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When rent is easier than profits

This article by Will Hutton, rehearsing the ideas of Thomas Piketty, is trenchant and significant.

It rang a bell with me for a number of reasons, but mainly because of the way in which the shift from the hard work of making profits to the easy work of becoming a rentier landlord is ringing time on many of Britain’s pubs. Among the people I follow on Twitter is the excellent Lifelong Landlady, one of the many people who campaign against the way in which British pub companies are driving pubs out of business by unreasonable and irrational rent demands. It’s a complicated and messy story of course, and it’s hard to explain the interaction between rents and beer deals that mean the real rent includes the cost of beer supplied at higher than market prices, but the first rule of the market applies in spades to pubs – any time someone offers you a complicated deal, ask why they want to complicate it, rather than make it simple.

If Ed Miliband needs a message it must be that capitalism cannot survive a world in which wealth grows faster than take home wages, and investment in productive industry will never happen while rents outstrip profits.And if he wants a populist example to make his case for him, the plight of the small pub is a perfect case in point.




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This entry was posted on April 13, 2014 by in Uncategorized.

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