Mike Rosen has to break out the Bailey Building and Loan analogy to educate a letter-writer how capital works.
He'd charge the borrowers interest for the use of the capital provided by the depositors at a rate marginally above the interest rate he was paying those depositors. That differential enabled George to recover his operating costs (payroll for Uncle Billy and others, utilities, rent, maintenance, taxes, etc.) with, he hoped, something left over for profit. That was his business and livelihood.
George's value to the community and the service he provided to the good people of Bedford Falls was to enable them to live the American dream, to enjoy the benefits of owning their own home sooner rather than later. Had they not been able to borrow money from the building and loan, they'd have had to defer the purchase and save for a lifetime to cover the full price of a home.
Read the whole thing. Mandatory economics education for graduating high school seniors, anyone?
