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The weirdest thing to me about Warren is her massive disconnect between her primary concern of corruption and actually applying that to the lives of average Americans. 1/
This is a *little* about politics, but not the actual skills of the retail side of it that she& #39;s demonstrated weakness in.
Warren believes that massive amounts of money and an excessive hoarding of capital have disastrous effects on society. Which is true. 2/
Warren believes that massive amounts of money and an excessive hoarding of capital have disastrous effects on society. Which is true. 2/
But every single plan she has on the real economic issues facing Americans seems to fail to take corruption, or broken systems, in consideration. 3/
Let& #39;s ignore healthcare since that& #39;s an argument that& #39;ll never end(I think the argument against Warren is correct here, but nonetheless), and focus on her housing plan. 4/
As we& #39;ve seen over the past 20 years, the cost of housing doesn& #39;t go down when there& #39;s an increased supply but instead only decreases dramatically within a boom and bust cycle akin to tulip mania. 5/
The ratio of empty housing to houseless persons is 24:1, which suggests that prices and rents should go down to people that can afford homes(not, unfortunately the homeless) but this does not happen. 6/
Instead prices and rents continue to go up absent government intervention. So what is Warren& #39;s Big Structural Change Approach to a commodity that doesn& #39;t reduce in price regardless of supply? Increase the supply of housing and a sweetheart zoning policy towards new development.7/
The *reason* why prices go up is relatively easy to understand, btw. It& #39;s because of the fact that the owners of rental properties can borrow around 70 to 75 percent the value of their units to then put into other properties or businesses. 8/
If you& #39;re a real estate guy who owns 3 houses in the same neighborhood, that you rent to working families, the standard rate for rent is between 0.8 to 1.1 percent of the value of a home. 9/
Let& #39;s say all three homes are worth 300,000 dollars. That means the maximum standard rent you& #39;re charging is 33k per year. 10/
BUT, you& #39;re also borrowing 70 percent of the value of those homes to fund a McDonald& #39;s or Five Guys Franchise you& #39;re opening up. At 70 percent of 300k that means you have access to 630k worth of collateral. 11/
Your rental income for three homes in a neighborhood is 100,000, but the value as a loan for another venture is six times that amount!
Now imagine that you have a house empty. 12/
Now imagine that you have a house empty. 12/
The value is still identical as collateral, but you& #39;re down 33k income. Your incentive could be to lower rent, but if you lowered the rental to 28k per year, that& #39;d reduce the property value of that unit. Which in turn could negatively affect the value of your other property. 13/
Btw, I just caught a math error in my initial calculation. The annual income per property on a 300k house is 39,600 dollars, which puts the value of rent per year at 118,800. We& #39;re going to lower to 28k still as a thought experiment. 14/
If you have 1 empty house at 300k value you lose roughly 40k per year, netting you a little less than 80k in incomes. The equity you can tap as collateral on a loan is still 630k.
If you lower the value of one house to 233,333 by renting it out at 28k annually... 15/
If you lower the value of one house to 233,333 by renting it out at 28k annually... 15/
Your overall value lowers from 900k for 3 houses, to 833,333k for all three. You are now drawing income from the formerly empty house. The amount you can draw on for a loan has fallen to 583k, or a 46,000 dollar reduction.
But when property value falls on multiple homes in a neighborhood this usually decreases the value of all homes in the neighborhood. 17/
let& #39;s assume the two 300k houses you own fall by 5 percent as a result of having to reduce rent, and thus value, of your empty house. That& #39;s 15k less in the actual value of property, which lowers the amount on rent you can ask of a new tenant. 18/
By treating your single empty home as a normal commodity subject to supply and demand you lowered the overall value of your properties from 900k to 833,333. Your loan availability went down from 630k to 583k. And every other landlord in your area lost some money too. 19/
This is why landlords don& #39;t reduce rents without government regulations forcing them to do so, and it& #39;s why the development of new properties don& #39;t lower existing values. The loss of overall property value for resale was only 70k, the loss of overall loan amount was only 46k 20/
But most renters aren& #39;t renting houses, they& #39;re renting apartments. Which means the rents you& #39;re extracting aren& #39;t on the factor of one person per property, but oftentimes 100s. 21/
If you own a property that rents at 2k per month per apartment, at 100 apartments a month, the annual rent you& #39;r extracting 2.4M. Reducing the value of rents in that apartment on empty units reduces the value of the apartment building, reducing the amount you can borrow. 22/
Multiply by 100s or 1,000s of buildings per city and what you& #39;re talking about is reducing the overall value the richest people have overall as a society. 23/
The Big Structural Change here is implementing rent control. Rent control lowers property values, which makes it easier for people to buy homes or pay lower rents failing that. Warren doesn& #39;t do this. 24/
You can& #39;t expect people to reduce the values of their holdings out of the goodness of their own heart. You can& #39;t force markets that act as a cartel to lower prices without controls. It will not happen. Warren doesn& #39;t offer structural change in markets that most affect people 25/
Honestly, her entire platform is kind of a mess and lacks the holistic vision that Sanders holds because I honestly think she doesn& #39;t care about 90 percent of the issues. I& #39;m a little pissed off I made a math error so early in the thread, so I& #39;m going to chain vape now. 26/26
TLDR on this bullshit thread;
Warren lacks basic solutions on the issues affecting the largest number of people in favor of a belief that corruption in higher markets has a trickledown effect rather than the fact that some markets are by nature corrupt.
Warren lacks basic solutions on the issues affecting the largest number of people in favor of a belief that corruption in higher markets has a trickledown effect rather than the fact that some markets are by nature corrupt.
Healthcare as a market is inherently corrupt because you can& #39;t have a for-profit system that pays for 100 percent of all care on the insurance side. Housing as a market is inherently corrupt because property functions as both income and a gold bar you can tap for liquidity.
