even from a liberal capitalist lens, it makes no sense to allow rents to get so out of control as they have in so many north american cities.
most businesses, as it turns out, have to pay rent too - and when their rent goes up, they have to either eat shit, cut costs, or pass the additional costs onto their customers. the first option is bad for the business, the second option is bad for the workers, and the third is bad for the consumers. as rents continue to rise, these problems amplify.
soon, this increase in the cost of goods, combined with the increasing cost of housing, makes most people in the city unable to afford goods and services. if rents remain inflated, businesses can only lower prices so much before the production of those goods and services become unprofitable. when this happens, two "solutions" present themselves...
Solution A: move a bunch of rich people into the city. this is what basically every major NA city is doing right now. as rents increase to the point where most of the city's original residents can no longer afford to live there, wealthier households move to this now highly desirable city. since the new residents bring way more money with them, business can return to usual. for now.
as economic activity returns to a booming state, landlords see this as an opportunity to increase their own profits. so, they continue to raise rents. and so, the cycle repeats - rents raise, costs of living and doing business increase disproportionately to average income, current residents are displaced, more monied people move in, blah blah.
to paraphrase margaret thatcher, the problem with capitalism is that you eventually run out of other people's money. once costs of living and production become so high that not enough people can occupy the city, "solution" B forces itself into reality.
Solution B: die. my prediction is that, if things continue on the path they're on, the economies of every major city in north america will utterly collapse. capitalism depends on people actually being able to produce goods and services. if nobody can be a capitalist, the system can't function at all. you've just sold your car engine. so why isn't anything being done about this?
the other problem with capitalism is that if you try and do something responsible, but less profitable, you risk someone else taking the opportunity to be irresponsible and more profitable - and now the irresponsible thing has been done, and you're behind in the competition. because of this, the only way to reliably force positive change is to have people in power who are as personally disconnected from the market as possible.
we don't have that here. an astonishing portion of north american politicians have huge personal stakes in real estate, whether that be through investments in companies like blackrock or through owning a bunch of properties for sale/rent themselves. because of this, any countermeasures against skyrocketing real estate prices directly hurt their personal wealth. and besides, they're mostly old farts who'll be long dead by the time this whole sham goes up in flames, so what do they care?
the solution, as always, is communism. thanks for coming to my ted talk.
