We’ll get to the housing shortage question, but a different question for you first. Where does wealth come from?
Ignore the fact that for some lucky people it comes from their parents. Wealth comes from an excess of income, which could be further simplified to wealth comes from selling time for more than is required to live today.
Tens of thousands of years ago, humans would spend their days finding or hunting enough food to eat and then resting before doing it again tomorrow. Food was income and we were getting enough to survive. Or we died.
Then we started farming and some of us could produce more food than we needed and the grains we grew could be stored for years. Food was still income, but now some of us could get more income than we needed allowing us to store the excess income. That income had been converted to wealth.
Those who could create wealth were able to use it to feed others in return for their time working growing more crops. So the wealthiest of our ancestors were able to convert the time of our poorer ancestors into even more wealth for themselves.
This pattern has continued for about 12,000 years and today the wealthy are able to convert the income of poorer people into more wealth for themselves in many ways. An increasingly popular method is buying and renting housing.
Since the turn of the century, the US has suffered a housing shortage that has got progressively worse. Many people can no longer afford to buy their own home. And the response of US politicians is to talk about the need to build more housing. Politicians in the UK offer the same solution for a similar problem there too.
But that won’t solve the problem in either country. FRED shows that the ratio of housing units in the US to the population is higher now than at anytime this century. The UK has seen a similar increase in the ratio of housing units to people too, even as the housing shortage has got worse.
The housing shortage is caused by wealthier people buying housing so they can rent it to poorer people and convert their income into wealth. As the saying goes, “money begets money”. Those who have wealth can use it to milk more wealth from poorer people. And building more housing will simply give the wealthy more opportunities to take the income of the poor and turn it into more wealth for the wealthy.
During COVID, there was outrage at businesses that increased prices to profit unfairly from their customers. Is it any different when wealthy people push up property prices so they can profit from people who are poorer than them?
Should the wealthy be able to profiteer from renting housing to the poor?
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