The Economic Ignorance of Saying Landlords and Stock Traders Contribute Nothing to Society

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Finding anti-capitalist (or better said, anti-business) wokes on Facebook (of all places) is just plain funny. Maybe, the term socialist isn't so negative since the late Lee Kuan Yew considered himself a socialist, the late Deng Xiaoping is the author of Socialism with Chinese Characteristics, and Vietnam still considers itself as a socialist country. The picture above this paragraph says that landlords and stock traders allegedly "contribute absolutely nothing to society". I feel compelled to write a bit of a post since, as a business graduate, I do feel insulted. Then again even if I didn't get an MBA--I do still feel insulted myself!

How good landlords contribute to society 

Landlords are often said to be a blight. Some say that it's the "easiest job in the world". However, managing real estate (especially rentals) isn't as easy as some think. I wrote an essay as to why being a landowner isn't as easy as some people think. I would like to discuss why in this essay.

Some people say the land should belong to them because they're the ones tilling the land. What they don't realize is that for every rental fee they pay--the landowner is required to keep the land they own usable. Those who rent the land, till the land, because they rented it in order to till it. The farmers who rent the land, rent the land, so they can have land to use. There are terms and conditions that both agree on. A landlord is always required to keep the land in good condition, repair any damages, and to respect the right of the farmers. A landowner is also required to keep the land for lease clean and orderly when it's not used.

Landlords don't just rent out land. They also rent out spaces either for commercial or residential purposes. Not everyone can afford land or need a temporary place to stay. If I don't intend to live in the place for too long--why would I buy a house that I don't intend to stay there for too long? If I would go to Manila then I would consider temporarily renting a space until I find a better place. It wouldn't make sense for me to buy a place in Manila if I'm not going to be always there. I would be better off renting a place for a year or two as a temporary resident.

Every landlord is required to be a good landlord. Any landlord that abuses their privileges loses any future gains. A landlord is required to make their spaces habitable such as meeting safety standards. If a commercial space or residential space is rendered inhabitable--such a landlord deserves to be arrested. If not, a landlord who takes care of the spaces, answers to the necessary complaints of the tenants, and the like deserves to get paid. A landlord who charges exorbitant fees deserves no tenants. A landlord who charges reasonable fees and gives the best quality service deserves the best tenants. 

Ironically, some people who say landlords are doing nothing love to go to the mall. I end up meeting such idiots in SM Center Cebu or at the Ayala Cebu malls (Ayala Center and Ayala Central Bloc). Don't tell me they think that the malls aren't owned by landlords? Don't tell me that the places they go inside the mall aren't renting the space at the mall? Malls don't make money by selling the spaces. Malls make money by renting the spaces. How can these landlord-haters hate landlords but go the mall? A mall is owned by a landlord. Do they even realize that landlords are still required to pay taxes. Every official receipt issued to any tenant is a tax deductible. 

I wonder if these people complaining are actually the ones contributing nothing at all. It's because I feel that those who are hating landlords either (1) use the bad landlords in the fallacy of Hasty Generalization, (2) they're habitually delinquent payers because they love to waste money, or (3) a bad combination of both. Some delinquent payers tend to be gambling addicts and lazy moochers. Do they even bother to ask themselves where will the landlord get the money to buy the materials needed for repair? If they don't pay the electrical company money then how will it generate electricity? I guess they want it to rain money, to have free stuff all the time, and not to do anything. In short, thinkers doers.

How do stock traders actually benefit society?

Right now, I'm invested in stocks via equity funds. I personally recommend that if one wants to invest in stocks and they're not technical--get an index fund (which contains all the companies in that index) or a feeder fund. It's not easy to come up with one's own portfolio unless one's very technical. Then again, most of the stock market horror stories I heard were actually a result of day trading instead of long-term stock trading. Now, to understand stock trading from Investopedia--a source hated by anti-business wokes too. 

A stock trader is a person who attempts to profit from the purchase and sale of securities such as stock shares. Stock traders can be professionals trading on behalf of a financial company or individuals trading on behalf of themselves. Stock traders participate in the financial markets in various ways.

Individual traders, also called retail traders, often buy and sell securities through a brokerage or other agent. Institutional traders are often employed by management investment companies, portfolio managers, pension funds, or hedge funds. As a result, institutional traders can have a greater influence on the markets since their trades are much larger than those of retail traders.

Becoming a stock trader requires an investment of capital and time, as well as research and knowledge of the markets.

Some people think stock trading is so easy. Not really, especially since most stock market horror stories do stem from people who actually try to invest in the riskier world of trading individual stocks. We do need to understand that a company gets money in two ways. One is the money market where bonds are given. A bond is when a bank depositor agrees to let a certain company borrow their money for a fixed period of time. It's like I allow SM or Ayala to borrow a certain sum within the bank's bond offerings. Meanwhile, a stock is when I buy a piece of the company. In a sense, when I enter into an index fund or a feeder fund, I'm buying pieces of equity of the company within that portfolio. A consumer feeder fund means I'm buying a piece of several consumer companies. A technology feeder fund means I'm buying a piece of several technology companies. A PSEi index fund means I'm buying a piece of the 30 best companies.

From Investopedia yet again, I'd share this definition of the stock market:

The stock market provides a venue where companies raise capital by selling shares of stock, or equity, to investors. Stocks give shareholders voting rights as well as a residual claim on corporate earnings in the form of capital gains and dividends.

Individual and institutional investors come together on stock exchanges to buy and sell shares in a public market. When you buy a share of stock on the stock market, you are not buying it from the company, you are buying it from an existing shareholder.

What happens when you sell a stock? You do not sell your shares back to the company, but instead, sell them to another investor on the exchange.

In other words, the stock market sells stocks in order to finance their companies. They do have to pay back the loans they owe the bank. Corporations have bigger expenses than partnerships and sole proprietorships. They need tremendous amounts of money for capital. What's the capital to be used for? Corporate expenses will include the salary of all types of employees, utility expenses, maintenance expenses, Research & Development (RnD) for better services, and every related expense. With the stock market, I'm confident that they can start to provide better services, maybe even ways to provide more affordable services in the future (possible through economies of scale), and be able to expand at a worldwide scale. Jollibee started off as a local Filipino company but has expanded worldwide since then. 158 branches in Vietnam and 500 branches in China, both Communist countries.

As part of the history of China and Vietnam, these Communist countries integrated the stock market inot their country. The late Deng Xiaoping saw the power of the stock market and what it could do to empower the Chinese communist state. The late Nguyen Duy Cong (Do Muoi) used the Doi Moi program. Doing so allowed both Communist countries to win against North Korea's hermetic kingdom. The stock market remains a powerful force if used right. 

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