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Comment by roenxi | Hacker News Reader

Words drift a bit over time. Smith isn't talking about landlords in exactly the sense of, say, someone who rents out an apartment. He's talking about people who own land and extract economic rent (ie, do nothing, breath through their mouth & get money; land isn't going anywhere).

So he'd probably be on board with the idea of setting up systems that get rid of the unearned part of rent, but even if the class of people he is talking about were gone there would still be people who own houses/apartments and rent them out to others. They'd be making a bit less profit since they'd earn whatever the market thinks administration is worth plus some sort of premium for tying up a lot of capital in a house.

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No, this is just ahistorical revisionism. Smith opposed pretty much all forms of economic rents because they’re a parasitic drag on the productive use of both labor and capital. He would be on board with none of what you describe. Go read the Wealth of Nations, chapter 11.

In the section you referenced [0] he explains himself reasonably clearly. He isn't talking about the entire class of duties that a modern apartment or housing landlord has. He is talking about the part that requires no planning, ongoing investment, work or even attention.

Some aspects of being a landlord are economic rent and should go away, but other parts are ownership and maintenance of capital and shouldn't. I'd suggest that while Smith was against economic rents he'd have no particular issue with a capitalist renting out their capital - even if that capital is a house. Note that Chapter 11 is rent of land not of capital.

[0] https://www.marxists.org/reference/archive/smith-adam/works/... - hehe, marxists.

Adam Smith is consistent in his opposition to rent seeking as a behavior, as embodied in his disdain for landlords and other “unproductive classes” throughout the Wealth of Nations. He was a moral philosopher above all concerned with how systems and incentives guide human behavior toward positive or destructive ends. You haven’t provided any evidence to the contrary, only tried to invent some special, imaginary form of his philosophy with carve outs that suit your beliefs.

Yeah, but the words mean something a little different to Smith - he's writing in the context of 1700s Scotland. As you note, he is talking about unproductive classes. That is different from the modern tenant-landlord relation where there is an unproductive aspect and a productive aspect. He wouldn't have changed his position at all on the unproductive part, but if we got rid of that he'd have been OK with what was left.

> You haven’t provided any evidence to the contrary

Neither have you. You've provided huge amounts of evidence that Smith doesn't like rents from land. I'm with Smith on that, rents from land are a moral and economic problem.

The issue your argument has is modern rental landlords aren't just doing that - they are also maintaining and renting out a significant amount of capital. That aspect of their role isn't going away; it would be silly to demand that everyone owns the house that they live in.

The word has drifted. We aren't talking about aristocrats who own vast tracks of farmland that they're leaching off. At the start of the chapter he lays it out with "In adjusting the terms of the lease, the landlord endeavours to leave [the tenant] no greater share of the produce than what is sufficient to keep up the stock from which he furnishes the seed, pays the labour, and purchases and maintains the cattle and other instruments of husbandry, together with the ordinary profits of farming stock in the neighbourhood.". That isn't what modern landlords are doing.

A landlord in Smith’s day is more or less the same as someone who buys a building and raises rent based on its increased value from the productive economic activity that occurs in and around it, as opposed to anything they do themselves. This is the thrust of his argument, the landlord is an immoral parasite because he “reaps what he does not sow,” i.e, extracts for himself the value created by others through productive economic activity occurring on or around his asset. This isn’t about any semantic drift, but your disagreement with Smith because you like landlords, are a landlord, like rent seeking in general or whatever else. Just say that instead of wasting people’s time with some imagined form of his philosophy that does not exist.

> A landlord in Smith’s day is more or less the same as someone who buys a building and ...

Wealth of Nations is available for free online and Chapter 11 isn't that long [0]. You should probably find a copy and read it - he is talking about a different type of rent. He explains himself in excruciating detail and outlines how "rent" is controlling access to natural factors of production like kelp, timber, cropland (especially cropland, this is a major focus of his [1]), coal, hunting opportunities, yadda yadda.

If you want to grep for "After food, clothing and lodging are the two great wants of mankind." you can see he breaks down lodging into the natural elements used to create a house and how they all present opportunities for the person who controls the natural resource to extract rent. He isn't talking about renting out capital which is a significant part of what modern landlords do for tenants. Houses (and apartments) aren't naturally occurring.

> This is the thrust of his argument, the landlord is an immoral parasite because he “reaps what he does not sow,”

Smith, you and I all agree on that. But we agree in the context Smith was using the word where that was all the landlord was doing. In the modern context, you can take all the parasitic aspects out of the landlord and there'll still be something left behind that you pay money to every month. The house doesn't appear by almost-magic like coal does - someone has to build it and the owner doesn't have to be the same as the beneficial user.

[0] https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/... - let's use a better link than the Marxists

[1] We get this choice quote: "Food is, in this manner, not only the original source of rent, but every other part of the produce of land which afterward affords rent derives that part of its value from the improvement of the powers of labor in producing food by means of the improvement and cultivation of land."

I’ve read it and you still are just engaging in nonsensical special pleading. In Smith’s conception, a free market was to be built on freedom from rent seeking, where labor and capital are deployed to productive ends and not siphoned off to unproductive ones by rentiering. Go watch this talk by UCL economist and historian Mariana Mazzucato for better context.

https://iai.tv/video/the-value-of-everything-mariana-mazzuca...

> Go watch this talk...

She makes some good points, but now you have the problem that even though Smith has left us a large body of work to refer to, you can't support your claims by referring to it.

On the other hand, if you look to to Volume 3 Chapter 2 you'll notice that Smith actually dealt with this specific topic (see: "Taxes upon the Rent of Houses") and drew the conclusions that I suggested he would. He breaks the rent up into "ground rent" (aka economic rent, the part that is economically damaging) and "building rent" (the return on capital) and concludes that ground rent should be taxed out of existence but that building rent is necessary and not all that much of a problem (he anticipates it settling at a fair premium of maybe 2% above interest rates, which seems like a reasonable guess that is in line with the actual rent I tend to have paid).

He is advocating a demise of rent on land (hence the more classic and literal landlord). Rent on houses (modern urban landlords) is a topic that he has a reasonable and balanced view on that acknowledges the necessity of a return on capital after dealing with the component of the rent that is for land.

Ah, now we’re getting somewhere! No modern landlord would support the demise of rents on lands, which is why they the same as the parasitic feudal dullards Smith elsewhere decries. Modern, urban landlords want to reap what the do not sow, i.e. the value derived from the productive activity of cities where they buy up houses to maintain an (individually partial, collectively large) monopoly on the availability and use of land. They generally in fact go one step further and leverage this monopoly to obtain loans, premised on the inflated valuations derived from the constraint of supply, and extend it even further. In a Georgist arrangement, they would be forced to reinvest rents on properties into making said properties more economically productive…which is why no modern landlords are Georgists!

How could the government systematically get rid of the "unearned part of rent", and why do you think doing so would only slightly lower profit?

1) Land tax. See Georgism [0]. Would be a great direction for society to go in.

2) Well, you can make something like 5% buying bonds. So if renting a house is making less than that people will sell the house then go buy bonds which are lower risk. The logic of alternative opportunities suggests the rate of profit for renting out a house won't change much.

I'd expect that profits would drop by a bit and then the supply of rentals would adjust if a bunch of landlords want to leave the market. But IMO most renters aren't in a position to buy houses so I don't think the supply would be able to contract by much. So I think the net effect is profits would drop a bit and then life continues.

Doesn't matter if I'm wrong on that point though. Whatever happens it'd still be an improvement.

[0] https://en.wikipedia.org/wiki/Georgism

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