Professors Piketty, Saez, and Zucman!

Have a minute? A minute to talk about rentiers, retirement, growth, and sharing?


Seems some sixty-percent of Americans think that things are going pretty well. For them, things are going pretty well. But, for the lower forty, things aren’t going well at all. Surely, this sixty – forty ratio is not a healthy economy? What’s worse; it’s getting worse.

Fifty, maybe even as few as thirty, years ago, one could lease a commercial space for, what at the time, seemed a princely sum and start a business. Today, upon comparison, that princely sum seems a mere pittance. Today, more than half of what one could possibly gross in a small start up goes to the landlord, the rentier. Between the rent, insurance, utilities, …, and the bottom line; one winds up paying their employees less than they deserve. Hardly anything left. Plunge taken, the budding entrepreneurs, and their employees, winds up working for the rentiers, the insurance company, the utility company, …; wind up working for next to nothing, or even worse.

Another example, s’il vous plaît: These days, the waiters, chefs, dishwashers, bus boys, … in neighborhood restaurants don’t get paid a living wage. Only undocumenteds, willing to work for less than a living wage, take these jobs. Even in very expensive restaurants, too much of what the diner pays, too much of the gross, goes to the rentier. All these workers wages, and business owners incomes, are being reduced in proportion to the increases being seen in rents.

As yet another twist on the rentier’s take: People with high incomes buy homes as investments and rent them out through an outfit calling itself ‘Airbnb’. Airbnb markets these rentals to tourists, travelers, and others, at rates substantially below the hotel/motel market rates. An arrangement with Airbnb allows investors to invest in residential real estate, rent it out through Airbnb, and then use the income to make their mortgage payments – to pay for the investment. As a result: Rental properties are taken off the market. Rents go up, homelessness rates go up, available housing is reduced, existing hotels and motels go under. A good investment opportunity for investors, a break for the wealthy traveler, a back-breaker for working-class renters. Airbnb is but another twist on the Uber and Lyft scams, but it is one with some even more serious consequences.

Are these examples only a matter of greedy landlords? Perhaps, more a case of expectations on a hamster wheel. The top sixty percent expect to make at least two-hundred thousand a year; and, to retire — on about two hundred thousand a year. One way or another, this two-hundred thousand a year retirement comes off the backs of others as rent. It comes off the backs of the would be entrepreneurs, off the backs of all America’s workers.

Back when, there might have been enough to go around; may be enough even now. Problem is with the sharing. When those no longer contributing, those who never contributed, want to take out a lot, that lot comes at the expenses of those on the bottom; the lower forty. Sitting home rocking while watching the world go by, is not the same as traveling the world. One of these costs way less. Since for a while now, more and more people don’t want to share.

Whenever some someone thought about growth back in the 18th century, chances are that they did so with an eye on exploiting the world outside of Scotland, England, and Europe. Africa was there for the taking. As for the rest of the New World; The Americas, Australia, and New Zealand? There was hardly even anyone there. Unlimited growth as far as the eye could see. Enough growth to absorb the retirement problem; the disabled veteran, expense of war, problem; …. All worked fairly well for the first two hundred years, then the old shoe of limitations began to pinch. Wasn’t too bad at first. But, lo of late!

Have to admit, this living off the future worked pretty well. Until it didn’t. Pensions backed by employers worked until employers started closing their doors. Municipal pensions based on economies based on a municipal population made up of well paid unionized workers worked well until there was no longer a large well paid unionized workforce living in the municipalities, but rather a population of people working at jobs that paid less than a living wage. Pensions backed by savings and loans worked until expectations and commitments exceeded all the savings in the world. Stocks and bonds to the rescue? Not enough return left after the CEOs, the hedge funds managers, and the big 401Ks all got first dibs. Then there is the price increase because of price increase loop. Any real return left over comes at the expense of — the workers; including any would be entrepreneurs amongst them.

Still, today’s politician says, “Grow the pie.” Sounds good, “Slice of cherry, a la mode, please.” Back in the 18th century, growing the pie meant more extraction and exploitation. By hook or by crook, this model worked fairly well for the developed nations well into the 20th century. But, you know, growth was always pie in the sky; always at someone else’s, or at the environment’s, expense.

So, good Professors, what do we do now?