The Rich Are Getting Richer!

[Kimura]

Going back to Ricardo, the distinguishing feature of rents is that the owner of the resource (in Ricardo's writing the feudal owner of agricultural land which is rented to tenant farmers and is passed on through inheritance) does not create the resource nor improve it. In the Ricardian world, improvements to land made by the owner such as agricultural buildings, fencing, land-clearing, or manuring were considered capital. The only decision the rentier class makes in production is to either extract a rent for allowing the use of the resource they control or to withhold it for (usually) speculative reasons. There is no sense in Ricardian theory in which rents are "earned". This analysis is continued in neo-classical theory and broadened to include many other situations other than land, such as patents, branding, "trade secrets", and location.

Note that there is nothing "leftist" about this, rent-seeking behavior like monopolies is roundly condemned by classical economists from Adam Smith through David Ricardo and Thomas Malthus to Alfred Marshall and Irving Fisher. I cannot think of a mainstream economist of the last three centuries (until 1980) who seriously defended monopoly power and rent-seeking behavior. Before the eighties, it used to be a primary part of the conservative economic canon.

In the fifties and sixties there was a theoretical alternative to neo-Ricardian rent theory; the theory of "excess profits". In economic texts of the period, the point was made that in a purely competitive economy the real rate of profit would tend to zero as new entrants into the market would force profits down. As this was not observed, some explanation was required and theories emerged that there had to be a return to "risk-taking" or "managerial ability" or "entrepreneurship". These "factors" would give rise to "excess profits". This fell by the wayside as no one was ever able to really quantify these, and eventually analysis of risk, imperfect information, and good old neo-Ricardian rent-seeking turned out to be much more fruitful.

Finally, the observed behavior of businesses is that they do not single-mindedly "maximize profit" nearly as much as they attempt to achieve anticipated profitability with minimum risk. The best way to do this is to achieve a degree of monopoly or monopsony power. This is equivalent to creating rent-producing assets and there is a huge overlap in the two approaches. Today I think that rent-seeking behavior and monopoly /monopsony power/collusion amount to the same thing.

Very well said, I couldn't agree more. I sort of went off into a economic rent tangent without laying the historical framework like you just did. As you pointed out, rent extraction was a central thesis in the classical economics of David Ricardo, as well as Adam Smith, culminating with Karl Marx.

While we can formulate moral arguments against economic rent all day long, I do see overall rent-seeking as extremely inefficient and it functions as a drag on productive capacity, innovation, and investment. The end result is always massive inequality which inevitability is an economic drag, and leads to the accumulation of political power.

If these things are left unaddressed, especially rent-seeking behavior, capitalism becomes utterly incompatible with democracy and we end up with corporatism.

In terms of capitalism, both renting-seeking and economic rent distort price discovery in competitive markets. It tends to favor special interests since they can extract rents; therefore, they'll also extract privileges. The creates two problems: artificial scarcity and artificial market power.

 

[Jimmy_Jam]

The rich are getting richer because the government is printing more money. That's how it works with fiat currency. The rich are rich because of a variety of means, but one tendency is also true, they tend to know how to keep their wealth and how to get more. So, if the central bank keeps pumping out more money, logic dictates that it will get funneled straight to the people who know how to suck it in.

Capitalists think that rich people who run businesses create jobs. Statists think that consumers create jobs. The fact is they are both right. Wealth and jobs are both created via the "circle of life" that exists between consumers and businesses. Without this symbiotic relationship, wealth stagnates as the rich hold onto it, and the middle class suffers because they're not making the money that will buy the products and thus keep that circle alive. In a struggling economy with a failing middle class, and a central bank cranking out more fiat currency, this problem only exacerbates, with the rich grabbing onto the extra money like they're good at doing, with the middle class seeing little to none of it except through whatever welfare programs the money is intended to provide.

The problems of the economy cannot be pinned on high taxes, because if one knows history, one knows that the enormous economic boom that followed WWII happened with tax rates double what they are now, and plenty of government spending going on to develop supporting infrastructure such as the Interstate Highway System, electrical grids, and airports, to name a few.

The problems of the economy cannot be pinned on the rich, because they are half of the circle of life that creates jobs and wealth. The self-centered motivation to get ahead, to succeed, to better one's peers, while not everything, is an important part of economic growth. But it cannot do anything in a vacuum. The symbiotic circle between consumers and businesses is everything to economic growth.

 

[oldfart]

While we can formulate moral arguments against economic rent all day long, I do see overall rent-seeking as extremely inefficient and it functions as a drag on productive capacity, innovation, and investment. The end result is always massive inequality which inevitability is an economic drag, and leads to the accumulation of political power.

If these things are left unaddressed, especially rent-seeking behavior, capitalism becomes utterly incompatible with democracy and we end up with corporatism.

In terms of capitalism, both renting-seeking and economic rent distort price discovery in competitive markets. It tends to favor special interests since they can extract rents; therefore, they'll also extract privileges. The creates two problems: artificial scarcity and artificial market power.

Agreed. The frightening observation is that political power is an object of rent-seeking behavior. If an industry can control the regulatory process it can create barriers to entry that forestall new competitors. Organized crime has become especially adept at extracting rents from political power: remember in the "Godfather" where the title character controlled the judges and politicians so that people wanting to get into drugs needed his protection? That's rent-seeking on steriods!

 

[Boss]

The rich are getting richer because the government is printing more money. That's how it works with fiat currency. The rich are rich because of a variety of means, but one tendency is also true, they tend to know how to keep their wealth and how to get more. So, if the central bank keeps pumping out more money, logic dictates that it will get funneled straight to the people who know how to suck it in.

Capitalists think that rich people who run businesses create jobs. Statists think that consumers create jobs. The fact is they are both right. Wealth and jobs are both created via the "circle of life" that exists between consumers and businesses. Without this symbiotic relationship, wealth stagnates as the rich hold onto it, and the middle class suffers because they're not making the money that will buy the products and thus keep that circle alive. In a struggling economy with a failing middle class, and a central bank cranking out more fiat currency, this problem only exacerbates, with the rich grabbing onto the extra money like they're good at doing, with the middle class seeing little to none of it except through whatever welfare programs the money is intended to provide.

The problems of the economy cannot be pinned on high taxes, because if one knows history, one knows that the enormous economic boom that followed WWII happened with tax rates double what they are now, and plenty of government spending going on to develop supporting infrastructure such as the Interstate Highway System, electrical grids, and airports, to name a few.

The problems of the economy cannot be pinned on the rich, because they are half of the circle of life that creates jobs and wealth. The self-centered motivation to get ahead, to succeed, to better one's peers, while not everything, is an important part of economic growth. But it cannot do anything in a vacuum. The symbiotic circle between consumers and businesses is everything to economic growth.

I like a lot of what you are saying here, it makes sense and is well articulated. However, there are a couple of points I feel compelled to make. When the government does 'quantitative easing' ...printing more currency... it hurts everyone, rich people included, because it devalues the dollar. The rich may not feel the effects as much, because...well, they are rich. But their portfolios and assets are still measured in "dollars" which become worth less and less.

The economic boon following WWII, was caused by the return of soldiers from the war, and a sense of national jubilation and pride in winning the war. It did not matter that top marginal income tax rates were high, the level of increased consumerism drove the economy for about a decade or so, into the 1950s. This was purely the middle class, consuming and buying, purchasing new homes, baby booming their way to the 1960s. By the early 60s, we started to see another economic downturn, and President Kennedy proposed lowering the top marginal rates, on the argument that "a rising tide floats all boats."

Now, what happens when you reduce the top marginal rates is, those who have wealth socked away in security trusts, take that money out and earn income with it at the new lower rate, because they have the means to do so. They simply will not do this when the tax rates are high, because they can make more money leaving their wealth in securities. The thing is, it doesn't really matter to a rich person, what you do with the income tax rates, they don't care. They don't have to earn incomes, they are wealthy people. If you say, well... we'll just tax the hell out of security investments... okay, you can tax US treasury earnings, and when you raise those rates, the rich person simply moves the money into foreign securities you cannot tax. Now you have a bigger problem, because there is no wealth backing US treasury bonds anymore. Therefore, you now have a devalued dollar and defunded treasury... not a good thing in bad economic times. The more you attempt to "punish" people for earning wealth, the less wealth earning you will get. Common sense should tell us this.

 

[Boss]

Now let's deal with this "economic rent" bullshit that keeps popping up.... Let's set up an analogy to demonstrate what is being said here. Say I am a rich person, with all kinds of wealth at my disposal. And let's say you are a young budding capitalists with a great idea and product, you just need someone to believe in your idea enough to get you started. I might be inclined to "rent" you a million dollars, to get you going, and you'll agree to pay my "rent" of $150k on the million, over the next three years. I'm making a modest 15% on my investment over three years, and I will pay roughly 15% tax on that. You get the benefit of working capital to get your company started, the government gets their 15% cut of my "rental" profits, and the economy has yet another business providing jobs with incomes, which are also taxed by the government. Now, I don't HAVE to "rent" you my million dollars, I can tell you to go suck an egg if I want to, it's MY money. If the government is going to say... hold on, you can "rent" him your money, but we want 39% tax on your rental rates... well, my "rent" just increased, if I am even inclined to still "rent" my money out. Maybe I am more inclined to "rent" my wealth to a foreign government, who needs my money so badly, they agree to pay my "rental fees" and not charge me any tax on my returns? In any event, money is a valuable commodity to a lot of people, and I can probably find someone who wants to "rent" it on my terms. If not, that's okay too, I can simply choose to keep it in my mattress if it comes down to that.

 

[Auteur]

The rich are getting richer because the government is printing more money. That's how it works with fiat currency. The rich are rich because of a variety of means, but one tendency is also true, they tend to know how to keep their wealth and how to get more. So, if the central bank keeps pumping out more money, logic dictates that it will get funneled straight to the people who know how to suck it in.

Capitalists think that rich people who run businesses create jobs. Statists think that consumers create jobs. The fact is they are both right. Wealth and jobs are both created via the "circle of life" that exists between consumers and businesses. Without this symbiotic relationship, wealth stagnates as the rich hold onto it, and the middle class suffers because they're not making the money that will buy the products and thus keep that circle alive. In a struggling economy with a failing middle class, and a central bank cranking out more fiat currency, this problem only exacerbates, with the rich grabbing onto the extra money like they're good at doing, with the middle class seeing little to none of it except through whatever welfare programs the money is intended to provide.

The problems of the economy cannot be pinned on high taxes, because if one knows history, one knows that the enormous economic boom that followed WWII happened with tax rates double what they are now, and plenty of government spending going on to develop supporting infrastructure such as the Interstate Highway System, electrical grids, and airports, to name a few.

The problems of the economy cannot be pinned on the rich, because they are half of the circle of life that creates jobs and wealth. The self-centered motivation to get ahead, to succeed, to better one's peers, while not everything, is an important part of economic growth. But it cannot do anything in a vacuum. The symbiotic circle between consumers and businesses is everything to economic growth.

Good post. One point though: employment, in my estimation, is a rather complex business, and is only marginally dependent on entrepreneurs. This is especially so today, as employment shrinks in response to automation, and the leveling effect of globalization. If left to pure market forces, we could easily be back to a highly stratified society, such as Russia before the revolution. Many jobs in fact fulfill mainly social goals, rather than those dependent only on profit. And this is a good thing, in my estimation, but it will only occur due to political consensus, not in response to market forces. The blueprint for economic growth, IMO, must come from the public sphere, or else all manner of distortions may occur.

 

[Auteur]

Now let's deal with this "economic rent" bullshit that keeps popping up.... Let's set up an analogy to demonstrate what is being said here. Say I am a rich person, with all kinds of wealth at my disposal. And let's say you are a young budding capitalists with a great idea and product, you just need someone to believe in your idea enough to get you started. I might be inclined to "rent" you a million dollars, to get you going, and you'll agree to pay my "rent" of $150k on the million, over the next three years. I'm making a modest 15% on my investment over three years, and I will pay roughly 15% tax on that. You get the benefit of working capital to get your company started, the government gets their 15% cut of my "rental" profits, and the economy has yet another business providing jobs with incomes, which are also taxed by the government. Now, I don't HAVE to "rent" you my million dollars, I can tell you to go suck an egg if I want to, it's MY money. If the government is going to say... hold on, you can "rent" him your money, but we want 39% tax on your rental rates... well, my "rent" just increased, if I am even inclined to still "rent" my money out. Maybe I am more inclined to "rent" my wealth to a foreign government, who needs my money so badly, they agree to pay my "rental fees" and not charge me any tax on my returns? In any event, money is a valuable commodity to a lot of people, and I can probably find someone who wants to "rent" it on my terms. If not, that's okay too, I can simply choose to keep it in my mattress if it comes down to that.

Mr Boss, I'm beginning to think you are smoking de herb while working away at your keyboard. Is this so? You have still not grasped the concept of "rent seeking".

 

[oldfart]

Now let's deal with this "economic rent" bullshit that keeps popping up.... Let's set up an analogy to demonstrate what is being said here. Say I am a rich person, with all kinds of wealth at my disposal. And let's say you are a young budding capitalists with a great idea and product, you just need someone to believe in your idea enough to get you started. I might be inclined to "rent" you a million dollars, to get you going, and you'll agree to pay my "rent" of $150k on the million, over the next three years. I'm making a modest 15% on my investment over three years, and I will pay roughly 15% tax on that. You get the benefit of working capital to get your company started, the government gets their 15% cut of my "rental" profits, and the economy has yet another business providing jobs with incomes, which are also taxed by the government. Now, I don't HAVE to "rent" you my million dollars, I can tell you to go suck an egg if I want to, it's MY money. If the government is going to say... hold on, you can "rent" him your money, but we want 39% tax on your rental rates... well, my "rent" just increased, if I am even inclined to still "rent" my money out. Maybe I am more inclined to "rent" my wealth to a foreign government, who needs my money so badly, they agree to pay my "rental fees" and not charge me any tax on my returns? In any event, money is a valuable commodity to a lot of people, and I can probably find someone who wants to "rent" it on my terms. If not, that's okay too, I can simply choose to keep it in my mattress if it comes down to that.

Mr Boss, I'm beginning to think you are smoking de herb while working away at your keyboard. Is this so? You have still not grasped the concept of "rent seeking".

I think you're right. Make him share!

 

[oldfart]

I am always skeptical of statistics presented to support a particular idea or philosophy, because statistics can be manipulated to mean almost anything. There is no "accepted fact" of Keynesian or Marxist economic philosophy, other than the fact they fail when practiced on a large scale. Because Marxist propagandists can bastardize Ricardo, in order to prop up their 18th Century socialist arguments, does not make them FACTS.

Once again you prove you are temporally challenged. "18th century socialist arguments" would be by St Simon and Fourier rather than Marx.

 

[Boss]

I am always skeptical of statistics presented to support a particular idea or philosophy, because statistics can be manipulated to mean almost anything. There is no "accepted fact" of Keynesian or Marxist economic philosophy, other than the fact they fail when practiced on a large scale. Because Marxist propagandists can bastardize Ricardo, in order to prop up their 18th Century socialist arguments, does not make them FACTS.

Once again you prove you are temporally challenged. "18th century socialist arguments" would be by St Simon and Fourier rather than Marx.

But I never said Marx was an 18th century philosophy. Socialism was, and Marx 'modernized' it. Still, it was promoted to people who lived under totalitarian rulers and kings, who had no representation in government or opportunity for prosperity. This is why the current "statist" movement (they don't call it Marxism or Socialism now), still uses these same 'memes' but they have to build a false perception, since these things simply do not actually exist in our free society. That's where we get "greedy capitalists" and "rich getting richer" and now, "economic rent" and all the rest... it's a throwback from the 18th century argument for Socialism, it hasn't changed a bit... just repackaged to appeal to morons who gullibly lap it up like kitties to milk.

We live in a free and open society. If you don't like CEOs making a bunch of money? Don't buy their goddamn product! Boycott their company and punish them with your pocketbook, it's that simple to fix! You don't like Exxon reporting record profits? Don't buy their goddamn products! You have the power, in a free society, to put any capitalist you want to, out of business! All you need to do is gather together like minded people who share your opinion.

 

[Boss]

Now let's deal with this "economic rent" bullshit that keeps popping up.... Let's set up an analogy to demonstrate what is being said here. Say I am a rich person, with all kinds of wealth at my disposal. And let's say you are a young budding capitalists with a great idea and product, you just need someone to believe in your idea enough to get you started. I might be inclined to "rent" you a million dollars, to get you going, and you'll agree to pay my "rent" of $150k on the million, over the next three years. I'm making a modest 15% on my investment over three years, and I will pay roughly 15% tax on that. You get the benefit of working capital to get your company started, the government gets their 15% cut of my "rental" profits, and the economy has yet another business providing jobs with incomes, which are also taxed by the government. Now, I don't HAVE to "rent" you my million dollars, I can tell you to go suck an egg if I want to, it's MY money. If the government is going to say... hold on, you can "rent" him your money, but we want 39% tax on your rental rates... well, my "rent" just increased, if I am even inclined to still "rent" my money out. Maybe I am more inclined to "rent" my wealth to a foreign government, who needs my money so badly, they agree to pay my "rental fees" and not charge me any tax on my returns? In any event, money is a valuable commodity to a lot of people, and I can probably find someone who wants to "rent" it on my terms. If not, that's okay too, I can simply choose to keep it in my mattress if it comes down to that.

Mr Boss, I'm beginning to think you are smoking de herb while working away at your keyboard. Is this so? You have still not grasped the concept of "rent seeking".

Oh I grasp the concept, it's called pinhead propaganda from Marxists who want to destroy free market capitalism. I get it, totally! I was merely illustrating an example of "rent" in a way that even the stupidest moron out there can understand. You are talking about wealthy investors using their wealth to generate more wealth, and you call it "economic rent" so as to portray a certain image, of the greedy landlord, sucking your money out of your wallet for doing absolutely nothing but being the landlord... I get it completely.

Propagandists are really good at portraying an image, playing on emotive symbolism, twisting reality into a pretzel to promote a myth and prop up a meme. "Economic rent" is nothing more than sophistry of semantics, designed to promote Socialism. It is largely successful because we have a nation of idiots like you, who think they are "smart" because they can pontificate the teachings of an even more profound idiot. Whether it's some socialist college professor or speaker, or a book by some socialist propagandist, or even a blog written in some grandmother's basement by a punk in his underwear.

 

[Kimura]

Oh I grasp the concept, it's called pinhead propaganda from Marxists who want to destroy free market capitalism.

I get it, totally! I was merely illustrating an example of "rent" in a way that even the stupidest moron out there can understand. You are talking about wealthy investors using their wealth to generate more wealth, and you call it "economic rent" so as to portray a certain image, of the greedy landlord, sucking your money out of your wallet for doing absolutely nothing but being the landlord... I get it completely.

Propagandists are really good at portraying an image, playing on emotive symbolism, twisting reality into a pretzel to promote a myth and prop up a meme. "Economic rent" is nothing more than sophistry of semantics, designed to promote Socialism. It is largely successful because we have a nation of idiots like you, who think they are "smart" because they can pontificate the teachings of an even more profound idiot. Whether it's some socialist college professor or speaker, or a book by some socialist propagandist, or even a blog written in some grandmother's basement by a punk in his underwear.

I know, you're right. It's Marxists like Dave Ricardo and Adam Smith.

Economic rent is a basic concept in economics. It's basically payment in excess of what's needed to mobilize factors of production. For example, economic rents have accumulated to those that monopolize or corner the market. This is done by artificially reducing the supply of resources, such as capital, labor or even land. In economics, we refer to these people as rentiers.

Secondly, there's no such thing as "free market capitalism". However, we do have competitive markets, which require governments to enforce contracts, pass legislation, take regulatory action, etc. We used to have a "free market" when humans were hunter-gatherers, but once city-states emerged, that was the beginning of political economy.

 

[oldfart]

Oh I grasp the concept, it's called pinhead propaganda from Marxists who want to destroy free market capitalism. I get it, totally!

Actually you have understood nothing and are embarrassing yourself. We have been polite to you, gently chiding you to expand your knowledge of economic theory and criticizing your erroneous statements but not characterizing you personally, so far as I recall. You are the one who has called others names like "idiot" and "moron". Obviously you have no concept of how to make an argument civilly and resort to invective when your ignorance and intellectual laziness are revealed.

Talking to you is a waste of time, and worse, reading you is painful to anyone with the least human sympathy, seeing you embarrass yourself so. So rage on; it only makes you more pitiful to observe.

 

[Boss]

Oh I grasp the concept, it's called pinhead propaganda from Marxists who want to destroy free market capitalism.

I get it, totally! I was merely illustrating an example of "rent" in a way that even the stupidest moron out there can understand. You are talking about wealthy investors using their wealth to generate more wealth, and you call it "economic rent" so as to portray a certain image, of the greedy landlord, sucking your money out of your wallet for doing absolutely nothing but being the landlord... I get it completely.

Propagandists are really good at portraying an image, playing on emotive symbolism, twisting reality into a pretzel to promote a myth and prop up a meme. "Economic rent" is nothing more than sophistry of semantics, designed to promote Socialism. It is largely successful because we have a nation of idiots like you, who think they are "smart" because they can pontificate the teachings of an even more profound idiot. Whether it's some socialist college professor or speaker, or a book by some socialist propagandist, or even a blog written in some grandmother's basement by a punk in his underwear.

I know, you're right. It's Marxists like Dave Ricardo and Adam Smith.

Economic rent is a basic concept in economics. It's basically payment in excess of what's needed to mobilize factors of production. For example, economic rents have accumulated to those that monopolize or corner the market. This is done by artificially reducing the supply of resources, such as capital, labor or even land. In economics, we refer to these people as rentiers.

Secondly, there's no such thing as "free market capitalism". However, we do have competitive markets, which require governments to enforce contracts, pass legislation, take regulatory action, etc. We used to have a "free market" when humans were hunter-gatherers, but once city-states emerged, that was the beginning of political economy.

There is no such thing as monopolies in America anymore, we outlawed them. The only entity that can reduce the supply of resources, capital, labor, or land, is GOVERNMENT! We still have a free market, except to the extent it is being choked to death by ever-increasing socialistic government.

 

[Boss]

Oh I grasp the concept, it's called pinhead propaganda from Marxists who want to destroy free market capitalism. I get it, totally!

Actually you have understood nothing and are embarrassing yourself. We have been polite to you, gently chiding you to expand your knowledge of economic theory and criticizing your erroneous statements but not characterizing you personally, so far as I recall. You are the one who has called others names like "idiot" and "moron". Obviously you have no concept of how to make an argument civilly and resort to invective when your ignorance and intellectual laziness are revealed.

Talking to you is a waste of time, and worse, reading you is painful to anyone with the least human sympathy, seeing you embarrass yourself so. So rage on; it only makes you more pitiful to observe.

Just shut the fuck up, you people have been anything BUT nice to me. Don't act like you are above all of that and have been having a civil dialogue, then in the next sentence, speculate that I am ignorantly embarrassing myself. Your entire post is full of insult, ridicule and denigration. You have had every opportunity to explain what you mean, and you continue to spew socialist propaganda from every orifice. You don't like me because I expose your fraud and explain what you are really up to. So you have to destroy me, and if there are two or more of you, that becomes an easier task, because you can make it seem as if I am the odd man out. But here's the deal, I've been around the block, I fully understand what you're doing, and I am not backing down. I'm not going to second guess what I believe, I am confident in what I am saying, and you probably can't throw an insult at me that I haven't heard before.

Like I said, "economic rent" or "rentier class" are memes developed by socialists to attack free market capitalism. They stem from ideas dating back to the 18th Century, where kings and tyrants were the "free market capitalists" and the people had no opportunity to prosper. It simply doesn't fly today, unless you can perpetuate a perception and myth, and artificially create an illusion through words. I've given you credit, you are good at doing that! This is why it's such a problem and we can't seem to rid ourselves of your failed economic ideas.

 

[Kimura]

Oh I grasp the concept, it's called pinhead propaganda from Marxists who want to destroy free market capitalism.

I get it, totally! I was merely illustrating an example of "rent" in a way that even the stupidest moron out there can understand. You are talking about wealthy investors using their wealth to generate more wealth, and you call it "economic rent" so as to portray a certain image, of the greedy landlord, sucking your money out of your wallet for doing absolutely nothing but being the landlord... I get it completely.

Propagandists are really good at portraying an image, playing on emotive symbolism, twisting reality into a pretzel to promote a myth and prop up a meme. "Economic rent" is nothing more than sophistry of semantics, designed to promote Socialism. It is largely successful because we have a nation of idiots like you, who think they are "smart" because they can pontificate the teachings of an even more profound idiot. Whether it's some socialist college professor or speaker, or a book by some socialist propagandist, or even a blog written in some grandmother's basement by a punk in his underwear.

I know, you're right. It's Marxists like Dave Ricardo and Adam Smith.

Economic rent is a basic concept in economics. It's basically payment in excess of what's needed to mobilize factors of production. For example, economic rents have accumulated to those that monopolize or corner the market. This is done by artificially reducing the supply of resources, such as capital, labor or even land. In economics, we refer to these people as rentiers.

Secondly, there's no such thing as "free market capitalism". However, we do have competitive markets, which require governments to enforce contracts, pass legislation, take regulatory action, etc. We used to have a "free market" when humans were hunter-gatherers, but once city-states emerged, that was the beginning of political economy.

There is no such thing as monopolies in America anymore, we outlawed them. The only entity that can reduce the supply of resources, capital, labor, or land, is GOVERNMENT! We still have a free market, except to the extent it is being choked to death by ever-increasing socialistic government.

We still have monopolies in the US. The US passed the Sherman Antitrust Act which was definitely needed at time.

Today's monopolies are the large Wall Street investment banks and some of the larger multinationals. I've found around twenty instances where Wall Street investment banks and multinationals could be considered monopolies, except the government refuses to take action. We can define a monopoly as a company that exerts such control of its market that it acts as a price setter and stifles innovation by preventing the competition from any chance of profit. Most modern-day monopolists achieve their goals trough regulatory capture.

The goal of monopolists is to maximize their income and decrease the overall share of all other factors, such as labor, capital, land, natural resources, raw material producers, etc.

The US government is socialist? The US government doesn't control the means of production in any way, shape, or form. Sorry to burst your bubble.

 

[Kimura]

Like I said, "economic rent" or "rentier class" are memes developed by socialists to attack free market capitalism. They stem from ideas dating back to the 18th Century, where kings and tyrants were the "free market capitalists" and the people had no opportunity to prosper. It simply doesn't fly today, unless you can perpetuate a perception and myth, and artificially create an illusion through words. I've given you credit, you are good at doing that! This is why it's such a problem and we can't seem to rid ourselves of your failed economic ideas.

Are you saying that David Ricardo and Adam Smith are "socialists"? Economic rent was formulated by neoclassical economists.

We have "rentiers" in the form of large swaths of the financial sector, i.e., Wall Street and the City of London. The rentier doesn't perform any type of useful function, and the economic rent can be extracted without decreasing the supply of resources required for production. They deserve a mercy killing which was advocated by JM Keynes. I never understood what he meant until I actually started working in finance. It's in the last chapter of the General Theory.

The rentier class are perfectly content to extract economic rents which negatively affect the real economy. Think of the old feudal lords of Europe; the whole point of their existence was to consume everything they didn't earn. We need to give them a mercy killing (regulatory) so we can have a semblance of the entrepreneurial power of actual capitalism. As Adam Smith elaborated upon, the feudal lords had interests which were diametrically opposed to the interests of all other classes within society.

Today's feudal lords are Wall Street. It serves no other interest except its own. It contributes economic rent to every economic activity in our society at every turn, adding a drag to the real economy. Wall Street is the rentier class, plain and simple. If you want a some examples of rentiers, look no further than Jaimie Dimon, Llyod Blankfein, Hank Paulson and Bob Rubin, et al.

At end of the day, you have to realize Wall Street isn't involved in traditional banking anymore. There's not enough economic rent is such activity. Over the past three decades, they've lobbied to repeal any and all regulations in their way. This has enabled them to financialize our economy, sticking their parasitical tentacles into every aspect of our economy, creating and directing economic rents that stifle our economy. Regulators take such a myopic view of their responsibilities since they've allowed the the financial sector to take control of our food supply, energy supply, and water supply.

 

[PhillyGuard]

If everyone's standard of living is rising, then wealth disparities aren't a big deal. The standard of living of those on the bottom of the US ladder is far higher than what it was 30 years ago. (Indicators like ownership of cell phones, air conditioning, etc)

 

[MikeK]

If everyone's standard of living is rising, then wealth disparities aren't a big deal. The standard of living of those on the bottom of the US ladder is far higher than what it was 30 years ago. (Indicators like ownership of cell phones, air conditioning, etc)

The material things you've mentioned are owned by people who earned the money to buy them during the period of middle class prosperity, a condition which has since declined leaving these "bottom-of-the-ladder" workers unemployed or under-employed, many of whom are living on their savings, or on credit cards or borrowed money. A statistically predictable number of them will soon run out of their meager remaining resources and will suffer foreclosure and become homeless.

What you are seeing and perceive to be material symbols of relative wealth are in reality the signs of slow economic death. Today they "own" an air-conditioned home and a nice car. Tomorrow they will be living in that car. Next day the car will be repossessed and they will be living on the streets -- along with an increasing number of formerly middle class Americans -- the ones you aren't paying attention to or think of as inferiors.

 

[Rshermr]

Oh I grasp the concept, it's called pinhead propaganda from Marxists who want to destroy free market capitalism. I get it, totally!

Actually you have understood nothing and are embarrassing yourself. We have been polite to you, gently chiding you to expand your knowledge of economic theory and criticizing your erroneous statements but not characterizing you personally, so far as I recall. You are the one who has called others names like "idiot" and "moron". Obviously you have no concept of how to make an argument civilly and resort to invective when your ignorance and intellectual laziness are revealed.

Talking to you is a waste of time, and worse, reading you is painful to anyone with the least human sympathy, seeing you embarrass yourself so. So rage on; it only makes you more pitiful to observe.

Just shut the fuck up, you people have been anything BUT nice to me. Don't act like you are above all of that and have been having a civil dialogue, then in the next sentence, speculate that I am ignorantly embarrassing myself. Your entire post is full of insult, ridicule and denigration. You have had every opportunity to explain what you mean, and you continue to spew socialist propaganda from every orifice. You don't like me because I expose your fraud and explain what you are really up to. So you have to destroy me, and if there are two or more of you, that becomes an easier task, because you can make it seem as if I am the odd man out. But here's the deal, I've been around the block, I fully understand what you're doing, and I am not backing down. I'm not going to second guess what I believe, I am confident in what I am saying, and you probably can't throw an insult at me that I haven't heard before.

Like I said, "economic rent" or "rentier class" are memes developed by socialists to attack free market capitalism. They stem from ideas dating back to the 18th Century, where kings and tyrants were the "free market capitalists" and the people had no opportunity to prosper. It simply doesn't fly today, unless you can perpetuate a perception and myth, and artificially create an illusion through words. I've given you credit, you are good at doing that! This is why it's such a problem and we can't seem to rid ourselves of your failed economic ideas.

Poor boss is a lost cause. He is totally ignorant of economics, and simply makes up things as he goes forward. He is funny, however. Sad. But funny.