6 ms·

Great Problems: An Epidemic of Rent-Seeking

132 points by eevilspock 10y ago

apathy 10y ago
This is fantastic. My only concern is that, after the last election's results, it's not clear to me whether enough members of the electorate are willing to vote in their own best interests (rather than "cheering" for their "team", which in similar fashion to football or baseball teams could not care much less about the "fans"). Without something to motivate that, it'll be a tough slog.
- Tempest1981 10y ago
  > willing to vote in their own best interests There is a good discussion of this here: https://news.ycombinator.com/item?id=13151687 https://news.ycombinator.com/item?id=13151687
  - tcbawo 10y ago
    Related to health care which was discussed in that other thread, it will be interesting what happens in medicine as AI software begins to take on functions of patient diagnosis. Will it reduce the cost of health care? Or, will the likely monopoly of health care providers continue to charge ever-exorbitant amounts of money for medical service?
eevilspock 10y ago
This complements nicely another post also on the front page: Ask HN: What was your best passive income in 2016? https://news.ycombinator.com/item?id=13150144 https://news.ycombinator.com/item?id=13150144
- gech 10y ago
  Are you stating those implements mentioned there are forms of rent seeking? I think not. Through real work at one time they still offer value on repeat.
  - danbruc 10y ago
    If you spent a year building something and then live from the income for ten years, then you are at the very least selling at an inflated price. Your customers should take their money, recreate your work, save 90 % and of course put you out of business.
    - branchless 10y ago
      I think it's okay if the opportunity is there. If people choose not to exercise the saving it may be they know the pitfalls better than outsiders. Rent seeking is where an individual/business is exercising some kind of monopoly, often granted by the state, to basically compel people to pay him an income at no further effort to himself. Usually they are exploiting some kind of situation where someone needs something and they are erecting a barrier. They are appropriating wealth rather than creating it. Examples of this would be people buying up land near a new development to profit from it, given land is scarce and more cannot be made (though zoning can in theory be changed). Or grabbing a patent to stop someone developing a rival product as they know the barrier to entry is not high without using the state legal apparatus. Or buying up apartment in the middle of an urban centre in the expectation of being able to capture wages due to an extreme shortage of accommodation. Or abusing your position as an issuer of fiat money to capture labour. Or some big land owner in the UK or USA whose grandfather grabbed land and now they descendants are sitting on this and demanding rent for use. If someone builds an app and people can replicate it but choose not to then it's not stopping people doing that, also they can choose to simply not use the app. I haven't read the article yet btw I don't have time just yet, just responding to this comment. Compare this to the epi-pen thing where they are gouging because people are desperate and they hold a patent. The patent being enforced by the state. http://ounodesign.com/wp-content/uploads/2013/02/henry-george-fay-lewis.png http://ounodesign.com/wp-content/uploads/2013/02/henry-georg... http://www.goodreads.com/book/show/552175.Progress_and_Poverty http://www.goodreads.com/book/show/552175.Progress_and_Pover...
      - danbruc 10y ago
        That is why I worded my comment carefully and called it selling at an inflated price instead of rent-seeking. As far as I can tell definitions vary and at least some only call it rent-seeking if the state is involved in one way or another. If you take the definition Wikipedia currently gives, [...] seeking to increase one's share of existing wealth without creating new wealth [...], then you are looking at a very broad definition that also includes selling at inflated prices, at least that would be my interpretation.
rsp1984 10y ago
Perhaps someone should add "(2013)" to the title.
- MaxfordAndSons 10y ago
  Eh, as far as I know none of the conditions the article describes have changed significantly or at all since 2013.
dri_ft 10y ago
Excellent. Depressed me.
- internaut 10y ago
  Yes, and it's strongly connected to this other essay (2011) by Neal Stephenson on innovation. https://news.ycombinator.com/item?id=13153558 https://news.ycombinator.com/item?id=13153558
- ENGNR 10y ago
  Probably because it was big on problems, not so much on solutions
woodruffw 10y ago
I found this post confusing. The author careens from attacking the "mega-federal-state" and the corporations it protects, to hinting at protectionism as a valid policy against the decline of America's industrial base.
- danbruc 10y ago
  Without any judgment on those two points, there is not necessarily a conflict between being against a state that protects some large business and being for a state that protects the entire national economy. A conflict will of course arise if you deem states to be inefficient in general or something along that line.
  - woodruffw 10y ago
    What is meant by the "entire national economy"? Does the state prop up grocery stores in small towns when the cost of imported foods rise naturally, or does it only protect companies that it contracts to (or deems politically convenient)? Protectionism doesn't generally involve the former, and I suspect that the author of the original post wouldn't appreciate the bureaucracy necessitated by such a large...safety net. It's a form of nonviolent warfare, with the state propping up those industries (and the strongest companies within those industries) in order to remain internationally competitive. In that sense, as far as I can tell, there is no meaningful difference between the current state of affairs and that proposed by the author, beyond perhaps which corporations get protected.
    - danbruc 10y ago
      It's unfortunately to late in the night for me to discuss this now but I would really have liked to. I never really understood the arguments for unrestricted free trade and against [some] protectionism in realistic scenarios.
      - woodruffw 10y ago
        The feeling's mutual, and I hope we can discuss at a later date (or on a later article).
Tempest1981 10y ago
Seems like he didn't directly address property ownership (or did I miss it?) I was expecting to see some mention of Henry George, and becoming rich by owning land: http://qz.com/169767/the-century-old-solution-to-end-san-franciscos-class-warfare/ http://qz.com/169767/the-century-old-solution-to-end-san-fra...
- fashionplate 10y ago
  In another article [1], the author writes that property ownership, "gives people the incentive to apply local knowledge and expertise in order to generate wealth." [1] https://devinhelton.com/principles-of-formalism https://devinhelton.com/principles-of-formalism
webmaven 10y ago
Really interesting analysis. But the following gave me pause: > Software has very natural returns to scale, because all engineering costs and up front. The marginal cost of serving one more customer is very low. One of the interesting things that we've seen over the past decade is that while Software-as-a-Product has nearly all of it's engineering costs up front, Software-as-a-Service does not. And I don't mean that the software is being improved continuously. There are significant ongoing engineering costs simply keeping the system working (consider, for example, the effort required to stay ahead of advanced persistent threats). That said, when you're operating SaaS at a large scale, generally speaking the marginal cost of serving one more customer is still fairly low. Just not as low as with SaaP.

132 points by eevilspock 10y ago

This is fantastic. My only concern is that, after the last election's results, it's not clear to me whether enough members of the electorate are willing to vote in their own best interests (rather than "cheering" for their "team", which in similar fashion to football or baseball teams could not care much less about the "fans"). Without something to motivate that, it'll be a tough slog.

Tempest1981 10y ago
> willing to vote in their own best interests There is a good discussion of this here: https://news.ycombinator.com/item?id=13151687 https://news.ycombinator.com/item?id=13151687
- tcbawo 10y ago
  Related to health care which was discussed in that other thread, it will be interesting what happens in medicine as AI software begins to take on functions of patient diagnosis. Will it reduce the cost of health care? Or, will the likely monopoly of health care providers continue to charge ever-exorbitant amounts of money for medical service?

eevilspock 10y ago

This complements nicely another post also on the front page: Ask HN: What was your best passive income in 2016? https://news.ycombinator.com/item?id=13150144 https://news.ycombinator.com/item?id=13150144

gech 10y ago
Are you stating those implements mentioned there are forms of rent seeking? I think not. Through real work at one time they still offer value on repeat.
- danbruc 10y ago
  If you spent a year building something and then live from the income for ten years, then you are at the very least selling at an inflated price. Your customers should take their money, recreate your work, save 90 % and of course put you out of business.
  - branchless 10y ago
    I think it's okay if the opportunity is there. If people choose not to exercise the saving it may be they know the pitfalls better than outsiders. Rent seeking is where an individual/business is exercising some kind of monopoly, often granted by the state, to basically compel people to pay him an income at no further effort to himself. Usually they are exploiting some kind of situation where someone needs something and they are erecting a barrier. They are appropriating wealth rather than creating it. Examples of this would be people buying up land near a new development to profit from it, given land is scarce and more cannot be made (though zoning can in theory be changed). Or grabbing a patent to stop someone developing a rival product as they know the barrier to entry is not high without using the state legal apparatus. Or buying up apartment in the middle of an urban centre in the expectation of being able to capture wages due to an extreme shortage of accommodation. Or abusing your position as an issuer of fiat money to capture labour. Or some big land owner in the UK or USA whose grandfather grabbed land and now they descendants are sitting on this and demanding rent for use. If someone builds an app and people can replicate it but choose not to then it's not stopping people doing that, also they can choose to simply not use the app. I haven't read the article yet btw I don't have time just yet, just responding to this comment. Compare this to the epi-pen thing where they are gouging because people are desperate and they hold a patent. The patent being enforced by the state. http://ounodesign.com/wp-content/uploads/2013/02/henry-george-fay-lewis.png http://ounodesign.com/wp-content/uploads/2013/02/henry-georg... http://www.goodreads.com/book/show/552175.Progress_and_Poverty http://www.goodreads.com/book/show/552175.Progress_and_Pover...
    - danbruc 10y ago
      That is why I worded my comment carefully and called it selling at an inflated price instead of rent-seeking. As far as I can tell definitions vary and at least some only call it rent-seeking if the state is involved in one way or another. If you take the definition Wikipedia currently gives, [...] seeking to increase one's share of existing wealth without creating new wealth [...], then you are looking at a very broad definition that also includes selling at inflated prices, at least that would be my interpretation.

rsp1984 10y ago

Perhaps someone should add "(2013)" to the title.

MaxfordAndSons 10y ago
Eh, as far as I know none of the conditions the article describes have changed significantly or at all since 2013.

dri_ft 10y ago

Excellent. Depressed me.

internaut 10y ago
Yes, and it's strongly connected to this other essay (2011) by Neal Stephenson on innovation. https://news.ycombinator.com/item?id=13153558 https://news.ycombinator.com/item?id=13153558
ENGNR 10y ago
Probably because it was big on problems, not so much on solutions

woodruffw 10y ago

I found this post confusing. The author careens from attacking the "mega-federal-state" and the corporations it protects, to hinting at protectionism as a valid policy against the decline of America's industrial base.

danbruc 10y ago
Without any judgment on those two points, there is not necessarily a conflict between being against a state that protects some large business and being for a state that protects the entire national economy. A conflict will of course arise if you deem states to be inefficient in general or something along that line.
- woodruffw 10y ago
  What is meant by the "entire national economy"? Does the state prop up grocery stores in small towns when the cost of imported foods rise naturally, or does it only protect companies that it contracts to (or deems politically convenient)? Protectionism doesn't generally involve the former, and I suspect that the author of the original post wouldn't appreciate the bureaucracy necessitated by such a large...safety net. It's a form of nonviolent warfare, with the state propping up those industries (and the strongest companies within those industries) in order to remain internationally competitive. In that sense, as far as I can tell, there is no meaningful difference between the current state of affairs and that proposed by the author, beyond perhaps which corporations get protected.
  - danbruc 10y ago
    It's unfortunately to late in the night for me to discuss this now but I would really have liked to. I never really understood the arguments for unrestricted free trade and against [some] protectionism in realistic scenarios.
    - woodruffw 10y ago
      The feeling's mutual, and I hope we can discuss at a later date (or on a later article).

Tempest1981 10y ago

Seems like he didn't directly address property ownership (or did I miss it?) I was expecting to see some mention of Henry George, and becoming rich by owning land: http://qz.com/169767/the-century-old-solution-to-end-san-franciscos-class-warfare/ http://qz.com/169767/the-century-old-solution-to-end-san-fra...

fashionplate 10y ago
In another article [1], the author writes that property ownership, "gives people the incentive to apply local knowledge and expertise in order to generate wealth." [1] https://devinhelton.com/principles-of-formalism https://devinhelton.com/principles-of-formalism

webmaven 10y ago

Really interesting analysis. But the following gave me pause: > Software has very natural returns to scale, because all engineering costs and up front. The marginal cost of serving one more customer is very low. One of the interesting things that we've seen over the past decade is that while Software-as-a-Product has nearly all of it's engineering costs up front, Software-as-a-Service does not. And I don't mean that the software is being improved continuously. There are significant ongoing engineering costs simply keeping the system working (consider, for example, the effort required to stay ahead of advanced persistent threats). That said, when you're operating SaaS at a large scale, generally speaking the marginal cost of serving one more customer is still fairly low. Just not as low as with SaaP.