The Poor, Poor Rich

I have started to notice something while reading public discussions, Facebook comments, and other expressed sentiments, and that is that normal people tend to have a great deal of disdain for rich people. This is probably obvious to most. It’s common to hear people talk about ‘the rich stealing from the poor’, ‘exploitation’, and of course the catch-all Wall Street.

Business, perhaps surprisingly, is often times very fair. Every participant in a business relationship is accepting of their role. Unfairness does make its appearances, but very often it is the case that people take mutually beneficial actions. Profits are to be maximized, and so under that operating premise, labor, for example, tends to get displaced overseas where it is cheaper. Many say that these workers who make very little each day are being exploited, and yet they don’t know much about the conditions these workers live in and what they would otherwise be doing with their time. It is often the case that this new labor is a big step up for them, and the addition of jobs en masse provides a significant boost to their local economies.

Overseas workers are jumping at the opportunity to work for U.S. companies. Perhaps you should ask them whether they feel exploited. Personally, if I had the option of working as a farmer and working at a call center or factory for a U.S. company for relatively more money, it would be very obvious to me what the better option would be, and I would think it rather strange for you to call me exploited because of it.

What is it with this idea that the middle class has about the upper class, that they are mostly over-privileged, greedy, an unworthy of compassion if they are to ever suffer? This attitude speaks little of them and volumes to the person who is clearly resentful.

When Humans of New York posted a series on attendees of the Met Galla, there were popular “woe is me” comments disparaging the personal experiences of the rich, as if they have it made so well that they are unworthy of any further attention. Of course there was a backlash, “it’s Humans of New York, not Poor Humans of New York,” but none the less, the fact that this conversation arose at all was telling.

I always try to keep a distance from the conversations to understand the different perspectives, because I find it interesting that these perspectives exist at all, and I’m curious why they do.

The way that I see it is it’s ridiculous to consider rich people as being all of one type, sharing any qualities at all, other than happening to have much more money than they need to live on alone. They got this money for all different reasons. Some inherited it (within this camp there are plenty of assholes). Many earned it through deliberate and sustained hard work. Some choose to live simple lives despite their wealth, and some loose their minds and buy as much as they possibly can. They are all individuals, and everyone is different; everyone has a different story and a different character.

Somehow, when wealth is achieved, there is a piece of humanity that is lost in the wealthy individual through the eyes of the public. This lost piece of humanity seems to have been driven out of perspectives via nothing other than envy. It’s really rather sad.

Of course there is reason to resent those that flaunt their money and cry over losing a $60k diamond earring while wading in the water on the shore of a south Pacific island (of course I’m talking about Kim Kardashian). That is indeed absurd. But everyone suffers. Humanity isn’t lost to the wealthy internally, and humans are highly adaptable. Problems are always relative to ones own experiences.

Allowing oneself to respect the grievances and complaints of the wealthy, barring ridiculous reality TV fiascos, perhaps requires that one come to terms with the fact that you don’t have as much money as they do.

The thing is, the way to get rich if you aren’t already in this world, if we are to do so in a self-made and dignified manner (i.e. not marrying someone for their wealth or inheriting wealth), is to create value. If you aren’t making as much as your boss, it’s because your work isn’t as valuable to the company as his. Another way to think about it is successful entrepreneurs who turn billionaires tend to solve major problems, with solutions that are so big they continuously effect the lives of millions for generations. Steve Jobs solved the problem of the absence of personal-sized, straightforward to use computers, and because of that he changed the way we interact with the world. His solution was so fundamental that it led him to achieve a net worth of 19 billion.

Famous actors have one of the highest paid jobs in the country. They create a lot of value–people eat up everything they create, say, and endorse. They are famous for a reason. We make them famous, because we watch them, read about them, and talk about them. They affect our thoughts and our lives, and they are duly compensated. They also tend to work 15 hour days shooting films, flying all over the country doing interviews, and whatever else, barely any time at all for a social life. They live large but they pay the price, and part of that price is losing their anonymity, the sincerity of the people they attract, and the compassion of the many that envy their success.

Instead of complaining about the dastardly rich exploiting the poor, maybe look inside yourself, and see that you are free to create your own success, to create value, to solve problems, all the while retaining your right to the entirety of the human experience.

 

 

 

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AirBNB: the Controversy

AirBNB launched in 2008, then called Airbed & Breakfast. Over the next two years, the company boomed, changing its name to AirBNB and reaching 1 million nights booked in 89 different countries by the spring of 2011.

AirBNB quickly became a well-known alternative to hotels. It is attractive due to its affordability, personalized home feel, kitchen space for cooking to further save money, and friendly hosts available to give information and tips about the city from a local’s perspective. A growing number of people choose AirBNB over hotels, and hotel lobbyists as a result began to battle against the current practices of short-term rental companies like AirBNB.

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AirBNB remains largely unregulated, existing in a legal grey area. Normally it is considered OK if you are the owner or you have the owner’s permission as well as the permission of the other residents in the building. If you or a roommate are living at least part of the time in the apartment, then technically it is perfectly legal in the US to use the apartment additionally for AirBNB purposes, as was determined in the 2013 NYC court case against Nigel Warren, whose fine of $2,400 was eventually lifted, with the help of AirBNB, after proving that a roommate was there for part of the time.

The legal war continued for a year between AirBNB and NYC, but throughout that time AirBNB more than doubled its guests served, from 4 million to 9 million in only 8 months’ time. Eventually NYC gave over the information of its hosts who rent out multiple properties without its main occupant present, but given that they number in the tens of thousands, it is still a daunting task to enforce regulations even when they are established.

Cities across the country are grappling with these questions.

Like New York, Santa Monica banned short-term rental of entire homes when the host is not present and additionally imposes a 14-percent tax when a host rents out a room in his house.

Cities, one by one, are establishing their own rules. San Francisco residents are now permitted to rent out homes for a maximum of only 90 days a year. In Philadelphia, the maximum is 180 days and hosts must also pay an 8 1/2% hotel tax to the city.

In many markets, Airbnb and similar short-term online rental marketplaces are technically illegal, but lax enforcement of existing laws has allowed these entities to grow exponentially in size.

Their increasing popularity, together with unclear regulatory structures, has prompted many local governments to examine new ways to tax and regulate these companies.

Airbnb has led aggressive outreach programs in several cities, engaging local officials, agreeing to collect and pay some taxes, and pushing for favorable rewrites of local planning law.

Hosts are responsible for filing their own income tax as self-employed real estate business owners. AirBNB has begun including a hotel tax within their fees in many cities, and the number of cities included is growing. It is a relatively slow process, however, as AirBNB must work with each city individually. In fall of 2014, AirBNB began collecting a 12% occupancy tax from guests and hosts to pass along to the government of their behalf in Amsterdam, San Jose, Chicago, and Washington, D.C.

The main problem remains that most of the apartments are zoned as residential, and therefore to be perfectly legal, in additional to paying all taxes, hosts much check zoning laws and possibly be required to register the business and get the apartment approved for <30 nights occupancy use.

What makes this not very straightforward is that the majority of hosts let only one property–their own home. The number of hosts that have multiple for-profit properties listed on AirBNB is only about a maximum of 1 out of 10 in most cities. Therefore the law would be applied differently to different hosts on AirBNB, which makes regulating AirBNB as a whole unclear.

Vijay Dandapani chairs the New York City Hotel Association:

“We have a fire command system, security systems that give you protections from intruders, and so on. The moment you get into converting your house into a hotel, which is de facto what is being done nowadays, none of those protections are there.”

The question is: how much freedom do people deserve? These are properties either they own or another owns with whom they have a contract and consensual agreement with. We aren’t required to have such stringent standards for fire command and security systems in our own homes, even when sublet for at least 30 days, so why does it suddenly become an issue when renting for less than 30 days? I suppose the line must be drawn somewhere, but the line seems to be pushing its limits against personal freedom and our own responsibility for the consideration of our own personal safety.

This is a community issue. If the neighbors in the apartment building have no problem with the use of the apartment as a vacation home, then it’s really none of the state’s business what the apartment is being used for. I could be knitting 24/7 in my residence and selling my self-made scarves and sweaters to all the strangers kind enough to stop by–it would be absurd to prosecute me for refusing to declare this as a business.

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This is where it becomes interesting, because the state doesn’t care much about 5 or 10 scarves being sold every once in a while under the table, but to sell 30/day every day, advertise, and put a sign up on my door saying “Welcome, come inside and buy my knitwear!” Suddenly there is pressure to pay income tax and it becomes a question whether I am illegally using a residential zone as a commercial one.

The shared economy has reintroduced power to the people and the community by introducing platforms that create free, largely unregulated markets. This is a good thing. There was a time with the government kept out of people’s business for the most part. The power and control of the government has continued to increase and the internet is making this a great deal easier for them. The idea that every bit of gain we make must be shared with the government is absurd in my opinion, but the government prefers to control and profit from all markets, always. Free markets are so natural–people are attracted to freedom and personal/mutual gain, which is why services such as AirBNB and Uber grow exponentially and very quickly overtake heavily regulated markets.

I have no qualms with the income tax, but I personally think the hotel and occupancy tax is unfounded. Again, you have to draw the line somewhere, but I favor privacy, personal freedom, and decisions based in the immediate community for such limited scale uses of property.

Even so, like many hosts, we simply wish to continue doing what we do; if we have to make less money by paying an assortment of taxes and fees, then so be it. But it will be great when the day comes when we hosts no longer have to feel like we might be doing something wrong when everyone directly involved is happy and we are contributing to the vitality of a booming free market.