4 ms·

They should invest their money elsewhere, like new enterprises, instead of homes as rent-seeking is a negative on society, not a productive activity.

snowwindwaves 8y ago
What if I require some leisure time to recharge so I can go back to work and be fully Productive? I need a lake house to go and relax at. The couple provides use of their lake house for my vacation.
formercoder 8y ago
How can you state that rent seeking is a negative on society? How is it not just optimal capital allocation?
- luckydata 8y ago
  that's the literal definition of rent seeking. https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking
  - formercoder 8y ago
    Oh interesting that wasn’t a term I was actually familiar with. I thought we were just discussing the idea of purchasing property and renting it out.
    - luckydata 8y ago
      well, that's also rent seeking. Some concepts in economics are not as straightforward as you would first think especially if not familiar with macro / micro concepts.
- snidane 8y ago
  What is usually meant by rent-seeking is more akin to rent-extraction. Here rent doesn't mean the monthly payment (lease) but an 'economic rent'. That is an income which is guaranteed by some distorition of current market conditions. Most often by some kind of monopoly. Eg. rents for pharma industry because potential competitors are not allowed to enter the market due to industry regulation. This allows the current players extract the guaranteed rent - monopoly income.
- zzzzzzzza 8y ago
  production = rent + wages + interest production - rent = wages + interest when productivity grows but wages do not, that means the marginal contribution of any new worker is being entirely eaten by various forms of rent within the economy. Those who collect rent have no incentive to do anything but perpetuate their rent collection and most likely if they were to re invest their gains would probably reinvest them in either acquiring more rent or protecting their existing rent... which is why the government should be funded off of monopoly/pigovian taxes like the land value tax, or removing intellectual property deductions from the corp income tax, as opposed to income or consumption taxes - a philosophy known as georgism.
sgc 8y ago
That is higher risk and many, many people cannot accept it. They are in no position to lose everything on your dumb startup idea.
chiph 8y ago
I think you're misusing the term "Rent Seeking". The important part of its definition is the manipulation of the social or political environment to gain financial advantage. It has nothing to do with collecting rent from a tenant. An example of rent-seeking would be if I were a steel producer and I ask the government to impose a tariff on imported steel.
- conjectures 8y ago
  It is quite appropriate actually. Speculative property buying is very much about trying to capture wealth without creating any wealth. C.f. also NIMBYism.
  - mcguire 8y ago
    1. Speculative property buying provides liquidity to an otherwise exceptionally illiquid market. 2. You have literally just described the stock market.
    - jodrellblank 8y ago
      1. given that it doesn't change the amount of property, how does it provide anything at all? 2. The stock market is exactly people trying to get rich without adding any value to the world.
      - leakybit 8y ago
        Where do you expect tech workers to sell their RSUs?
    - conjectures 8y ago
      1. This hasn't been demonstrated. In fact, when there is a housing shortage in the areas considered that strongly hints that friction in housing purchase is due to other factors than being able to match a buyer with a seller. So the average dollar value of this supposed liquidity is likely to be miniscule compared to the average dollar value of the capital appreciation. 2. I'm not going to get bogged down refuting bad analogies here.
fbonetti 8y ago
You’re confusing “contract rent” (an amount paid on a recurring basis for the temporary use of goods, services, or property) with “economic rent” (an amount that is paid on top of the “natural” price due to a distortion in the market). Rent-seeking refers to the latter definition of rent. Renting property is not rent-seeking. Wielding the power of local government to prevent new housing from being built is rent-seeking.
mcguire 8y ago
...aaaaand suddenly all of those people currently renting have nowhere to live. (I swear, the Kantian Categorical Imperative should be taught in high school just for its entertainment value.)

snowwindwaves 8y ago

What if I require some leisure time to recharge so I can go back to work and be fully Productive? I need a lake house to go and relax at. The couple provides use of their lake house for my vacation.

formercoder 8y ago

How can you state that rent seeking is a negative on society? How is it not just optimal capital allocation?

luckydata 8y ago
that's the literal definition of rent seeking. https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking
- formercoder 8y ago
  Oh interesting that wasn’t a term I was actually familiar with. I thought we were just discussing the idea of purchasing property and renting it out.
  - luckydata 8y ago
    well, that's also rent seeking. Some concepts in economics are not as straightforward as you would first think especially if not familiar with macro / micro concepts.
snidane 8y ago
What is usually meant by rent-seeking is more akin to rent-extraction. Here rent doesn't mean the monthly payment (lease) but an 'economic rent'. That is an income which is guaranteed by some distorition of current market conditions. Most often by some kind of monopoly. Eg. rents for pharma industry because potential competitors are not allowed to enter the market due to industry regulation. This allows the current players extract the guaranteed rent - monopoly income.
zzzzzzzza 8y ago
production = rent + wages + interest production - rent = wages + interest when productivity grows but wages do not, that means the marginal contribution of any new worker is being entirely eaten by various forms of rent within the economy. Those who collect rent have no incentive to do anything but perpetuate their rent collection and most likely if they were to re invest their gains would probably reinvest them in either acquiring more rent or protecting their existing rent... which is why the government should be funded off of monopoly/pigovian taxes like the land value tax, or removing intellectual property deductions from the corp income tax, as opposed to income or consumption taxes - a philosophy known as georgism.

sgc 8y ago

That is higher risk and many, many people cannot accept it. They are in no position to lose everything on your dumb startup idea.

chiph 8y ago

I think you're misusing the term "Rent Seeking". The important part of its definition is the manipulation of the social or political environment to gain financial advantage. It has nothing to do with collecting rent from a tenant. An example of rent-seeking would be if I were a steel producer and I ask the government to impose a tariff on imported steel.

conjectures 8y ago
It is quite appropriate actually. Speculative property buying is very much about trying to capture wealth without creating any wealth. C.f. also NIMBYism.
- mcguire 8y ago
  1. Speculative property buying provides liquidity to an otherwise exceptionally illiquid market. 2. You have literally just described the stock market.
  - jodrellblank 8y ago
    1. given that it doesn't change the amount of property, how does it provide anything at all? 2. The stock market is exactly people trying to get rich without adding any value to the world.
    - leakybit 8y ago
      Where do you expect tech workers to sell their RSUs?
  - conjectures 8y ago
    1. This hasn't been demonstrated. In fact, when there is a housing shortage in the areas considered that strongly hints that friction in housing purchase is due to other factors than being able to match a buyer with a seller. So the average dollar value of this supposed liquidity is likely to be miniscule compared to the average dollar value of the capital appreciation. 2. I'm not going to get bogged down refuting bad analogies here.

fbonetti 8y ago

You’re confusing “contract rent” (an amount paid on a recurring basis for the temporary use of goods, services, or property) with “economic rent” (an amount that is paid on top of the “natural” price due to a distortion in the market). Rent-seeking refers to the latter definition of rent. Renting property is not rent-seeking. Wielding the power of local government to prevent new housing from being built is rent-seeking.

mcguire 8y ago

...aaaaand suddenly all of those people currently renting have nowhere to live. (I swear, the Kantian Categorical Imperative should be taught in high school just for its entertainment value.)