The Rent is Too Damn High? Let Them Eat Cake

The Rent is Too Damn High? Let Them Eat Cake

The Princesses (to each other): "The peasants have no bread again," said one princess. "I hear their rent is too damn high," said another. "Then let them eat cake!" they shrieked together with delight. Oh, what fun it was, having a little laugh at the peasantry - that squeaky bottom rung. It was always whining about something, always so hungry. Like, bleh, get over it already, peasants. Go back to our distribution centers and make us more money.

The Peasantry (to themselves): What's next right? You finally graduate from paying your too-high rent to paying a too-high mortgage, and now you're on the bank's hook for the next thirty years. That's a third of your life. And maybe you'll own your little slice of the pie at the end of it - for your last 20 or so arthritic years. Your old rent and your new mortgage payment are both going to the same private equity princess, as they like to remind you - the same private equity princess that owns the bakery that controls the supply and prices of bread and cake that you also can't afford.

It's the inflation they say. It's the cost of living. It's the corporate taxes. What a delight right? Just not for you. While the princesses of the private equity kingdom lounge against the growing piles of the money that used to be yours, your little collection of crumpled bills and coins just got a little smaller. And with that dwindling little pile of change, you still have to pay your own taxes.

The Concentration of Global Wealth

As the concentration of global wealth ends up in fewer hands, the rich continue getting richer as the poor continue getting poorer. According to the Forbes 400 list for 2023, the richest people in America grew $500 billion richer last year with a combined wealth of $4.5 trillion. The annual Oxfam inequality report released in January 2024 also concluded that the world's five richest men have more than doubled their wealth since 2020 while the world's poorest five billion people have become even less financially secure. To put it in perspective, if each of these five men were to spend a million dollars a day, it would take them 476 years to scrape the bottom of their coffers.

And here you were worrying about making your monthly rent or 30-year mortgage payment. In a world where the "richest 1% own 43% of all global financial assets," the proceeds from your rent or monthly mortgage payment are increasingly going to the same landowner. The data shows that the proportion of privately owned property being accumulated by the world's wealthiest people and corporations is an ever-growing one. As private property worldwide progressively becomes owned by a smaller percentage of the world's wealthiest individuals and private equity firms, the remainder of the world's population is becoming all the more land-poor. But the more disparate a society becomes in terms of land ownership, the closer that society begins to resemble one when all was owned by a few, and everyone else was either in the labor of that few or a beggar.

Such is the way the tide turns in the United States today, with approximately 60% of the land surface being owned by an increasingly smaller number of private individuals or corporations. Of the 1.9 billion acres of land that make up the contiguous 48 States, approximately 1.3 billion acres are owned by approximately 77 million private landowners. The 25 largest U.S. private landowners own 24.1 million acres between them, or slightly less than a million acres each on average. Of the remaining land, the federal government controls approximately 640 million acres, with state, local, and Indian lands comprising the remainder. In other words, the opportunities for land ownership in the Land of Opportunity have become less opportune for the majority of Americans.

All Hail the Private Equity Landlord

With its current population of 342 million people projected to increase to 383 million people by 2054, many millions more Americans will never own property in the U.S. than the number of those who already do. As values continue to rise on limited land resources, land ownership will eventually be concentrated amongst a small number of wealthy private and corporate entities in the U.S. And as those limited properties are acquired, the data shows that their owners are not selling. The remaining land-poor American majority will be relegated to renting from a wealthy minority of property owners, a newly landed aristocracy within a nation founded on the premise that an individual's right to own property is essential to liberty.

The U.S. is not alone here. Less than 1%, "including aristocrats, royals, and wealthy investors," of the approximately 56 million people comprising the British population in 2019 owned about half of the land in England. Throughout the world's advanced economies, limited housing supplies, still-elevated home prices, and higher interest rates continue to stifle housing affordability for many prospective home buyers. Indeed, PWC's Emerging Trends report for 2023 noted that housing affordability had hit a 30-year low with rental property and for-sale housing prices soaring to unprecedented levels. And according to a 2022 MetLife Investment Management report, "institutional investors may control 40% of U.S. single-family rental homes by 2030."

As private equity firms quickly buy up the limited for-sale residential properties that do go on the market, single-family houses and apartment buildings that were once in reach of the individual prospective owner are no longer. Over the last few years, private equity-backed real estate investment firms including Blackstone, Colony Capital, and Greystar have acquired billions in residential properties throughout the country. But why stop at ownership of these properties when there's more money to be made? It is, after all, just business. Through a process of "re-tenanting," these new private equity-backed landlords simply "force out existing renters to make room for others who can afford higher rents."

Kick Rocks, Peasant

The tenants of the medieval feudal order, or "serfs," as they are more commonly known, lived and worked on the manors of their lords. In exchange for their labor and the taxes imposed upon them by a manor's lords, these propertyless serfs were afforded housing, farmland, and protection. Generations of lords and serfs thus coexisted in an unequal social hierarchy as long as the serfs didn't develop any revolutionary aspirations or fall too behind on their taxes. If a lord did so fancy a serf's removal from their manor for such an offense though, a serf had little redress. It was just, "Kick rocks, peasant. Thank you for your ser[f]ice."

In today's modern, evolved society of private equity manor lords and princesses where the property-poor are less bound to the land than those serfs of yore, tenants for who the rent is too damn high may also find themselves re-tenanted - forced to hit the proverbial road by their higher rent seeking-landlords. With record numbers of homeless Americans being reported over the last few years due to ongoing inflation and rising rental prices, this prospect is more reality than myth. According to a January 2024 report by the Joint Center for Housing Studies of Harvard University, 653,100 Americans were homeless in January 2023, "an all-time high."

Among these numbers experiencing homelessness is a segment of the U.S. population that has been particularly vulnerable to rental increases and economic fluctuations, the aging baby boomer generation living on fixed incomes. Dennis Culhane, a professor at the University of Pennsylvania's School of Social Policy & Practice, told the Wall Street Journal in September 2023, "The fact that we are seeing elderly homelessness is something that we have not seen since the Great Depression." With the number of unhoused people aged 65 and older in the U.S. expected to nearly triple by 2030 and private equity firms projected to own far more residential housing by that same year, the future of the peasantry is not a bright one - least of all for the elderly.

Up Next: A Modern Neo-Feudal State