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If the asset, say a house, already exists, then there are no costs of production apart from maintenance costs. Those who receive unearned income from existing assets do so not because they are in any sense ‘deserving’—they have not contributed anything that did not previously exist—or because they are judged by others as needy and unable to provide for themselves, but because they can. This is power based on the unequal ownership and control of key assets, what J.A.Hobson called ‘improperty’ in the 1930s.
Let’s say you get £10,000 profit from your house. That money can only have any value if there are goods and services you can buy with it. And for that to be possible, the makers of those goods and services have to produce more of them than they can consume with their own (earned) income. So your £10,000 of unearned income is parasitic on the work of others.
[The] investor’, the landlord, and the bank providing the mortgage are all ‘rentiers—recipients of unearned income, based on the control of existing assets that others need or want, rather than on contributing to the provision of new goods and services. As such, their income is a form of free-riding on the labour of others.
Think of investing in equipment, a new firm, a school, a training programme, or wind farms. Here the term is used to refer to wealth creation—things which improve the provision of goods and services like better machines, new products, new skills and cleaner energy.
But then think of gains ‘investors’ might get from renting, lending, buying stocks or bonds and other financial assets, buying up existing property and waiting for its value to go up, and speculating. Investments of this second kind need have no connection with investments of the first kind. They need not create anything new. All they are supposed to do is provide a return for the ‘investor’—wealth extraction, regardless. On this definition, gambling is a form of investment.
originally posted by: Edumakated
You mofo's need to go back to freshman year of college and study basic economics. Seriously. The constant drivel about the rich and how unfair it is that some people make investments is just tiresome. If any of you have a pension, 401k, or any other kind of investments you are making unearned income.
People invest their money hoping to get a return. There is a level risk associated as you may actually lose your money. You know that old adage of risk and reward. The greater the risk, the greater the reward.
Choosing to invest in real estate or other asset classes hoping to get a return is not evil. The point is you see value in something that someone else may not. That asset's value increases and you reap the reward because you took the risk of investing your money (or leveraging up with a mortgage or other debt).
I bought a condo in a neighborhood that most people seemed to ignore, but I saw potential. Took out a 100% loan at the time to buy it. I maintained the property, shopped at my neighborhood stores, etc. Next thing you know, the neighborhood is all of a sudden really popular and my condo increased in value by $100k. I sold it and reaped the capital gain from selling a price higher than I paid. How is this evil? I could have also lost my azz by the value going down.