is collecting land rent actually earned income? should an entity be able to treat debt service and economic rent as "earnings?"

does the financial sector actually produce a product?

or should it be dismissed as "Marxist" to even ask?

discus...

Yes. Capital is a real thing that you can choose to do something with - hold and maintain something of value, invest in a business, employ people, etc. If you choose to invest capital in land, and then allow others to use your capital for a time for their personal benefit, you're getting income in the same sense that interest on a loan is earned income.

It produces a large numbers of products. Secure banking services are real things, as is point of sale, a global wealth transfer directory, asset transfer, asset availability, the creation of markets via market making, the lowering of spreads via market making, the provision of large scale business insurance against via futures, mergers, demergers, activity financing, etc. A vast number of highly valuable services are performed by the financial sector.

It's awfully cute that someone could even consider the notion that 10% of the economy, used frequently by every adult and in manifest ways by every business, is somehow people simply flushing their wealth on something that produces no utility.

Questions are not anything unless they push an agenda.

If your agenda is that capital and the services around it don't provide huge amount of irreplaceable value via the lubricating of economic moving parts and the creating of enabling ecologies and the bringing to together of disparate groups to perform economic activity, you're not really Marxist so much as extremely ignorant and shamefully unaware of how anything important works.

lol @ "lubricating of economic moving parts..."

10xlol @"how anything important works"

zzz at you being the first to snap respond.

Your utopian assessment aside, banks in this era typically do not finance tangible investment, means of production nor research . ... they instead lend against existing collateral, the majority of which is real estate, stocks and bonds. It's a bid to transfer wealth, not produce more. It's been this way for over 15 years, and I'm confident you know it.

I'm doing a public service in educating a moron. I did the same for you on peak oil, which also showed you don't have the faintest clue about how anything important works, even when educated in detail by someone far wiser than you (me). You're welcome for both.

To your edit:
There's nothing utopian about the basic mechanics of the finance industry and how they greatly help the economy.
Banks have always mostly loaned against collateral, there's nothing new here. Are you claiming that's not a valuable service? If so, imagine this scenario. You own a house. You don't have other assets. You want to start a business and need some money. The bank agrees to part mortgage your house and give you cash to start the business. The house is obviously collateral. Is it your opinion that the bank hasn't provided a valuable economic service here? Is it your opinion that the bank isn't funding means of production or tangible investment?

Another scenario: Tesla needs capital for expansion. One of the owners, Musk, goes to Goldman Sachs and says: "I'd like $500 million loaned to me against my stock so I can buy part of the company's secondary and invest in the production of the Model S". Goldman Sachs agrees. Is it your opinion that they're not financing tangible investment here? This actually happened by the way.

I mean, not a ****ing thing has changed here in 500 years. The guy who went to the Dutch banker in 1600 and said "I have three ships bringing spice from Indonesia, I want to add one more, I will mortgage you the title in exchange for the cash for another ship" is getting exactly the same service as the two scenarios above, which you seem to think are a modern habit and merely a wealth transfer rather than financing "tangible investment or means of production".

And this is only one part of the incredibly valuable services that banking provides in the lubricating of economic moving parts. You don't have the faintest clue how anything important works.

so it's OK to be a troll on this subforum? I just was hoping to know if this has unchained rules before I go ahead and respond.

Seems that way, with the liberties you take -- the same supremely arrogant narcissist we came to adore back in UC.

Just for the record, you had no actual "education" to offer on PO, and you generally avoided the fundamental point put to you on the issue. Don't flatter yourself.

Though I suppose it's the same dynamic here as there: Money tricks doesn't create actual growth. Sorry, I know that fact untucks your business shirt.

Of course money tricks create growth. Put down the reefer son.

Actually, quite a bit has changed.

This is a nice story. If it were honest about what occurs today, when borrowers routinely bid up prices for the assets they by on credit. They, themselves, install tollbooths. It turns into asset price inflation. Meanwhile, paying off these loans -- with fat interest -- leaves less and less wage or profit income to spend on goods (debt deflation).

Cut out all the fluff you assert that insists how it is all supposed to work. In the end, debt service and economic rent shrinks markets, consumer spending, employment and wages. Period.

LOL

saved.

Sure, if you could somehow get equal allocation without banks, that would be great. How do you plan on accomplishing that? How much would the economy shrink if every mong with a bong had equal opportunity to invest capital on likely terrible ideas as people with proven track records of (net) winning and/or backing winning ideas did?

Jiggs lives in the abstract, which is why he faceplants into the concrete. It's amusing to watch.
Lots of meaningless abstractions being thrown around there. Concrete examples and amounts of assets being bid up beyond reasonable value or return?

Should be a killer opportunity for some enterprising individual to make money off this view. How do you propose we do so? Or is this major market distortion not exploitable in your mind?

If you claim it's not exploitable, this is then a politics thread, not an investing one.

Pretty sure you just answered your own question.

"Every mong with a bong" was lent to (10 to 12 years ago), and it was done out of "necessity" by desperate financial institutions. ... Debt servicing is all the finance industry knows how to do anymore. That's the whole point.

So that you can quibble for 2-3 weeks re: what constitutes "reasonable value?" LOL ... Let's just concede we differ there.

You're so precious. Super quick to get a topic getting away from you shut down before it starts.

Everything is politics, most especially finance.

So you think people taking out loans to consume **** they couldn't afford is an endorsement to let them do more of that, or what? Is there a point here? What other mechanism do you propose for bringing people and capital together? Or do you deny that that is even a useful service?

"Yes. Capital is a real thing that you can choose to do something with - hold and maintain something of value, invest in a business, employ people, etc. If you choose to invest capital in land, and then allow others to use your capital for a time for their personal benefit, you're getting income in the same sense that interest on a loan is earned income."


For someone to lend money at interest they first have to earn the capital from some labor at some point in the past. Karl Marx said "Capital is dead labor, which, vampire-like, lives only by sucking living labor, and lives the more, the more labor it sucks."


Now the trouble with land rent is that land was not created by labor, therefore one should not be able to claim income from the owning of something in which no labor was ever done. This is why I am a Georgist.


Georgism, also called geoism and single tax, is an economic philosophy holding that, while people should own the value they produce themselves, economic value derived from land (including natural resources and natural opportunities) should belong equally to all members of society. Developed from the writings of the economist and social reformer Henry George, the Georgist paradigm seeks solutions to social and ecological problems, based on principles of land rights and public finance which attempt to integrate economic efficiency with social justice.

Yes services are real income... banks provide the service of securing and lending money... landlords provide the service of providing a place and building for people to live or companies to operate. Do you think equipment rental is real income? Do you think doctors, lawyers, accountants and other services are creating real income? Just because they don't make a usable tangible product doesn't mean they are not providing a product.

Isn't the house created by labor?

Does Finance Benefit Society?

Yes, but the land underneath it is a fixed supply and most improvements upon land are created by communities and public works. This is why a land value tax (LVT) should be the primary source of taxation for the government, as opposed to taxes upon labor. Revenues from a LVT can be used to reduce or eliminate existing taxes (for example, on income, trade, or purchases) that are unfair and inefficient.

I'm guessing you've never owned land if you believe there's no labor involved or that most improvements to private land are created by public works.

As de captain said, a lot of labor goes into creating and maintaining habitable land.

Also, on a really long term scale, is land really a fixed supply? To my knowledge the overwhelming majority of the east coast of the US was incredibly dense forestland not too long ago. Then we invented big machines — produced by labor — and labored with those machines to cut down all the trees to make space for cities and neighborhoods. Was land really a fixed supply before this happened? Is it even a fixed supply now? In the future, don't you think there will be ways to increase the amount of habitable land available to humans? (Man-made areas and islands. Or if you want to get really dreamy: Colonizing other planets)

Does this mean we are moving on from Peak Oil?

So the community plows my sidewalks? (they don't even plow the side roads anymore in Spokane) They fix my heaters? They handle tenant disputes? They collect late rent? They clean up the vandalism? They handle all the painting/carpet/plumbing? They hang doors and lay floors? They deal with showing vacancies and screening tenants? They clean up abandoned garbage and mow the lawn? They unlock apartments for tenants that lose their keys and unclog plugged toilets? They rush in at 2 am to deal with water leaks?

(even things that people "think" the city does, the city doesn't do...examples: trees within 10 feet of a road are owned by the city, but the property owner is required to do the pruning/maintenance/make sure it stays alive. The sidewalk while owned by the city is require to be maintained and fixed by the property owner (last one cost me $1,800 to fix.)

Roads/water/sewer are a small part of what a landlord has to deliver to their tenants. It's hilarious claiming the community/public works does most of it.

No landlord works as hard as Joe Sixpack. Land owners that collect rent should be taxed at a higher rate than those that derive their income from wages, that's all. Are you really gonna argue that you work harder than the proletariat oh Lord of the Land? This is not some far out radical proposal, land value taxation is currently implemented throughout Denmark, Estonia, Lithuania, Russia, Hong Kong, Singapore, and Taiwan.

In many cases landlords do work harder. You've summarily dismissed years of work and saving that most landlords had to do just to become a landlord in the first place.

It also sounds like you'd prefer to disproportionately reward working hard over working smart. The trash collector should be one of the highest paid jobs because they work harder, amirite?

Are you unaware of the fact that all land owners pay a separate property tax?