4 ms·

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

• luckydata 7y ago
  that's the literal definition of rent seeking. https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking
  • formercoder 7y 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 7y 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 7y 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 7y 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.