Notes Book


Slavery has been largely eliminated from the world. Morally, it was just not fair. Practically, it led to violence and conflict. The definition of the relationship between owner and slave was that whatever the owner did was right. The slave was subject to the whims of the owner. The rules of the game explicitly stated that the owner could not lose and the slave could not win. Therefore the only way the slave could win, or even experience a feeling of personal satisfaction was to break the rules.

The game of owner slave was not fair, and that caused people involved in slavery to fight more and work less than people is a free market economy. Societies that embrace authoritarianism in any form are less prosperous than societies in which all people are viewed as equals.

Slavery is far from the only social arrangement that suffers from this defect. The landlord/tenant game is similar, though not as extreme. Rent is inherently unfair to the tenant. The tenant is basically paying for the property he occupies at an infinite rate of interest. Because he has no ownership interest in his home, he has no motivation to improve or maintain his home. Rented properties are mostly poorly maintained, and rarely improved. Even if a landlord wants to improve a rented property, the tenant is likely to resist. The process of improvement is likely to disrupt the tenant's life, and the landlord is likely to want to raise the rent once the improvement is completed.

Rented properties are not maintained and improved as well as owner occupied properties. This does not happen because tenants are lazy or landlords are evil. It happens because both are reacting rationally to the constraints of the landlord/tenant game. The design of the game is inferior to the design of the buyer/seller game in terms of its utility to both the landlords and tenants and the society as a whole. Unfortunately, both landlords and tenants often fail to realize the problems they are creating for themselves and the larger society.

The owner/occupier of a property has every incentive to make improvements on his property. He can control the process of improvement so that it has minimum impact on his life. He can choose what improvements he wants, and the timing. His house payment will not increase, but his equity will.

A tenant has incentive to move often. Landlords have difficulty maintaining a property while a tenant is in residence, but when the property is vacant, they must fix it up so they can rent it. When the property reaches a threshold level of disrepair, the tenant moves, and the landlord does the minimum amount of work necessary to attract the next tenant. This causes a lot of unnecessary moving around which is very expensive to the society. In addition to the costs of renting vans and the labor of moving, it takes a lot of effort for people to adapt to a new home, and this cost must be deducted from the GDP of the economy as compared to an economy composed entirely of owner/occupiers.

These negative effects of renting are well known. Various corrective measures have been tried. Rent control is one favorite, which only make the situation worse. That is an attempt to ameliorate the negative effects of asymmetric landlord/tenant game by introducing the asymmetric state/landlord game. Rent control turns a single disaster into a double disaster. The only hope of a cure is to make the game symmetrical. Even the mostly incompetent US government is savvy enough to track statistics on home ownership and rentals, and boast when the rate of home ownership rises.

You might think that if you are neither a landlord nor a renter, you are unaffected by this problems. That is not true. The society that allows this inequity to continue is an inefficient society whose growth is stunted by the conflict and waste of unnecessary landlord/tenant fights, and the lost potential of tenants not making improvements on their homes. The tenant is the modern version of the medieval serf.

The buyer/seller relationship does not suffer from the defects of the landlord/renter relationship. It is as symmetrical as the society can make it. So a very practical way to minimize the rent problem is to convert rental agreements into sales. As an opponent of Statism, I can't suggest that passing laws would best solve this problem.

On the other hand, in a stateless society, that transfer of real property would need to be regulated by some set of commonly understood conventions, so I could suggest a set of methods that might be better than the ones we now have. Obviously we wouldn't want to limit the ability to rent a motel for travelers, and people would still need to be able to rent tools, and vehicles. Handling the ownership of roads and various other right of way issues would need to be revisited.

But it might be appropriate to have social conventions that encouraged the conversion of all rental agreements into sales agreements after a period of time has passed. After you have lived in a place for some number of months and paid your rent, you would automatically start to have an ownership interest in the property.

A corollary to this convention would be diluting the ownership of property on which the owner did not live. If a person owns property, but does not live there most of the time, he should put it up for sale. One person should not be able to own more than one piece of real property for an extended period of time. Absentee ownership of real property causes all sorts of problems, and should be discouraged.

Zoning laws, building permits, and restrictions on splitting and merging parcels should be weakened or eliminated. The owner/occupier's rights should be strengthened and the absentee landlord should be discouraged.

If these conventions could be established, there would not be two separate markets for sale and rental of homes. Sale would be the only option, and every person able to pay a reasonable payment would be able to be secure in his home from rent increases with the assurance of eventual outright ownership if he made agreed upon payments.

I'm sure there would be problems I am not anticipating, and perhaps benefits I don't foresee, but I think that taking steps to end the current inequities would benefit all members of society.

Perhaps we can't all play the game for the same stakes, but all of us would be better off if we were all playing by the same rules.