Everyone’s getting excited about the prospect of watching Bill English bash landlords tomorrow afternoon, with no thought (or just poorly-thought out thoughts) as to what bashing landlords will do to tenants, or to whether or not landlords themselves deserve to be bashed by the double-dipper.
Which of course, they don’t.
But bashing landlords is always fashionable, and those doing the bashing can always count on the support of ignoramuses who can be heard to argue that landlords’ income is unearned—i.e., that their rents and the capital gains they might enjoy from their property are “unearned income” that these (so-called) “greedy scum” don’t deserve to keep.
Now, if you think that sort of argument and this sort of argument sounds just like stale, warmed-over Marxism, you’d be right, as Amit Ghate points out today in a fortunately-timed article entitled ‘The Nonsensical Notion of ‘Unearned Income’.’
“The concept of ‘unearned’ income is the remnant of a long-refuted economic theory known as the ‘labor theory of value.’ Though first proposed by classical economists such as Smith and Ricardo, today it is most closely identified with Karl Marx, who was its last — and most consistent — advocate.
“Essentially the labor theory of value holds that values are determined by the (physical) labor it takes to create them. Thus physical exertion becomes the measure of an item’s worth. According to Marx — and to his modern adherents like [Bill English], [Idiot/Savant], [the writers of The Standard] et. al. — any values created in ways other than by brute force are ‘unearned.’ … So while today’s politicians generally fail to protect the individual’s right to property, they’re openly hostile to so-called ‘unearned’ income and property. Hence their unabashed support for these new taxes.”
I recommend reading Amit’s explanation of why this idea of “unearned income” is fundamentally wrong, and is the argument behind more than just attacks (and taxes)on landlords. Hint: it’s all about the mind, grasshopper.
POSTSCRIPT: There’s an added irony about the parasites who attack landlords as “greedy scum” while sucking down as much taxpayers’ largesse as they can.
In general the parasites at The Standard and No Right Turn uphold Marx’s exploded Exploitation Theory (i.e., the theory that “capitalism promotes a system of slavery wherein the labor of workers is exploited to attain profits on behalf of the relatively few businessman or capitalists”) and Marx’s “Iron Law of Wages” (i.e., the
theory fallacy that without trades union and benevolent labour-loving government, employers would pay employees whatever they want, driving employees’ wages right down to subsistence level).
But when it comes to landlords, they’re both now arguing against the Exploitation Theory, “arguing that [rents] are set by supply and demand, not at whatever level the landlords want and not at whatever level the tenants want.” See, here’s IowaHawk writing in the comments at The Standard:
“Rentals are not set by landlords saying:
’Gosh Humphrey, I think I deserve an extra $500 a year.”
‘Why yes Reginald, that’s only fair. I deserve to make an extra $1000 a year in rent, so I’ve raised the rent on my peons too!’
“No. Rentals are not set by landlords making up what they want. They are set by supply of rental property vs demand for rental property. Charge too much and you find your property empty – and for landlords with a mortgage that’s very, very expensive.” [Emphasis in the original]
Ironic, don’t you think. Especially because the same argument they’re using here for rents overturns their own theories about an “iron law of wages”: that is to say, wages are not set by employers making up what they want, [emphasis mine] they’re set by a combination of supply and demand and the productivity of labour. (Read George Reisman’s ‘Classical Economics vs. The Exploitation Theory’ for the full story on this, which also explains the role of the mind in overturning the fallacy.)