Why is this so hard to understand?

Let's try a small example.

In a city there are ten houses. Five are vacant, let's call them new construction.

Five people are moving to the area.

Everything sounds good, right?

Blackrock buys 3 of the homes. Now 5 people have to fight over 2 houses. This drives housing price up as they bid with each other.

The remaining 3 losers are forced to rent. Blackrock can now charge more money because a) house prices went up, and b) there are no other places to live.

To be clear, this is talking about what's happening in -my- area. And based off your Nimbyism comments, I can assure you that it's not the same as your area.

Blackrock bought the 3 houses because they believe they will make money on them. If that's true, then even if you remove Blackrock, then someone will fight to buy the house because of the positive return on investment.

Any solution requires that buying an existing house is no longer directly profitable. However, as originally posted, that goes against the goal of having houses increase in value, a goal which too many voters share.

Put simply, to make houses affordable, you have to drop (or stabilize) prices. If prices are now stable, then your Blackrock problem just goes away.

There are a few ideas that preference individuals over Blackrock (rules about how many houses you can own, tax rules that preference primary residences, etc...). Some of these can help, but still, if prices keep going up, then new residents won't be able to buy, and you still have the same disaster.

EDIT: I am partial to a ludicrous capital gains tax on property (like 70%). However, it's possible that will harm liquidity, so who knows!

Blackrock isn't the only player in the market. If their rental prices are "too high" other rental properties will be listed for less.

The problem is single-family homes being bought by investors to rent in the first place. People want to buy, but even low interest rates allowing my bank to offer me cheap money can't out-compete a large investor that has more more assets that allow them access to even more cheap money.

I get that no one has a God given right to home ownership, but we've made a deal with the devil where home equity and housing appreciation are major stores of wealth for the middle class. Letting the investor class corner this market feels like kicking out the ladder for anyone not already on it.

Then we need to build more housing to meet demand.

> but we've made a deal with the devil where home equity and housing appreciation are major stores of wealth for the middle class. Letting the investor class corner this market feels like kicking out the ladder for anyone not already on it.

But it's not the "investor class" that's cornering the market, it's current homeowners. Housing prices are going up due to a limited supply, something that many current homeowners actively fight for

> But it's not the "investor class" that's cornering the market, it's current homeowners.

It can be both. One keeps supply from entering the market, the other buys out the supply that does enter the market.

Long term, yes, we need to build more houses. Americans should also probably adjust their expectations and zoning laws to expect less detached single-family houses. We also probably need to stop treating residential property as an investment, however we go about doing that.

Lots of people prefer renting. They may be in the area for only a short term. They may be unwilling to make the financial commitment necessary. They may be uninterested in the work and hassle of owning (like mowing the lawn, cleaning the roof, etc.). They may not want to deal with all the hassles and stress when selling.

Yeah, that's great and all, but there aren't enough houses for the people who want to buy. The fact that some people like to rent doesn't change anything about what I said.

> there aren't enough houses for the people who want to buy.

That's true of every item on the free market. It's why markets exist.

Note that air is essential to life, but nobody is selling air. There's no marketplace for free software, either.

Sorry, I'm dipping out of this conversation because I don't like arguing...but this is a troll position.

Would you feel the same way if you or your SO had some awful disease, and someone was buying all the medication and selling it at a price out of your reach? 'Sorry honey, we can't afford medicine, that's the market working lol.'

And before the argument starts 'well, someone else would just make more...' that takes a lot of lead time, like houses do. And by then, aforementioned medicine buyer has made enough profit to buy even more.

I mean, it happened with TP or all things. There was enough for everyone, until people got greedy with it. Happens with gasoline yearly.

Seems people with houses don't care because it's good for them. Hell, I made a lot of money in all of this even.

Please understand I'm not arguing from a position of need. I don't need a house, and if I did, I'd just buy one.

I'm arguing for people like my brother, who worked hard their whole life and keep getting priced out by asshole investors.

In summary, I only ask you attempt to look at problems from a lens different than the one people like you and I currently look at things. It's easier when you know and love people affected, admittedly.

The thing about shortages is they are caused by anti-gouging laws.

> Would you feel the same way if you or your SO had some awful disease, and someone was buying all the medication and selling it at a price out of your reach?

What is your proposed mechanism for deciding who gets it and who doesn't?

>Note that air is essential to life

There are some items that are essential enough where society has determined the market is not the appropriate mechanism to manage supply and demand. Not how we regulate clean air/water supply rather than leave it up to the market and how citizens in some areas have rejected claims by corporations to market previously free resources.

There are some who would say housing falls into this "essential" category and thus should not be entirely a free-market (I'm not sure I'm one of them, but think it's important to acknowledge the position in good faith).

Lots of markets are well supplied and have prices that more or less follow costs.

And then there's businesses that do sell bottled air and people that do contract work or paid support on free software.

> then there's businesses that do sell bottled air

They're selling compressed air. That's added value.

> and people that do contract work or paid support on free software

They're being paid for a service, not the software.

But hey, I'm an enterprising man. Send me $100 and I'll send you a package with air in it and instructions for downloading free software.

Your scenario is that of a monopoly. Monopolies don't happen in a free market. They happen when the government outlaws competition.

The usual way the government accomplishes this in the housing market is by making it difficult or impossible to build more housing.

>Monopolies don't happen in a free market. They happen when the government outlaws competition.

This is true for a subset of regulated monopolies, but there is also the concept of a natural monopoly which does not require any governmental intervention

Name one!

The most obvious historical example is Standard Oil, but many would consider social media companies to be natural monopolies in the current context. Here, read up for yourself.

https://www.investopedia.com/terms/n/natural_monopoly.asp

SO never had a monopoly. Ironically, throughout the long anti-trust trial, SO's market share kept sliding. SO was never convicted of having a monopoly, it was convicted of certain business practices.

> many would consider

I don't. Many of the current top ones replaced the previous top ones. Not many even remember AOL.

I mean, they essentially operated 9 of every 10 refineries. That was enough for both the NJ and US courts to deem them a monopoly (yes, they used those words).[1]

And since a monopoly is just “certain business practices” that unfairly constrain competition, your definition seems to be a difference without a distinction.

[1] Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911)

SO's market share declined substantially throughout the trial. How does that fit your thesis?

See "Titan" by Chernow.

If you agree that more risk tends to push prices lower with all else being equal, I don’t see that being indicative of evidence considering investors would presumably be pricing in regulation risk.

But in any event the price at trial is not necessarily indicative of unfair anti-competitive business practices. The trial was not necessarily about the current practices at the time of the trial, but broke the business practices into three distinct periods dating back to 1870.

Why did SO's "natural monopoly" keep sliding away from them throughout the trial period?

I don’t think you’re tracking. There’s no guarantee a natural monopoly will remain in place forever or reuse we’d still be working by whale blubber light. What happened to the business during the trial is not necessarily relevant to the trial ruling.

I think a better question for you to ask yourself is “why did the court determine they were acting in a monopolistic manner?”

I’d suggest reading the previously referenced court ruling to get your answer.

If you want to call SO a "natural monopoly", the evidence does not support that conclusion. Nor did the trial conclude SO was a monopoly. That's my point here.

Rockefeller was convicted of being rich. That's the bottom line.

Except multiple courts disagree with your conclusion and found Standard Oil guilty of anti-competitive price fixing. Meaning they found evidence to the contrary of your point.

Here is a part of the majority court decision written by Chief Justice White:

"constituted a combination in violation of the first section and an attempt to create a monopoly or to monopolize"

See the word "attempt". That changes everything. They were not convicted of having a monopoly.

Uh, no. Feel free to read the actual referenced judicial opinion rather than cherry-picking to suit your conclusion. That was the word used in the charge. Here's more of it:

>"entered into agreements with, various persons, firms, corporations, and limited partnerships engaged in purchasing, shipping, refining, and selling petroleum and its products among the various states, for the purpose of fixing the price of crude and refined oil and the products thereof, limiting the production thereof, and controlling the transportation therein, and thereby restraining trade and commerce among the several states, and monopolizing the said commerce"

If actual price-fixing to monopolize commerce isn't part of your unique definition of a monopoly, I don't know what else to tell you. It's pretty hard to price fix without a monopoly, but as we already discussed they were able to do so because they controlled over 90% of refineries at the time. (And before you jump in again - erroneously - about their price during the trial, this monopoly charge was related to actions decades earlier). But it's pretty obvious from your relentless rules-lawyering/wordsmithing that either you aren't responding in good faith or don't actually have the ability/willingness to read evidence objectively.

Cognitive dissonance is a hell of a drug.

This article[1] from Brookings says,

>> At the time of the divestiture, the oil industry was becoming competitive because it was moving into Kansas, Oklahoma, Texas, Louisiana and California—states where Standard Oil didn’t have much power. The price of petroleum was actually falling in the years before the case, because these new fields were pumping so much crude. The breakup had no measurable effect on oil production, crude-oil prices or refined-product prices.

(The article does say that antitrust actions were necessary to make cigarettes affordable, though.)

For a rather less charitable take, [2] from the "Competitive Enterprise Institute" says,

>> Standard Oil Co. of New Jersey v. United States had a defendant that was cutting prices while increasing output. The case also lacked evidence of either predatory pricing or consumer harm.

After this quick bullet-point summary, there's more content below with references to other academic sources, page 2 is pretty interesting.

> many would consider social media companies to be natural monopolies in the current context

They have positive returns to scale, but even this phrasing ("social media companies") deflates the argument -- Facebook competes with Twitter competes with TikTok competes with Reddit competes with Youtube etc. They're big enough to exert market power, but

- Some of them seem to dislike using that power (to the horror of authoritarians in many governments who want to co-opt it), and

- If they abuse that power to the detriment of users (raising prices too high, banning enough communities) users will go elsewhere.

1: https://www.brookings.edu/opinions/if-it-aint-broke-dont-bre...

2: https://assets.realclear.com/files/2021/01/1755_antitrust.pd...

For just about any ruling, I’m sure you’ll find dissenting opinions. The only opinion that matters in the end is the court’s and they concluded it was a monopoly.

For the record, with my limited understanding I don’t think “social media companies” are monopolies because they do not run afoul of general consumer prices because their products are typically free. They may deserve to be regulated under a different framework, but they don’t seem to fit the anti-trust paradigm. I brought them up because others, including the authors of the link I provided, consider them natural monopolies

> The only opinion that matters in the end is the court’s and they concluded it was a monopoly.

I guess I'm less convinced of judicial infallibility, but I'll grant you it anyway. Mostly I don't think the important question here is the legal standard (which is of course what the court is interested in) than the question of whether the law is achieving its intent. If the law says that a company that is lowering prices and losing market share is a monopoly that should be broken up, the law isn't really reflecting mainstream thought about antitrust -- that market concentration is self-perpetuating and harms consumers.

> If the law says that a company that is lowering prices and losing market share is a monopoly

Gates was convicted of giving away Explorer for free. Nobody managed to show that harmed consumers.

Like Rockefeller, Bill Gates was convicted of being rich.

You have an interesting way of rewording court decisions to fit your narrative.

Here's what MSFT was actually taken to trial for:

"monopoly position in the market for operating systems designed to run on Intel-compatible personal computers ("PCs"). Specifically, the plaintiffs contend that Microsoft violated § 2 of the Sherman Act by engaging in a series of exclusionary, anticompetitive, and predatory acts to maintain its monopoly power. "

Not "for Gates being rich." Now, his wealth may have put the spotlight on him, but that doesn't negate the court decision on his actions. I can lament that the only reason I was pulled over was because I drive a red Ferrari, but that doesn't mean that my speeding wasn't illegal.

The entire case hinged on Windows including Explorer for free.

> red Ferrari

Selective enforcement is a real thing, and why the offense written on the ticket is not always the real offense.

Oh I’m not claiming they are infallible, my point is that in a pragmatic sense theirs is the opinion that matters.

Here’s why I think you’re previous comment misses the mark: the court ruling was not about whether the company was monopolistic at the time of divestment (1911), the ruling was against business practices that occurred previously, dating back to 1870. It’s possible those practices were unfairly anti-competitive while also no longer creating a monopoly decades later due to other factors.

SO was never convicted of being a monopoly.

Again, read the actual court decision on the case rather than draw your own conclusion. They were found guilty of unreasonable restriction of trade, which is to say guilty of monopolistic behavior.

"was in restraint of trade and amounted to the creation of an unlawful monopoly."

Monopolistic behavior is not the same as having a monopoly.

Land in desirable locations.

You can't create more land in the middle of San Francisco, so the land-owners of the land in the middle of San Francisco have a natural monopoly on the land in the middle of San Francisco.

> Land in desirable locations.

"Desirable" locations is a completely subjective term.

> You can't create more land in the middle of San Francisco

Yes, you can. We call them skyscrapers.

> "Desirable" locations is a completely subjective term.

Alright, use "valuable" then. Value is derived from people's desire to purchase the land, which means valuable land is equivalent to desirable land.

> Yes, you can. We call them skyscrapers.

Skyscrapers aren't land.

I'm not entirely sure you're conversing in good faith but I'll do my best to assume you are. Land is a natural monopoly, and the most classic of all. For example, the land surrounding Central Park in New York City is of limited supply. If you want land which borders, say, the west side of Central Park, then there is even less land available.

If someone owns all of the land that borders the west side of Central Park, then no one else can use that land unless they are permitted to by the owner. This means that the owner has a natural monopoly over all land that borders the west side of Central Park. You cannot create more land that borders the west side of Central Park.

Now, if you wanted to live in a house or apartment that borders the west side of Central Park, your only option is to negotiate with the land-owner. They may sell you the land, or rent the land to you (or rent you an apartment or house on that land). If living on the west side of Central Park is something desirable to you, then the land-owner can charge you the absolute maximum price you are willing to pay for living there. You have no alternative, except to not pay at all. If you are willing to pay $1000 a week to live on the west side of Central Park, the land-owner can charge $1000 a week. It is entirely independent of the labour and costs of the land-owner, and entirely based on your willingness to pay.