Who's the man

Friday, October 23, 2009

Rent

Capitalism. Those who own the assets and charge rent for usage, those who own nothing and pay. Land/real-estate, the most basic asset, whether for shelter, agriculture or industry. Capitalists charge rent. They don't create value, they simply have a piece of the pie. Good thing about charging rent is that the asset gets to be used in projects that generate high RoIs. However, what about the others? What about the 20 year old, just literate male who moves from rural to urban, to make a living, he is forced into labor, nothing he'd ever have signed up for at the age of 5, and he can never get out of it, wages only cover rent/food/clothing.

There is a huge purchase power parity across this nation. Families in Rural India live off a few thousand rupees an year. That means everything, life. Urban India and that amount is blown up on 1 restaurant meal. Wow! So whether it be rent/food/clothes, the rates sore from Rural to Metro. What goes into the price? Capitalist rent pervades everything as we move from Rural to Metro. So the 20 year old male now in the city makes 10X what he did in Rural, but he spends at the same levels too, yes, he saves some to take home, but the vicious cycle lives.

Only 1 way out of this vicious cycle. Equity investment seems a way. Currency is losing value pretty fast, do interest rates even cover actual inflation? In a market relatively stable, share prices reflect the profits that industries see. Invest in one, and you own a part of that profit stream. Lock in prices early, and hang on.