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In the terms "economic rent" and "rent seeking", the concept of rent is not specific to assets. Rent paid to landowners was the original inspiration for the ter

In the terms "economic rent" and "rent seeking", the concept of rent is not specific to assets. Rent paid to landowners was the original inspiration for the terminology, but in actual usage it refers to any economic behavior that extracts value without creating new value. • https://en.m.wikipedia.org/wiki/Rent-seeking https://en.m.wikipedia.org/wiki/Rent-seeking Notably, this usage does not include "providing liquidity", so most of what hedge funds and private equity do for a living is rent seeking, by definition. So the parent commenter's usage appears to be correct... If it's any consolation, I was under the same mistaken impression as you for a long time.

simonh 5y ago
Liquidity is a service customers pay for. It’s not clear to me that’s unproductive work. More efficiently allocating capital can absolutely improve productivity. Some activities classed as renty can be economically beneficial. It’s not all pure usury, but activities that seek to increase rent revenue without increasing the value provided are a problem and that’s the ‘rent seeking’ part. I’ve no problem with fair value rents, but rents should be as low as the market can reasonably bear as excess rents are essentially a tax on production.
- SkittyDog 5y ago
  I'm not arguing whether the definition is valid, just correcting the previous poster's misuse of some well-established economics jargon. Re: Liquidity... The fact that a service is immediately useful to somebody (and has a willing customer) does not prove that it's a net productive behavior for the society, as a whole. That's just how the field of economics defines it, and the practioners widely agree that "providing liquidity" falls into that category. Now, it sounds like you may be trying to defend the morality of rent-seeking behavior... If that's the case, I wish you good luck in your argument, with somebody besides me. I have no dog in that fight.
  - simonh 5y ago
    Car hire companies are built on a renting business model, but I don't hate Avis. I don't curse every time I need to hire a skip at the evils of the skip hire company. What am I going to do, buy a skip? Start a local skip share collective? As long as the 'landlord' or owner is improving the efficient allocation or utilisation of resources there really isn't a problem. The real issue is when owners seek benefits of ownership that are not correlated with efficiency or productivity. For example grants and subsidies, inflation of rents though monopolistic practices or opportunism. In fact all monopolistic profit inflation is renty in a way, regardless of what the business model is, because it's extracting extra profits from simply exercising control of something in excess of the economic value provided. It's exercising the power of incumbency that's the problem.
vanattab 5y ago
Unless you consider liquidity to be valuable? No?
- SkittyDog 5y ago
  It's not about whether something is immediately valuae to somebody... It's about whether the total net effect on society produces new value, or if it's just shifting value from someone to another. Per the overwhelming opinion of economists, providing liquidity is rent seeking, because the benefit it provides to one person is exactly offset by the value it takes away from someone else.

simonh 5y ago

Liquidity is a service customers pay for. It’s not clear to me that’s unproductive work. More efficiently allocating capital can absolutely improve productivity. Some activities classed as renty can be economically beneficial. It’s not all pure usury, but activities that seek to increase rent revenue without increasing the value provided are a problem and that’s the ‘rent seeking’ part. I’ve no problem with fair value rents, but rents should be as low as the market can reasonably bear as excess rents are essentially a tax on production.

SkittyDog 5y ago
I'm not arguing whether the definition is valid, just correcting the previous poster's misuse of some well-established economics jargon. Re: Liquidity... The fact that a service is immediately useful to somebody (and has a willing customer) does not prove that it's a net productive behavior for the society, as a whole. That's just how the field of economics defines it, and the practioners widely agree that "providing liquidity" falls into that category. Now, it sounds like you may be trying to defend the morality of rent-seeking behavior... If that's the case, I wish you good luck in your argument, with somebody besides me. I have no dog in that fight.
- simonh 5y ago
  Car hire companies are built on a renting business model, but I don't hate Avis. I don't curse every time I need to hire a skip at the evils of the skip hire company. What am I going to do, buy a skip? Start a local skip share collective? As long as the 'landlord' or owner is improving the efficient allocation or utilisation of resources there really isn't a problem. The real issue is when owners seek benefits of ownership that are not correlated with efficiency or productivity. For example grants and subsidies, inflation of rents though monopolistic practices or opportunism. In fact all monopolistic profit inflation is renty in a way, regardless of what the business model is, because it's extracting extra profits from simply exercising control of something in excess of the economic value provided. It's exercising the power of incumbency that's the problem.

vanattab 5y ago

Unless you consider liquidity to be valuable? No?

SkittyDog 5y ago
It's not about whether something is immediately valuae to somebody... It's about whether the total net effect on society produces new value, or if it's just shifting value from someone to another. Per the overwhelming opinion of economists, providing liquidity is rent seeking, because the benefit it provides to one person is exactly offset by the value it takes away from someone else.