alt Hacker NewsIn every other case, in every other industry, we call people who buy a limited resource, transform it in no way, and sell it at a profit a "scalper".
For a long time I thought, "maybe landlords are offering some service and not just squeezing people...." But over the past decade it's become clearer and clearer how predatory and parasitic the industry is. Things like this. Things like landlords all using the same pricing algorithms so they can raise rents in unison.
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But scalpers don't take money from you.
Consider a second-price auction: everyone submits bids, the highest bidder gets the resource, and pays the price submitted by the second-highest bidder. This is incentive-compatible: everyone is incentivized to submit the maximum amount they're willing to pay, no more no less. Does it matter if the resource is being sold by its original owner or a scalper? No. Who gets the resource and how much they pay depends only on which people wanted the resource and how much. The only loser from the scalper's existence is the original owner, because they sold to the scalper too cheaply.
If there are villains in this situation, they aren't those who extract market price: a scarce resource was always going to be sold at market price. If the price is set lower, people will line up in queues and so on, to "burn" an amount of patience and time equal to the price difference in their eyes. Except in a queue all participants end up spending this "burn", so it's strictly more wasteful for society than a market where only the winner pays.
No, the real villains are those who engineer the market so the resource is scarce to begin with. In case of housing: not landlords, but people who vote for laws restricting housing construction. In other words, most homeowners. That's the unpleasant conclusion that people are trying to ignore when they blame landlords, price fixing and so on.
Buying something that is being sold for less than it is worth and then immediately reselling it for what it is worth is what I would call "arbitrage". So someone doing that would be an arbitrageur.
In your opinion, what is the difference between arbitrage and scalping?
Even grocery stores fit your definition of scalpers.
But this is even more different because they don't even sell the housing to you, they rent it to you. The service they offer is that you don't have to have capital to buy a house and you don't have to maintain it and if you move, you don't have to sell it and pay sales taxes.
Single family used to act as a check on greed. Careless institutional investment was limited to multi family. They couldn’t push multi family rents beyond single family. Once institutional got into single family, everything became uncapped. It’s harder for millions of small landlords competing for tenants to act as a cartel than it is for a few large landlords taking up marginal supply.
In economics its rent seeking.
The question is, whose gonna stop them
A 100% rate LVT would not solve, but would certainly massively improve, this situation. The free market is ill-suited for many things and has tremendous problems, but even in its theoretical ideal it simply does not work if a limited commons such as land is not properly accounted for, and instead intermediaries and speculators can extract "rent" (in the economic sense, as rentiers) without providing a service.
Actually we call them arbitrageurs and see them as helping to minimise price distortions across markets. It's only in a small number of consumer facing contexts where retailers deliberately sell goods below the price set by supply and demand that some call them scalpers.
Also landlords, even the psychotically greedy ones doing things like this article describes, are neither arbitraging nor scalping. That'd be house flippers.
I don't order delivery food, but I recently learned my Amazon Prime membership includes GrubHub Premium membership, and fees were waived, so I said why not give it a try.
The no-fee price for the order was $70. Going directly to the restaurant website would have been $38. Item prices were higher, there was a non-fee driver fee, and there was a non-fee order fee. I shudder to think how many more fees there would have been if I were a non-non-fee member.
The only advantage I can see from DoorDash, GrubHub, Postmates et al. is that they provide a directory of places willing to deliver to me. For that, every restaurant suffers from 80% higher delivery prices, or faces the challenge of advertising itself against all the delivery platform giants. I fail to see how anyone but the platforms have benefited from this new normal.
There has to be another name for this than mere rent-seeking or scalping. Extortion?