Are we exploiting each other through ‘passive’ income?
Insights from living in a world where we have to aggressively compete with each other in order to have a home and meet our material needs.
This morning I was pondering that as a society, we have become addicted to this idea, that it is a positive and industrious endeavour to earn passive income from other people’s earned income, through rental properties.
“He who sees the truth, let him proclaim it, without asking who is for it or who is against it.”
― Henry George
It’s quite an innocent sounding word, ‘passive’.
adjective
- accepting or allowing what happens or what others do, without active response or resistance.
In the majority of cases, these ‘other’ people, who are actually creating the value by paying the rent, do not yet own a property, i.e. a house to live in, they do not have a home, so they are forced to pay the rent.
Usually people renting are less well off than their landlord, because of their ownership contract. In Ireland and the UK at the moment, renting a home means living in conditions not fit for what a secure home (and life) requires: ability to put down roots (not having to face evictions on the whim of the landlord), fair rent, and the freedom to adapt the space to your needs.
Today it is completely socially acceptable for landlords to live off, the profits derived from other peoples (tenants) labour.
The aggressive privatisation of our housing and land markets of our current era began in the 1980s in the UK, has meant that there are no other viable options for many, and making homes available to people is now a profit-making pursuit. As citizens we have to aggressively compete with each other to access a home.
The private market is ill equipped for the responsibility of fairly allocating land and / housing / homes.
This is not a new problem.
A growing unease with the current ‘property industry’ or ‘home industry’ has been bubbling up inside me as I have been reading about the lives of people who endured slavery, the emancipation of slavery, and the tenantry system under the British Empire. When slavery was abolished in 1838, the landowning classes who ran the sugar plantations, did not lose out on any profit, even though they potentially could have lost their entire fleet of workers. How did they ensure this? Because the plantation owners also owned all of the land on the island of Barbados, along with having control of the legislation — meant that they could control the emancipated people by making them work to pay rent, in exchange for a home. By inventing the tenantry system — the former slaves became ‘tenant’s.
If the former slaves had been given some land, to grow their own food, build homes, along with the abolishment of slavery — the plantation owners would have suffered big losses in profits, and would likely have had less control over a vulnerable workforce who were reliant on the plantations for survival.
I have to admit that I can often feel a sense of judgement towards people who are making money this way, i.e. rental income — which is indirectly profiting from the work efforts of another — especially when it directly affects me, eg if I am sharing a house with a landlord who is living in the same home. The social connection can become somewhat fractured because of the power dynamic that exists, and I can justify my resentment by being judgemental, that it is somehow ethically wrong, to be doing this, to be earning money in this way.
Holding on to judgments and resentments is a horrible thing. I believe that, I should not judge another persons behaviour, and I cannot presume that I wouldn’t do the same if I were in their shoes.
I don’t know their history, their upbringing, the stories they have been told, the way they have been taught to act in the world.
judgement
noun
- the ability to make considered decisions or come to sensible conclusions. “an error of judgement”
- a misfortune or calamity viewed as a divine punishment.
I don’t judge anybody for earning passive income if it is a way to get humble material needs met. Many of us are rebuilding our professional lives to find meaningful work having which contributes to the making of a better world, and that will probably require some form of resourcing from others.
There are only three ways by which any individual can get wealth — by work, by gift or by theft. And, clearly, the reason why the workers get so little is that the beggars and thieves get so much.
— Henry George
Judging individuals for profiting on others misfortunes is futile, and don’t banks, and the financial industry do exactly the same thing? When you strip away the veil of administration, essentially how these institutions make their riches is by profiting from the contributions that other people create — through creating businesses, enterprises and industries, contributing their labour, producing food, energy, buildings, infrastructure, providing education, value derived from cultural activities, art, music, etc. — by lending them capital to start their business, buy their home — and then charging them high interest rates for the use of that money. Other people do the work. The banks just move the money around and charge high interest for it
In a society where discernment, common sense, intelligence, wisdom, empathy, and established religious institutions, are absent in our politics and in our mainstream media, there is a need to find a way to communicate considered discerning judgements on the systems that are problematic and causing harm.
Today some of the biggest industries operate on the same business models — extracting profits from other people’s labour — in our banking system with high interest loans, in the form of mortgages. Our property system is based on land speculation. The value recouped has never been created by the banks or the land trader.
This practice is known as ‘usury’.
In modern law, usury is the practice of charging an illegal rate of interest for the loan of money. In Old English law, the taking of any compensation whatsoever was termed usury. It also refers to the charging a fee for the use of money, eg bureau de change.
Usury was considered morally wrong and was made illegal in ancient Christian, Jewish and Islamic societies. During the Sutra period in India (7th to 2nd centuries BC) there were laws prohibiting the highest castes from practicing usury. Similiar disapproval and judgements on the practice of usury are found in religious texts from Buddhism.
The term usury may be used in a moral sense — condemning taking advantage of others’ misfortunes — or in a legal sense, where an interest rate is charged in excess of the maximum rate that is allowed by law.
In a strange way, learning about usury is liberating. You could say — screw it the whole world is totally corrupt, I might as well just become a bit of a civilised gangster myself. Look after my own needs. But I think that as a generation we are all walking up to the fact that this can leave us feeling miserable and soulless. And it is comforting to understand that greed and usury have always been a part of societies and ultimately the human condition.
As a society today, we are finding ways and building systems to look after our needs both on an individual and a collective level, simultaneously. It’s hopeful, optimistic, empowering, but a very messy journey.
Let’s try and not judge one another, for how they have come into wealth — or lack of wealth — along the way.
But — we all have an individual responsibility here, as much as the financial and property industry are milking this, and usury seems to be rampant in our banking and housing systems today, we have becoming accustomed to it being socially normal to exploit each other and that is also problematic.
Maybe there needs to be a cultural shift, before our wider financial and ‘property industries’, or ‘home industries’ evolve.
Building and implementing systems based on collective responsibility is going to take time. In the mean time we all need to live and live well, to look after one another and to enjoy the sensuality that material and earthly comforts provide, to root us into the present moment, balancing our nervous systems during turbulent and uncertain times.
“You’re always practicing something. So you’re either practicing upholding the world as it is, or you’re practicing shifting the world into how you want it to be”
— Cassie Robinson
