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Thread: Value Added to Society by Idle Shareholders and Landlords

  1. #31
    Spanish_Vicente sledger's Avatar
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    The use of "the society" instead of just "society" is so annoying.

  2. #32
    Spanish_Vicente sledger's Avatar
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    Quote Originally Posted by weldone View Post
    Not sure what is the point you're trying to make. By 'landlord' I am referring to people who own multiple properties and rent out most of those. How are people being allowed to own properties that they don't intend to use helping the society in any way?
    Because having somewhere to live is generally something most people find very beneficial.

  3. #33
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    Quote Originally Posted by sledger View Post
    RE: Landlords the risk is actually pretty severe.
    Note in my below reply previously I haven't questioned the severity of risk taken by landlords. While I questioned the severity of risk for most idle shareholders (in comparison to employees), my main question about landlords was different - why is this risk important to 'society' (yes that word again)? How landlords taking risk is helping the human civilization to grow?

    Quote Originally Posted by weldone View Post
    How does the society benefit from it?

    1. Idle Shareholders: When a Company fails, most of the employees lose their jobs anyways. Idle shareholders 'assuming the risk' doesn't help people working on the ground in such situations. As you surely know, in most such cases, employees incur far greater losses than idle shareholders in the long-run. An idle shareholder with a diversified portfolio incurs limited loss. But the employee with only one job loses his livelihood. Therefore, the main risk is being borne by the people who are actively contributing rather than those who are partaking in speculative investments.

    2. Landlords: What is the use of 'assuming the risk' of the market value of a property? What does the society lose if the 'market value' of a house drops? Nothing. What is the use of bearing such an imaginary loss that doesn't impact the society?
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    Quote Originally Posted by sledger View Post
    Because having somewhere to live is generally something most people find very beneficial.
    So if Mr. Donald Truck does not own 226 properties, Mr. Joe Bloggs and his family will have no place to stay?


  5. #35
    Global Moderator Spark's Avatar
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    Presumably, your rich landlords are the ones pouring capital into the housing market and stimulating further demand. Which means that more houses/apartments get built more regularly, which means that ordinary people have better and more affordable choices of places to live in good locations. And the additional activity in housing has spin-off benefits in a range of other industries.

    Whether this works in practice really depends, although I will say there are a bunch of cities around the world who could use reminding of the concept.
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  6. #36
    Spanish_Vicente sledger's Avatar
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    Quote Originally Posted by weldone View Post
    So if Mr. Donald Truck does not own 226 properties, Mr. Joe Bloggs and his family will have no place to stay?
    Yeah, short of them owning property themselves, or being able to rent a property from someone else, that is precisely what will happen.

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    Quote Originally Posted by Spark View Post
    Presumably, your rich landlords are the ones pouring capital into the housing market and stimulating further demand. Which means that more houses/apartments get built more regularly, which means that ordinary people have better and more affordable choices of places to live in good locations. And the additional activity in housing has spin-off benefits in a range of other industries.
    Quote Originally Posted by sledger View Post
    Yeah, short of them owning property themselves, or being able to rent a property from someone else, that is precisely what will happen.
    Nope. The real estate market would lose a large amount of value and properties would be more affordable.

    Quote Originally Posted by Spark View Post
    Whether this works in practice really depends, although I will say there are a bunch of cities around the world who could use reminding of the concept.
    Yes sort of
    Last edited by weldone; 06-03-2019 at 06:26 AM.

  8. #38
    Spanish_Vicente sledger's Avatar
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    Quote Originally Posted by weldone View Post
    Nope. The real estate market would lose a large amount of value and properties would be more affordable.
    Nothing said in my post suggested otherwise.

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    Hall of Fame Member harsh.ag's Avatar
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    weldone is essentially making an argument that rich people shouldn't be allowed to invest their money in multiple passive assets. Presumably, this is about increasing inequality driving up asset prices, I suppose.
    weldone likes this.
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    Quote Originally Posted by harsh.ag View Post
    weldone is essentially making an argument that rich people shouldn't be allowed to invest their money in multiple passive assets. Presumably, this is about increasing inequality driving up asset prices, I suppose.
    I know you liked this, but you do realize rich people don't necessarily have to buy these assets personally in their own names, don't you? They can just do it by creating a legal entity and doing it through that. Ain't no stopping that.

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    Quote Originally Posted by harsh.ag View Post
    weldone is essentially making an argument that rich people shouldn't be allowed to invest their money in multiple passive assets. Presumably, this is about increasing inequality driving up asset prices, I suppose.
    *important/useful assets (I have no problem if Jeff Bezos buys 90% of the world's gold), yes that's one of the two points I am trying to make. That's the point about landlords.

    The point about idle shareholders is different. It's hinting at a question about who should 'own' a Company..

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    Quote Originally Posted by harsh.ag View Post
    I know you liked this, but you do realize rich people don't necessarily have to buy these assets personally in their own names, don't you? They can just do it by creating a legal entity and doing it through that. Ain't no stopping that.
    Why not?

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    Quote Originally Posted by harsh.ag View Post
    weldone is essentially making an argument that rich people shouldn't be allowed to invest their money in multiple passive assets. Presumably, this is about increasing inequality driving up asset prices, I suppose.
    I think you could definitely argue that this would be the case in an environment where supply isn’t able to keep up for some reason. But IMO the main question there - outside of obviously massively constrained markets like Hong Kong - is why there are such constraints on supply in the first place.

    There are definitely situations where too much money being pumped in causes prices to rise in a really nasty way which prices out ordinary people and that has enormous social consequences down the line. But in the present day, most of this is just exposing the underlying issue which is supply and badly planned infrastructure.

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    Hall of Fame Member harsh.ag's Avatar
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    Quote Originally Posted by weldone View Post
    *important/useful assets (I have no problem if Jeff Bezos buys 90% of the world's gold), yes that's one of the two points I am trying to make. That's the point about landlords.

    The point about idle shareholders is different. It's hinting at a question about who should 'own' a Company..
    What if the one who *should* own the company isn't able/willing to provide the required capital?

    Quote Originally Posted by weldone View Post
    Why not?
    Because if you stop companies/partnership firms/etc from putting money in stocks and real estate, most of western civilization will have to be redesigned.

    Essentially, if you think rising asset prices are a bad thing, try living in an era with lowering asset prices and exult in the resulting stagnation. For that to work, a complete overhaul of how money and capital and law works will be required. Not going to comment on whether there are better alternatives or not, but you proposing this change means that you haven't thought the whole thing through to the end.

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    Quote Originally Posted by harsh.ag View Post
    What if the one who *should* own the company isn't able/willing to provide the required capital?
    Debt

    Quote Originally Posted by harsh.ag View Post
    Because if you stop companies/partnership firms/etc from putting money in stocks and real estate, most of western civilization will have to be redesigned.
    For real estate, just making renting out illegal will go a long way into achieving that. I want to see how many people buy 300 houses when renting becomes illegal.

    For stock ownerships, yes I agree that will require a major change in the system.
    Last edited by weldone; 06-03-2019 at 07:46 AM.

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