The owner of ghetto housing differs little from any other purveyor of low-cost merchandise. In fact, he is no different from any purveyor of any kind of merchandise. They all charge as much as they can. FULL ARTICLE by Walter Block
Source link: http://archive.mises.org/13133/defending-the-slumlord/
Defending the Slumlord
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Unfortunately, at least in the UK, this very correct economic argument breaks down around the problem that land lords and land lord cartels actively prevent competition from new entrants via non-economic (i.e. threats, violence, arson etc. etc.) means. I suggest looking at the life and times of Nicholas van Hoogstraten for example. Possibly in a country with more space and a more mobile population, this might not be such a problem?
That would be a breakdown of another government function, the monopoly over force. If Mr. van Hoogstraten wasn’t blocked from hiring his own security force, the situation may have been very different. As it stands, a private, armed, security force is de facto illegal in the UK.
Block’s argument applies in a country in which criminals (such as the landlords of which you speak) are punished. Most economic arguments “break down” in a society where property rights are not respected.
Block’s argument was that we shouldn’t hate slum landlords. I would suggest that slum landlords are hated because being land lord over a slum is very conducive and supportive of criminal activity, even if that activity only goes so far as negligent maintenance or lack of compliance with building regulations. The population is easily intimidated (or criminal) and economically weak, with many difficult backgrounds and problems to exploit. The honest profit without criminal activity may be uncertain or low due to non-payment and high costs maintaining and collecting rent. So the area of low price renting attracts criminals in exactly the same way as other marginal areas of life.
People hate slum land lords because of the illegitimate power they wield ove other people’s lives. A landlord who is an honest economic agent who deals with competition within the law will just be called a “landlord”, not a “slum landlord”.
Just like it’s irresponsible to say that doctors are crooks because Dr. So-and-so is a crook, it’s irresponsible to say that landlords of low-value property are crooks. There’s nothing inherently wrong with being a landlord in low-income areas.
Webster calls a slum a “densely populated usually urban area marked by crowding, dirty run-down housing, poverty, and social disorganization.” I don’t see why you wouldn’t call a land lord operating in such an environment a “slum land lord.”
You say “People hate slum land lords because of the illegitimate power they wield over other people’s lives.” No–it is the poverty or the criminal activity, not the renting of a place to live, that is at fault. An honest landlord in a slum wields no illegitimate power over anyone–his renters can simply move if they don’t like his service.
“I don’t see why you wouldn’t call a land lord operating in such an environment a sum land lord.”
That is the problem. “slum landlord” is not in any common usage equivalent to “landlord of a slum”. There is no such thing as a good “Slum landlord” in the same way as there is no such thing as a good “Evil dictator”. It is built into the name. Trying to write an article that claims otherwise is just trying to alter the meaning of a well known, widely used term. Tilting at windmills for the sake of controversy.
I suppose another title, “Defending landlords who charge the economic rent for very cheap housing but are criticized because it is still above some people’s ability to pay.”
doesn’t really have that zing and zip about it though!
I think the Jacobins had the right idea regarding “Lords” of all kinds.
Sure they provide an economic service. Calling them hero’s is a stretch. It is not like they actually want to help and see the good they are providing for the community and do it despite the vilification they recieve. Their excesses still exist.
The real villains here are the dictatorial socialist governments in cahoots with contractors and lending institutions who impose absurd building codes which drive up the cost of minimal housing to outrageous levels. Decent basic housing can be built for ten thousand dollars or less, if it were allowed. In many cases this is less than the government subsidy per year for welfare recipients. The general public should be outraged at this blatant thievery, both for their personal residences and the taxes they pay for the welfare crowd.
What you just stated applies to all participants in an economy. Each person simply wants to improve his situation, and he does so by making voluntary trades that make him better off (as does the one he’s trading with; they both come out better). The magic is how this local, self-directed activity has lots of positive externalities. I think Block was describing one the slum lord provides. When you’re looking at participants in an economy, I don’t think you should look at them as people wanting to improve things in general; you should look at them as goal-directed local-cost-optimizing agents, where the particular situation results in specific beneficial side-effects to others.
A more simplified explanation: To improve the whole, you must focus on improving the individual parts. You can’t improve the whole if focus on the whole.
This works in just about every aspect of life. Can’t improve the GPA unless you improve each class. You can’t improve your stamina without first focusing on running and weightlifting. There isn’t anything in our world we can improve by focusing on the whole and not the parts that make the sum.
Shay
That is one of the most brilliant and concise comments I have ever read. Kudos!
The main point was about the emergent behavior of the market, which isn’t something each participant is conscious of. If you ignore this and treat the whole as merely the sum of its parts in isolation, you try force each part to care about the well-being of the whole, which destroys the beneficial emergent behavior that you’re blind to. The problem with emergent behavior is that it can’t be arbitrarily told what to do, hence can’t be easily directed to serve a special interest.
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