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Those seeking rents should be where the buck stops in a paused economy.

by mjevans 6y ago

refurb 6y ago
Collecting rents is not the same as "rent seeking".
- bootcampwhere 6y ago
  This is a very important point. Similar to how most Americans think they are capitalists even if they don't have any capital.
- sooheon 6y ago
  When it comes to land ownership, I'm pretty sure the two are equivalent.
- jakelazaroff 6y ago
  It's exactly the same. "Rent seeking" means to increase your share of wealth without creating new wealth. https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking
  - refurb 6y ago
    No it's not. "Rent" is not the same as "economic rent". If I buy a piece of land a build a house on it and rent it out, I'm adding value to society by creating value.
    - jakelazaroff 6y ago
      Building the house, specifically, creates value. Renting it out does not.
  - tptacek 6y ago
    It is, kind of obviously, not exactly the same thing, and the 51% of Wikipedians who agreed about the content of that article agree, because it does not support the point you're making. Instead of attempting an axiomatic derivation of the term, you could just link to an actual discussion by economists of the term, most of which make the distinction between the layperson use of the term "rent" and Ricardo and Krueger's definition.
    - jakelazaroff 6y ago
      It’s “the same” in the sense that it’s an example of rent-seeking. Here's another definition [1]: > David Ricardo introduced the term “rent” in economics. It means the payment to a factor of production in excess of what is required to keep that factor in its present use. So, for example, if I am paid $150,000 in my current job but I would stay in that job for any salary over $130,000, I am making $20,000 in rent. Similarly, a landlord charges rent in excess of what it costs to maintain the land and building. Unless I’m misunderstanding Ricardo’s definition, that fits neatly inside of it. [1] https://www.econlib.org/library/Enc/RentSeeking.html https://www.econlib.org/library/Enc/RentSeeking.html
      - kasey_junk 6y ago
        By that interpretation any profit making is rent seeking. A landlord is not “rent seeking” just by charging rent. For instance they are providing value in the form of risk arbitrage in most cases. The only case a landlord is purely rent seeking in the economic sense is if they only captured the difference in value of their properties due to external factors.
        tptacek 6y ago
        Right, as I understand it, the "economic rent" (ER) of an apartment lease would be the extent to which the cost of the lease was inflated by artificial scarcity (as opposed to just supply and demand). There are, then, rent-seeking things you could do as a landlord/developer, but in a well-functioning market where you're competing with lots of other landlords, the price of a lease reflects the market value of occupancy and does not include ER. Similarly, one of the classic examples of ER is wage premiums paid to closed-shop union members: the clearing price for the labor involved is, say, $20, but your union bumps that up to $25; the extra $5 is ER. There is directly substitutable labor that could be acquired at a discount to union labor, but closed-shop rules lock in the extra rents.

Those seeking rents should be where the buck stops in a paused economy.

refurb 6y ago

Collecting rents is not the same as "rent seeking".

bootcampwhere 6y ago
This is a very important point. Similar to how most Americans think they are capitalists even if they don't have any capital.
sooheon 6y ago
When it comes to land ownership, I'm pretty sure the two are equivalent.
jakelazaroff 6y ago
It's exactly the same. "Rent seeking" means to increase your share of wealth without creating new wealth. https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking
- refurb 6y ago
  No it's not. "Rent" is not the same as "economic rent". If I buy a piece of land a build a house on it and rent it out, I'm adding value to society by creating value.
  - jakelazaroff 6y ago
    Building the house, specifically, creates value. Renting it out does not.
- tptacek 6y ago
  It is, kind of obviously, not exactly the same thing, and the 51% of Wikipedians who agreed about the content of that article agree, because it does not support the point you're making. Instead of attempting an axiomatic derivation of the term, you could just link to an actual discussion by economists of the term, most of which make the distinction between the layperson use of the term "rent" and Ricardo and Krueger's definition.
  - jakelazaroff 6y ago
    It’s “the same” in the sense that it’s an example of rent-seeking. Here's another definition [1]: > David Ricardo introduced the term “rent” in economics. It means the payment to a factor of production in excess of what is required to keep that factor in its present use. So, for example, if I am paid $150,000 in my current job but I would stay in that job for any salary over $130,000, I am making $20,000 in rent. Similarly, a landlord charges rent in excess of what it costs to maintain the land and building. Unless I’m misunderstanding Ricardo’s definition, that fits neatly inside of it. [1] https://www.econlib.org/library/Enc/RentSeeking.html https://www.econlib.org/library/Enc/RentSeeking.html
    - kasey_junk 6y ago
      By that interpretation any profit making is rent seeking. A landlord is not “rent seeking” just by charging rent. For instance they are providing value in the form of risk arbitrage in most cases. The only case a landlord is purely rent seeking in the economic sense is if they only captured the difference in value of their properties due to external factors.
      - tptacek 6y ago
        Right, as I understand it, the "economic rent" (ER) of an apartment lease would be the extent to which the cost of the lease was inflated by artificial scarcity (as opposed to just supply and demand). There are, then, rent-seeking things you could do as a landlord/developer, but in a well-functioning market where you're competing with lots of other landlords, the price of a lease reflects the market value of occupancy and does not include ER. Similarly, one of the classic examples of ER is wage premiums paid to closed-shop union members: the clearing price for the labor involved is, say, $20, but your union bumps that up to $25; the extra $5 is ER. There is directly substitutable labor that could be acquired at a discount to union labor, but closed-shop rules lock in the extra rents.