Friday, January 18, 2013

Rumplestatskin — Looking for rent-seekers in all the wrong places

The economics profession as a whole has in fact fallen for their own folk-story about the nature of rents in regards to land ownership and banking (where private banks generate rents through seignorage). When the profession debates rents, these largest of rent-seekers are absolutely ignored. 

The problem of course is that economics as a discipline does not a have a core working model of rents. Which means it is hard to put your finger on what is rent seeking. They get part the way there with models of monopolies, duopolies, imperfect competition. But invariably they all lead to the conclusion that there exist conditions, where markets are perfect or close to it, that economic rents cease to exist.
This is nonsense.
Since economic rents always exist, the question is how they are best distributed to achieve the social goals of society? The history of political-economy and moral-philosophy used to debate these very topics that economists ignore. And we need to bring back this debate. No longer can economists claim to be ‘technicians’ – with objective approaches to analysing distribution.
MacroBusiness
Looking for rent-seekers in all the wrong places
Rumplestatskin
(h/t Yves Smith at Naked Capitalism)

Hear, hear!


1 comment:

David said...

Most California land, on the other hand, is now taxed at well below the allowable max of 1%. Speculators may sit on it at little tax cost, however many highways and water and sewer lines run to and past it, however many policemen are guarding it from trespass. Little wonder that California enterprise, once so dynamic, flexible, and vital, is giving way to stasis and decay. We used to lead the nation in making jobs; now in losing them. We used to lead in school quality; now in jail population. When you tax land, the market moves each owner to join it with labor and capital as a vehicle for enterprise or shelter. When you untax it, the market moves each owner to hold it more passively and obstructively as a “store of value,” like a dog burying a bone.

Mason Gaffney Taxable Capacity of Land