Comment by imightbebatman
2 hours ago
I have a similar PoV. I think rent seeking without sufficient checks is one of the biggest problems in our economy.
But the underlying problem that people aren't paid enough is still true. Outside a few fields, most people are underpaid. It's even more stark when measured against productivity increases during the same time periods. That wealth went somewhere. It wasn't to most people.
People have a tendency to get upset when they realize these kinds of things.
From outside it doesn't look like not being paid enough. It looks like affordability problem. Prices in general are too high.
Rents in general are part of this. Both for housing and commercial property. Somehow getting profit from both rent and appreciation is the goal of the system.
Well that is what population voted for and choose not to overthrow system for so maybe they deserve it.
Underlying rent are other things going up - property taxes, input costs like labor and materials, and insurance.
While we must be mindful of greed and abuse, we need to include all underlying costs before just assuming people are cranking up rents. I'm not a landlord but I own property and the costs are gotten vicious lately. Labor is expensive, materials are insane, energy costs, and now insurance are suffocating. And in states with high property taxes, watch out.
Energy is one variable. But have things gotten less efficient as things keep going up in prices? Is more labour needed to produce the same? There is stuff like regulation forcing more expensive things. But in general if there was efficiency gains things should keep the same price or drop. Somehow this isn't really happening very well.
But my thesis really is that these things are not underlying the rents. But rents are actually underlying these costs. And well in general the rent seeking economic process build on ever growing valuations of everything.
Restaurant operations is one of the places where it's most clear the rent is the biggest problem.
You can say restaurant workers need to be paid more, and ok sure, but where is that money coming from? You pay labor, food suppliers, rent, utilities, taxes, and... where exactly is the money to pay workers more coming from?
With the number of empty storefronts in my city (not to mention restaurant closures) it's clear owners aren't making money hand over fist or there would be many more restaurants.
Restaurant workers in my experience are more likely to go to more restaurants and they can't because... their rent is too high and the price of food at restaurants is too high.
The common denominator with all of it is money being sucked away from people doing work and people hiring work by... rent seekers.
The "labor share of income" is exactly this. How much money is getting sucked out of the rest of the economy to prop up the do-nothing class. Retired people whose retirement investment was selling a house for much more labor than they bought it for and real estate owners doing as little as they can to maximize income they aren't earning.