This has been the case in California for a long time.
Unless we just forgive rent until a vaccine is out, many people will never catch up.
Unless we just forgive rent until a vaccine is out, many people will never catch up.
I’m a renter. Do I need to prove I’ve lost my job to not pay? Do I get to skip out on paying for a luxury apartment if I have money in the bank? Does my landlord get to skip her mortgage? Or only the portion paid by my rent? What about the bank who holds the mortgage? Or the retired bond holder who ultimately gets the mortgage payments?
Every step along the way requires somebody to not get paid.
If the government intervenes, at which step should they do it?
I’m not saying no actions should be taken, just that it’s more complicated than pure rent forgiveness. Perhaps the answer is some kind of short term UBI, but that gets expensive quick. Zero interest government loans puts the burden back on the individual. I’m not fully clear on how to beat balance individual ownership versus protecting the system from collapse. (The latter involves propping up the banks)
I think the starting principle I'd take is that this is going to go very poorly for some people, and our only decision is for whom it goes poorly. (After all, if we do nothing, it will clearly go poorly for many people, and as you point out there's no obvious solution where it works well for everyone.) There is a productivity loss that needs to be borne by someone, and it seems to me the obvious approach is to ask who can bear it with the least impact on the long-term good of society / the nation / humanity.
The answer is probably that certain people in the chain you mention, possibly the landlord, probably the bank, and perhaps (but probably not) the retiree, can afford to just not get paid. It's unfair for them, but they will do fine: they won't lose out on revenue that they need to put food on the table or a roof over their heads (the whole point here is to keep roofs over heads). Everyone upstream of them gets to not pay them.
And yes, it's unjust to take money from people (or really, require that people keep providing services without being paid for them) without their consent, but it's also unjust to draft people for a war without their consent. We do it anyway because the alternative - choosing to not fight the war - is unjust too.
How is any family, which was already living paycheck to paycheck ever going to sort that out. What's going to happen is tons of Americans are simply not going to be able to pay, their credits will be ruined and the rent won't be paid anyway.
It would be nice to present a goal, no one pays rent until we have a functioning economy again, and then sort out the details a bit later. The government could forgive property taxes as well, Banks could delay mortgage payments until the end of the pandemic.
I spoke to one friend who was three months behind on rent at a point. Telling him to Buck up and figure it out, isn't going to do any good. Money ultimately is an abstraction, as a society we very much can shape the rules around it. I can't imagine millions of homeless families being worse than landlords having to seek out different arrangements with their Banks.
Overalla lot of people aren't going to be able to pay rent through no fault of their own, they shouldn't be evicted as punishment. Or you can tell me ,how would anyone catch up on a year of rent once the eviction moratorium is over ?
The problem is, you can't just say "so don't pay rent" and magically make that OK. That rent money in turn pays for maintenance/upkeep, mortgage payments, property taxes, wages for property managers and repairmen etc. You can't pretend like all land is owned by some king who can just afford to not get rental payments.
If the government doesn't collect property taxes, how do they pay for schools, roads and firefighting next year? If the bank doesn't collect their mortgage payments, they go insolvent and don't have the cash to give you when you try to withdraw from your checking account.
Flipping your final line around, how would the elderly widow relying on renting out her former family home handle receiving no income for a year?
Landlords are going to lose money.
>Flipping your final line around, how would the elderly widow relying on renting out her former family home handle receiving no income for a year?
She still will not get any income until the eviction moratorium is lifted. The only thing she can do is sue her tenants for money they don't have. Even in good times evictions can take months to a year.
It can be argued this is the risk of doing business. If tenants can't pay they can't.
The backlog of evictions ( which are one of the most stressful things you can experience) will clog courts. At least if we establish renters will not be able to pay, we can develop an alternative plan. Better to have a plan than saying everyone has to survive the best they can.
Someone with an economic degree would work out the details. Obviously I can't write a full relief bill in a comment
The extreme urgency of now
05/05/2020 by David McWilliams & John Davis
Web player: https://podplayer.net/?id=104174933
Episode:
https://media.acast.com/the-david-mcwilliams-podcast/theextr...
If 'we' forgive rent owed landlords, will 'we' also forgive the mortgages those landlords owe the banks? Will 'we' also forgive the obligations the banks which owe to other banks and their investors? Will 'we' also forgive the obligations those investors owe, for example to pensioners? Will 'we' then step up and pay for those pensioners' food and … rent?
An economy is a gigantic web of interlocking relationships. It takes years (one might even say centuries!) to build and develop all of those, but it takes far less effort to destroy them. It is computationally impossible for anyone to understand all of an economy, and thus impossible for anyone to make good decisions on behalf of an entire economy.
If we are worried about folks without resources, we should give them some. Yes, that runs the risk of encouraging those who want to get those resources (e.g. student financial aid encourages the growth of the academic industry, mortgage assistance encourages the growth of the real estate industry &c.): we should probably just give the poor some amount of money and let them make their own decisions about it. Call it unemployment or UBI or whatever.
I think there's a good argument that yes, forgiving all of those rents and paying for the pensioners' pensions is less bad than not doing anything. (We might also want to consider why pensioners are living off of complex financial relationships instead of, like, cash, and whether that risk/reward tradeoff was good for society, but we won't be able to see the results of any changes we make for another generation or two.)
I do think that, yes, "we will just give you money" (and "we will increase taxes on people who won't get evicted if we do") is a fine answer too.
But also, the amount of benefit that any intervention can have drops rapidly by the month. Every time rent payments (or mortgages, or pension-funded bills) are due, there's a new batch of people who can't pay it. A bad answer today, and maybe a workaround for second-order effects later, is a lot better than a better answer in three months.
Does it? Maybe the right answer is not to make all decisions in one place: maybe the right answer is to let every citizen make his or her own decisions. The one who is willing to trade the emotional cost of moving back in with his loving family in order to have more money for lunches with friends does so, while the one with abusive parents chooses to cancel cable rather than moving back in — and so forth.
> We might also want to consider why pensioners are living off of complex financial relationships instead of, like, cash
Because storing all of one's life savings under the mattress is susceptible to theft. Even taking a broader definition of 'cash' to include a bank account, would you at age 60, with another 20 years to live, rather be earning 0.06% (the current savings account rate) or 1% (or more) per annum? At 0.06%, one would need about $100,000,000 to earn the $64,000 median U.S. income in interest. Alternatively, if you figure that you will live a maximum of 50 more year, you will need over $3 million in order to retire and just spend the money. You gotta invest to have something to live off of.
That is one of the possible decisions, yes. It does seem to be the decision the US is going with, for the most part.
(I'm a little confused what you mean by "cancel cable" - do you live somewhere where the cost of a monthly cable TV bill is comparable to the cost of a monthly rent bill?)
> would you at age 60, with another 20 years to live, rather be earning 0.06% (the current savings account rate) or 1% (or more) per annum?
It depends on the risk profile. If you can guarantee me 1% or more per annum without risk, then obviously I'll take it, but if you could make that guarantee, then savings accounts would just make the same investment and offer 1% interest too.
Also, if you tell me that my options are earning 1% on my savings and setting up a system of complex dependencies that leads to a thousand people becoming homeless over the rest of my life, or 0.06% and not doing so, that may influence my answer.