3 ms·

Rent-seeking is an "economic activity to gain wealth without any reciprocal contribution of productivity". Or put another way it means societies resources are p

Rent-seeking is an "economic activity to gain wealth without any reciprocal contribution of productivity". Or put another way it means societies resources are put towards wealth transfer instead of productivity/wealth creation.

robertlagrant 3y ago
Thank you; understood. I've just looked at the Wikipedia definition[0] as well, which is a little different, but I get the point you're making. I haven't thought about this enough, but one thing I'd note is that HFT is risk-taking, and taking a risk generally has the possibility of profit or loss. A second thing would be that the phrase "society's resources" is a bit dangerous, as it might let us think that the money they're using is somehow everyone's money. When in fact they're spending their money on this, hoping to make a profit. [0] https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking
- nerdponx 3y ago
  "Excess rent" is economics jargon for something akin to "selling something for more than its fair value". The idea with "rent-seeking" is therefore that of seeking opportunities to take advantage of or even create market distortions that work in your favor, allowing you to capture a greater share of surplus value than you would otherwise obtain in a theoretically-fair market.
  - robertlagrant 3y ago
    How do HFT firms create market distortions that work in their favour?
    - nerdponx 3y ago
      I'm not making the assertion, I am just trying to clarify the terminology.
- gnopgnip 3y ago
  >A second thing would be that the phrase "society's resources" is a bit dangerous, as it might let us think that the money they're using is somehow everyone's money. When in fact they're spending their money on this, hoping to make a profit. From the perspective of the whole economy it is everyone's money. Rent seeking behavior is a dead weight loss due to market inefficiency. Through tax policy the incentives can change and largely remove this inefficiency.

robertlagrant 3y ago

Thank you; understood. I've just looked at the Wikipedia definition[0] as well, which is a little different, but I get the point you're making. I haven't thought about this enough, but one thing I'd note is that HFT is risk-taking, and taking a risk generally has the possibility of profit or loss. A second thing would be that the phrase "society's resources" is a bit dangerous, as it might let us think that the money they're using is somehow everyone's money. When in fact they're spending their money on this, hoping to make a profit. [0] https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking

nerdponx 3y ago
"Excess rent" is economics jargon for something akin to "selling something for more than its fair value". The idea with "rent-seeking" is therefore that of seeking opportunities to take advantage of or even create market distortions that work in your favor, allowing you to capture a greater share of surplus value than you would otherwise obtain in a theoretically-fair market.
- robertlagrant 3y ago
  How do HFT firms create market distortions that work in their favour?
  - nerdponx 3y ago
    I'm not making the assertion, I am just trying to clarify the terminology.
gnopgnip 3y ago
>A second thing would be that the phrase "society's resources" is a bit dangerous, as it might let us think that the money they're using is somehow everyone's money. When in fact they're spending their money on this, hoping to make a profit. From the perspective of the whole economy it is everyone's money. Rent seeking behavior is a dead weight loss due to market inefficiency. Through tax policy the incentives can change and largely remove this inefficiency.