[Good Rich, Bad Rich] Even Real Estate Wealth Can Be Productive

Our people are exceptionally hostile to real estate speculation. As a result, it has come to seem as though the first requirement for becoming a high-ranking public official is not competence, but owning no real estate. This is a mistaken prejudice.

Robert Kiyosaki, author of the bestseller Rich Dad Poor Dad, is an American who made money through real estate, and he teaches others to become rich the way he did. Trump, co-author of another bestseller, Why We Want You to Be Rich: Two Men, One Message, is likewise someone who made money through real estate. To them, making money through real estate is no different from making money through stocks or funds.

If investment in real estate were harmful to society, the U.S. economy, where real estate investment is allowed almost without limit, would already have collapsed many times over. Because of real estate speculators like Kiyosaki and Trump, American consumers ought to be suffering from poor housing conditions. But housing conditions in the United States are far better than in our country. If anything, housing prices fall so much there that crises like the subprime mortgage crisis can erupt.

Just as fund managers play a productive role, real estate investors also play a productive role. Just as the law of supply and demand works properly because there are fund managers, the law of supply and demand can function in the housing and land markets only if there are real estate investors.

Suppose an increase in demand for luxury apartments is expected. Anyone with even a modest understanding of the flow of money will rush to buy such apartments. Builders, too, will increase construction of them. Through that process, the supply of luxury apartments, whose demand is rising, also increases. Now suppose an increase in demand for commercial land is expected. Naturally, people will rush to buy commercial land, and the price of commercial land will rise. As the price of commercial land rises, some people will convert residential land into commercial land. Through this process, the supply of commercial land increases.

The more making money through real estate is treated as a sin, the more regulations there will be, and the longer real estate shortages will persist. If we can recognize fund managers, then it is only natural to recognize making money through real estate as well.

Original title: [좋은 부자, 나쁜 부자] 부동산 부자도 생산적일 수 있다

Author: Center for Free Enterprise (CFE)

Date: 2007-12-17

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=19&idx=10703