for nearly 90 percent of today's GDP, including even the "steam engine, the railroad, and many other inventions of an earlier era."[3] But the Forbes lists of the world's wealthiest people shows the degree to which most wealth today consists of rent-yielding property. The Federal Reserve's reports on "Balance Sheet of the U.S. Economy" (Table Z of its quarterly flow-of-funds statistics) show that real estate remains the economy's largest asset, and further analysis makes it clear that land accounts for most of the gains in real estate valuation. Most of the remaining U.S. wealth consists of other monopolies - fuels and minerals, the broadcasting spectrum, Microsoft and kindred intellectual property rights.
Your rental income does not produce capital when you earn it. You simply decide to purchase capital with it. You could just sleep in all day. It does not change the affect of land rents in the economy.
Yes, I use rental income to invest in capital producing endeavors. It is a common way to finance small business and it is beneficial for my local economy.
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Originally Posted by gwynedd1
Again, all things being equal, the highest bidder will be the ones who take on debt. That is what's happened and the last one in defaults because asset prices which don't produce any capital will always stall.
Yes, that happens. And properties are also bought with cash/no debt. Or, they're bought without competitive bidders which can drive down price freeing up funds to be invested in capital building activities.
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Originally Posted by gwynedd1
You made your money as a capitalist and you are purchasing your way into the rentier class. You are mixing apples and oranges because you are a member of two classes.
I made money as capitalist and land owner concurrently. Are you a Marxist? Just curious. As I said before, I do not believe in such distinct separations in social class. It is a gray area with class being a function of education, wealth, lifestyle, career choice, bearing, family, locale, as well as role of property owner / capitalist / laborer. I am a member of 3 classes, depending on where I spend my day.
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Originally Posted by gwynedd1
Your assets are also artificially inflated because they may be purchased through finance. See how valuable they will become at 20% interest rates.
My main asset is my business value which I create and my skills which may be used for positive, opportunistic purposes. At 20% interest rates, I will change my plan and find another way to build capital.
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Originally Posted by gwynedd1
Eventually labor and capital will not be able to purchase their way into the rentier class.
This is not my idea. This has been observed for quite some time from the foundations of western economic thought in classical economic literature.
Yet, trends show (see also article referenced in previous post), that it is the global working (labor) wealthy producers (capital) who are the ones moving into the elite classes. Lucky for me, times have changed and education, hardwork, and innovation can enable more mobility between social classes.
"But in contrast with the landed, and often leisured, aristocracies of previous eras, the elite now consists mostly of “the working rich,†in the words of Emmanuel Saez, an award-winning economist at the University of California, Berkeley, who is one of the leading students of income inequality.
In 1916, Mr. Saez’s research shows, the richest 1 percent of Americans received only one-fifth of their income from paid work. In 2004, in contrast, paid work accounted for 60 percent of the income of that same sector." Working Wealthy Predominate the New Global Elite - NYTimes.com
Eisner increased the value of Disney from 1 Billion Dollars to over 50 Billion Dollars and received compensation of half a billion dollars to do so. Are you telling me that the Disney employees were at a disadvantage, because Eisner made the company's value increase 50 times and he recieved 1/100th of the wealth he increased during his tenure?
If Disney employees are at such a big disadvantage because of Eisner's pay, why has the overall amount of people employed by Disney actually increased on his watch?
Should the 47% that do not pay federal income taxes pay at least 1% of their salary as federal income taxes so they have a stake in what is going on? America has the most progressive tax structure in the world according to a few international studies. The top 1% pays about 38% of the federal income taxes and the bottom 40% tends to make a net profit on federal income taxes.
No one, rich or poor, should be paying more taxes until we get responsible government. Solyndra, "Fast and Furious", Fannie Mae/Freddie Mac, are all examples of why you should not contribute one more dime to this irresponsible clown car government.
Good observation! That is what does amaze. People complain so much about the greedy rich people and turn around for the government to make laws against them. Many of the government they turn to are walking hand in hand with the same greedy people they hate.
All they do is really compound the problem. They hurt the economy with many wasteful and inefficient government programs. Take care.
Yes, I use rental income to invest in capital producing endeavors. It is a common way to finance small business and it is beneficial for my local economy.
What you buy with money is irrelevant. An extortionist can invest in capital endeavors. Land squatting doesn't produce goods and services even if you bought it with money earned with capital.
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Yes, that happens. And properties are also bought with cash/no debt. Or, they're bought without competitive bidders which can drive down price freeing up funds to be invested in capital building activities.
You seem to have no idea how to define what you are doing economically. You are proving my point in the very business you conduct. When you buy land no one wants its means land is cheap, and more can be spent on capital improvements. If the land you bought were expensive, then it would all go as interest to finance. Cheap land rents always produce more wealth. That is why the industrial base has been moving south in search of cheaper land. That is also why we know have a rust belt in decline.
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I made money as capitalist and land owner concurrently. Are you a Marxist? Just curious. As I said before, I do not believe in such distinct separations in social class. It is a gray area with class being a function of education, wealth, lifestyle, career choice, bearing, family, locale, as well as role of property owner / capitalist / laborer. I am a member of 3 classes, depending on where I spend my day.
I always enjoy being called a Marxist when discussing the economic principles of the likes of Adam Smith. Its actually quite common. Very few people seem aware of how much he warned about monopoly capitalists. So did Marx of course. The difference is I read his works while other people take a few quotes out of context to support their fire and brimstone sermons on ersatz economics. Nearly all romantic economists discussed this and people pretend what they are doing now was compatible with their principles.
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My main asset is my business value which I create and my skills which may be used for positive, opportunistic purposes. At 20% interest rates, I will change my plan and find another way to build capital.
Has nothing to do with economic rent.
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Yet, trends show (see also article referenced in previous post), that it is the global working (labor) wealthy producers (capital) who are the ones moving into the elite classes. Lucky for me, times have changed and education, hardwork, and innovation can enable more mobility between social classes.
Where land rents are cheap that is happening. However huge portions of the productive economy are being skimmed and its accelerating.
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"But in contrast with the landed, and often leisured, aristocracies of previous eras, the elite now consists mostly of “the working rich,†in the words of Emmanuel Saez, an award-winning economist at the University of California, Berkeley, who is one of the leading students of income inequality.
In 1916, Mr. Saez’s research shows, the richest 1 percent of Americans received only one-fifth of their income from paid work. In 2004, in contrast, paid work accounted for 60 percent of the income of that same sector." Working Wealthy Predominate the New Global Elite - NYTimes.com
There is more meritocracy in Bill Gates being at the top than the Duke of Bedford.†Even Emmanuel Saez, who is deeply worried about the social and political consequences of rising income inequality, concurs that a defining quality of the current crop of plutocrats is that they are the “working rich.†He has found that in 1916, the richest 1 percent of Americans received only one-fifth of their income from paid work; in 2004, that figure had risen threefold, to 60 percent.
Utter nonsense. Bill gates came from an old banking family and used legal frame works to set up monopolistic barriers. First came a law before any political even knew what an operating system was that all computers must be sold with one. Then he forced companies into contracts that sold PCs to pay Microsoft per unit sold, net for every OS sold. That is why superior operating systems like DR DOS would always be more expense because even if it were a cheaper and better OS it would add to the cost of the computer.
If that is their example, its far worse than anyone thinks.
Next example
Peter Peterson, for example, is the son of a Greek immigrant who arrived in America at age 17 and worked his way up to owning a diner in Nebraska; his Blackstone co-founder, Stephen Schwarzman, is the son of a Philadelphia retailer. And they are hardly the exceptions. Of the top 10 figures on the 2010 Forbes list of the wealthiest Americans, four are self-made, two (Charles and David Koch) expanded a medium-size family oil business into a billion-dollar industrial
Exactly what I am talking about, conflating wealth creation with minerals. While capital is involved, huge amounts of wealth are simply due to control of mineral rights. Its like someone who owns a grove of apple trees with a local cannery. What is the wealth of the operation? How much is due to the apple grove? What good is a cannery without apples? Which one represents human progress more? In modern day economic accounting, they call it all "capital", and lower taxes to encourage "innovation" . Appreciation of the apple grove is not capital appreciation, its land rent. You could have the best oil extraction technology there is, but without the oil, its worthless. So is a country full of the Beverly Hills Hillbillies what we are looking for? Should we tax them at a lower rate than money spent on education because they should be rewarded for their coon hunting creativity?
Then just as I said, they take it out of context name dropping John Stuart Mill.
To grasp the difference between today’s plutocrats and the hereditary elite, who (to use John Stuart Mill’s memorable phrase) “grow rich in their sleep,â€
John Stuart Mill would have clearly seen Peter Peterson as having gained share in a company whose wealth is largely from minerals as defined by the very industry. The latest oil extraction technology is extremely perishable which is why the actual capital will never represent most of its value. Its the same reason why a computer worth 2k today is nearly worthless in 3 years. The question to ask is can they sleep. Any money you make while sleeping is essentially economic rent and certainly should not be taxed at a lower rate than labor.
Your article proves the point. Rent is now conflated with capital, just the way the rentier class likes it.
What you buy with money is irrelevant. An extortionist can invest in capital endeavors. Land squatting doesn't produce goods and services even if you bought it with money earned with capital.
You seem to have no idea how to define what you are doing economically. You are proving my point in the very business you conduct. When you buy land no one wants its means land is cheap, and more can be spent on capital improvements. If the land you bought were expensive, then it would all go as interest to finance. Cheap land rents always produce more wealth. That is why the industrial base has been moving south in search of cheaper land. That is also why we know have a rust belt in decline.
I always enjoy being called a Marxist when discussing the economic principles of the likes of Adam Smith. Its actually quite common. Very few people seem aware of how much he warned about monopoly capitalists. So did Marx of course. The difference is I read his works while other people take a few quotes out of context to support their fire and brimstone sermons on ersatz economics. Nearly all romantic economists discussed this and people pretend what they are doing now was compatible with their principles.
You are stuck in antiquated categories of who is a capitalist vs land owner vs laborer and you see no gray areas between the classes. First, I was an overbidding/over mortgaged home buyer, now I am some land squatter. I am a land redeveloper. Big difference. I do not squat on land and do nothing. I use it to provide labor (my contractors), services (lease/maintenance), and income which funds the building of capital. I buy existing properties and develop them for utilitarian purposes as well as profits to fund beneficial capital building businesses.
I redevelop apt. buildings which are used to house people who are unable or unwilling to buy a house. This service provides affordable housing, home maintenance, and provides tenants with financial flexibility. Housing people in existing city multi-unit dwellings is better for the environment as it reduces the demand for ripping up forests/farmland to construct new tract housing. It reduces commuting times thereby reducing dependence on fossil fuel. I redevelop commercial properties which are economically leased for American manufacturing operations which creates capital and hires workers. Renovated buildings produce a positive social, environmental, and financial impact on the local community. Did I mention that I retrofit my buildings with American made energy efficient products which is also good for the environment and American employment?
But you're right, I'm just a greedy land squatter who is causing inflation.
I did not call you a Marxist. I asked if you were one based on all your talk of capitalist vs rentier classes. It doesn't really matter as I don't stereotype people into categories, I listen to their individual views. I was just curious if this was driving your political views.
I am proud of what I am doing and believe it is good for the American economy, American workers, tenants/customers, local communities, local schools to whom I pay taxes, local retail, and the environment. Every day, I see very positive things in the lives of people who are affected by my business decisions and ability to borrow money and produce products, services, and capital. You may be happy spending your days studying Marxism, picking gourmet thistle, and pontificating against the American capitalist and think it is of great benefit to society. That is not how I choose to lead my life. Thank you for the interesting discussion.
You are stuck in antiquated categories of who is a capitalist vs land owner vs laborer and you see no gray areas between the classes. First, I was an overbidding/over mortgaged home buyer, now I am some land squatter. I am a land redeveloper. Big difference. I do not squat on land and do nothing. I use it to provide labor (my contractors), services (lease/maintenance), and income which funds the building of capital. I buy existing properties and develop them for utilitarian purposes as well as profits to fund beneficial capital building businesses.
I explained it clearly that the class lines were blurred because of a high rate of land ownership in the US, especially in the beginning. Now you are trying to explain it back to me? You simply can't seem to separate the concept of value like blue sky and products of human labor. You keep conflating them when the whole point I am making is that we keep conflating them.
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I redevelop apt. buildings which are used to house people who are unable or unwilling to buy a house. This service provides affordable housing, home maintenance, and provides tenants with financial flexibility. Housing people in existing city multi-unit dwellings is better for the environment as it reduces the demand for ripping up forests/farmland to construct new tract housing. It reduces commuting times thereby reducing dependence on fossil fuel. I redevelop commercial properties which are economically leased for American manufacturing operations which creates capital and hires workers. Renovated buildings produce a positive social, environmental, and financial impact on the local community. Did I mention that I retrofit my buildings with American made energy efficient products which is also good for the environment and American employment?
There is a land component to it, end of story. You keep going on and on about capital improvements..... Its as if you cannot tell a hand from a glove.
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But you're right, I'm just a greedy land squatter who is causing inflation.
I did not call you a Marxist. I asked if you were one based on all your talk of capitalist vs rentier classes. It doesn't really matter as I don't stereotype people into categories, I listen to their individual views. I was just curious if this was driving your political views.
That is because you are ignorant of economics. I already explained to you Adam Smith recognized the concept, and even your article mentions John Stewart Mill who was known as Utilitarian who was directly quoted. I keep mentioning how Adam Smith and John Stewart Mill is name dropped to promote the exact opposite of what they preached and then you call it Marxism. You are an almost perfect representation of the problem.
The difference between land owners collecting rent and sleeping, and collecting rent and buying capital is that both things are purchased with rental income. Someone is taking money winning the highest bid for something made by a god or the devil, but no man had consideration. Now this land rent is flowing to finance because they are purchasing the asset and paid with interest. If the bank "loans" you money for property, who holds the deed?
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I am proud of what I am doing and believe it is good for the American economy, American workers, tenants/customers, local communities, local schools to whom I pay taxes, local retail, and the environment. Every day, I see very positive things in the lives of people who are affected by my business decisions and ability to borrow money and produce products, services, and capital. You may be happy spending your days studying Marxism, picking gourmet thistle, and pontificating against the American capitalist and think it is of great benefit to society. That is not how I choose to lead my life. Thank you for the interesting discussion.
Its not Marxism as I clearly explained several times. That you keep repeating means you are using it as a smear. So I'll just call you a slum lord. Isn't that what owners of distressed properties are? I mean if you can just make these loose associations based on a single word like rentier, then distressed properties must mean slum lord. Does that suit you? Do you like that? That is what you did to me.
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