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Is it 300 units for a profit of $1 each ($3 sale price minus $2 unit price?). That's $300/day....
Correct and now he pays a %10 land tax to a land squatter who did nothing.
Of course eventually these sorts of things end up as financial assets and this spot will be a $1000 a month producing asset on say a REIT.
Now if someone wanted to buy it they might want to pay up to a $1,000 in interest to finance it. If I could borrow from a bank at the cost of $900 a month, I could make a $100 and not even use my own money.
However since land is always going up in these bidding wars it often is sold at the current rent. One way to make it go up is to charge more, say $2000 a month to turn it into a $2000 a month asset( doing absolutely nothing of course but driving up the price of a hot dog)
So instead of creating capital and making hot dogs, it drives up costs and gives it to bankers who create credit from nothing and secure it with the land. Why would a bank lend against a business plan? Who cares which business plan winds up paying the interest on a rock that was always there? Banks don't like business plans.The hot dog guy who took a risk usually has to secure the loan with an asset like his house that was also driven up in price by the winning bid which the bank gladly printed up.
These days %40 percent of the price of a hot dog is from this financial bloat.
Then the land owner would get $1,000 while the hot dog hawker would keep the remaining $8,000. That or maybe the hot gouger would go rent the spot across the street for $950.
Raising the rents to the point the market will demand is called... demand. If you're the only game in town, you could probably go up to $7,000 before you couldn't find anyone to rent to. Beyond that, there's no demand for renting a hot dog stand as no one will do it for much less than $2000 a month. That's also why hot dogs are priced at $3 and not $30. At $30. you might sell five hot dogs a day. You'd make more charging $3 and selling more hot dogs. By the same logic, if you could make more selling hot dogs at $4, then you would be selling them at $4 and not $3.
"Bank parasites" or "land-owner scum" ensure resources are being used efficiently. If it's a choice between a lemon-aid stand and a hot dog cart competing for the one spot, the more productive use will always win by out-bidding the less productive use. Let's say the Gyro Guy would like to open up. He can sell his gyros for $5 for each with a cost of $2 and all 300 hot dog buyers will happily eat gyros for $5 instead. Gyro Guy can outbid Hot Dog Hawker by offering $7,500 a month. Now the same spot is producing $27,000 instead of $9,000.
Of course, there isn't just one land squatter. Hot Dog Hawker isn't left out completely, he just gets relegated to Williamsburg where he can only sell 200 hot dogs for $2.75 a piece. He gets that spot by outbidding Philly Cardboard who previously was renting the spot for $50 a month since he only sold ten sandwiches a day to lost tourists. Of course, Hot Dog Hawker would also leave Manhattan for Williamsburg sooner... so Manhattan Landlord Scum would only be able to get $5000 instead of $7500 a month from Gyro Guy.
Correct and now he pays a %10 land tax to a land squatter who did nothing.
Of course eventually these sorts of things end up as financial assets and this spot will be a $1000 a month producing asset on say a REIT.
Now if someone wanted to buy it they might want to pay up to a $1,000 in interest to finance it. If I could borrow from a bank at the cost of $900 a month, I could make a $100 and not even use my own money.
However since land is always going up in these bidding wars it often is sold at the current rent. One way to make it go up is to charge more, say $2000 a month to turn it into a $2000 a month asset( doing absolutely nothing of course but driving up the price of a hot dog)
So instead of creating capital and making hot dogs, it drives up costs and gives it to bankers who create credit from nothing and secure it with the land. Why would a bank lend against a business plan? Who cares which business plan winds up paying the interest on a rock that was always there? Banks don't like business plans.The hot dog guy who took a risk usually has to secure the loan with an asset like his house that was also driven up in price by the winning bid which the bank gladly printed up.
These days %40 percent of the price of a hot dog is from this financial bloat.
Malloric pretty much hit it to the point where I don't have to say much.
The only thing that I have to add is that if hot dog hawker doesn't feel comfortable with his business, why not become a land squatter?
Or the other way around. I was watching Discovery on a LA land developer (bought land for land squatters and sold it to other land squatters after building stuff on it) who is now THE urban oil baron. Pretty neat stuff seeing oil drills right next to luxury condos, sitting in the middle of parks, etc. More money in the oil baron business than the land squatter and land squatter development businesses it would seem.
"Bank parasites" or "land-owner scum" ensure resources are being used efficiently. If it's a choice between a lemon-aid stand and a hot dog cart competing for the one spot, the more productive use will always win by out-bidding the less productive use. Let's say the Gyro Guy would like to open up. He can sell his gyros for $5 for each with a cost of $2 and all 300 hot dog buyers will happily eat gyros for $5 instead. Gyro Guy can outbid Hot Dog Hawker by offering $7,500 a month. Now the same spot is producing $27,000 instead of $9,000.
That's great Chicago school stuff there. The math is great. We have a competition to insure that its the most efficient use of the land because the most productive will have the most incentive to get the winning bid. It all seems very efficient between capital and labor. No free lunch for them. But uh, oops, I see the hot dog guy working, and I see the gyro guy working his tail off, but who is that fat guy eating all the euros and hot dogs? You dropped a fat remainder with junk economics in his trunk, the do nothing land owner.
Is 2 out of 3 working efficient to you?
What's the point of ensuring the land is used efficiently when all of that surplus goes to a squatter? Would you be interested in being extra efficient carrying two bags up the stairs so I could have none?
That's classic Chicago school stuff essentially calling slavery a model of efficiency cause one person is carrying two bags
A real simple solution to this leetle problem is you tax the land. That means he needs to get a job too and the highest bidder will still have the land because you only tax the land value. Then we can dump the income and capital gains tax overhead because ,after all, many economic rents masquerade as capital gains. So now we have 3 working people and low taxes on production.
Not only is this far more efficient, it prevents enormous and dangerous accumulations of wealth for people with nothing but time on their hands.
Quote:
Of course, there isn't just one land squatter. Hot Dog Hawker isn't left out completely, he just gets relegated to Williamsburg where he can only sell 200 hot dogs for $2.75 a piece. He gets that spot by outbidding Philly Cardboard who previously was renting the spot for $50 a month since he only sold ten sandwiches a day to lost tourists. Of course, Hot Dog Hawker would also leave Manhattan for Williamsburg sooner... so Manhattan Landlord Scum would only be able to get $5000 instead of $7500 a month from Gyro Guy.
Yes that is painful. However the thing is with unearned income you can build wealth faster than other people because they are one, and he leaches off many. So the land lord scum might just buy all the spots one day.
Malloric pretty much hit it to the point where I don't have to say much.
The only thing that I have to add is that if hot dog hawker doesn't feel comfortable with his business, why not become a land squatter?
No see he missed the point entirely. If efficiency is all men working, then the land must be owned by the gods. There is absolutely no reason why they still cannot bid for the spot. Its just that we can remove taxes on production and use the land value for the common wealth.
Yes that is painful. However the thing is with unearned income you can build wealth faster than other people because they are one, and he leaches off many. So the land lord scum might just buy all the spots one day.
Everyone smart attains unearned income at some point. The hot dog hawker will at some point hire someone else to sell the hot dogs for $7/hr and open up another hot dog cart in another area. Sooner than later he will have 20 hot dog carts and be earning a significant amount of unearned income. The hot dog hawker got there by working hard and smart just like the land squatter. It's normal progression for working smart and the American Dream.
No see he missed the point entirely. If efficiency is all men working, then the land must be owned by the gods. There is absolutely no reason why they still cannot bid for the spot. Its just that we can remove taxes on production and use the land value for the common wealth.
Not all men can be at the same level. There must be a hierarchy in order for society to function.
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