Thursday, July 25, 2013
Randy Wray — Wall Street’s Rent Seeking Vampires Kill Innovation
I can't tell you how excited I am to see Randy going after rent-seeking. I had though that was missing as an MMT emphasis previously, although Michael Hudson has been on it for a long time. As Randy pointed out in his previous post, "euthanizing the rentiers" in the sense of ending parasitical economic rent and extractive rent-seeking was high on the policy agenda of Keynes at the conclusion of the General Theory.
While there are moral arguments against economic rent, rent-seeking is inefficient and constitutes an unnecessary drag on circular flow that inhibits productive investment and innovation. It also leads to inequality that also becomes an economic drag, as well as increasing the political power of wealth.
Perhaps most significantly in the long run, without addressing rentierism and rent-seeking, capitalism becomes increasing incompatible with democracy and distributive justice, and leads to corporate statism.
Even from the side of capitalism, economic rent and rent-seeking are also disruptive to price discovery in markets by favoring vested interests that able to extract rents and thereby to exact privilege as well. This leads to artificially imposed market power and artificial scarcity, as well as exclusion of disruptive innovation that would shift the status quo.
Economonitor — Great Leap Forward
Wall Street’s Rent Seeking Vampires Kill Innovation
L. Randall Wray | Professor of Economics, UMKC
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6 comments:
Yet we rent our money supply when it could be issued as Equity* instead without rent.
When will the government-backed credit cartel's "rent seeking" via debt-creation be attacked by the MMT crowd?
Look. Some may not wish to "share." Fine. But that's no excuse to allow them to legally steal via what is essentially a government-backed counterfeiting cartel, is it?
*Except for government money which is backed by the taxation authority and power of government.
F.
There is no "rent" if there is no interest....
And:
"government money which is backed by the taxation authority and power of government."
Where are you getting this?
Here's Aristotle:
"By virtue of voluntary convention nomisma has become the medium of exchange. We call it nomisma, because its efficacy is due not to nature but to nomos (law), and because it is always in our power to control it." — Aristotle, " Ethica."
The last users of true "government money" used it VOLUNTARILY...
it was NOT "backed by taxation" or "government power" you are parroting the common libertarian interpretation of how state currency systems work.
Libertarians are always cooking up diverse ways to showcase "coercion" or some such thing.... "the non agression principle... blah, blah, blah...."
The last time state currency was used in the west it wasnt "backed up" by anything other than a voluntary commitment by our Greco-Roman ancestors to enforce the social contract between themselves via the institutions of civil government...
Poll taxes back then were small formalities whereby the citizenry would demonstrate their subjection *TO EACH OTHER* by paying the tax to the govt figure who occupied the position of authority to enforce this social contract...
"Be paying, then, Caesar's to Caesar,..." Mat 22:21
Paul termed these people "ignorantly devout" (Acts 17:23)
... They were in many ways better people who had a better view of social justice than we do today with the morons we have in leadership now...
"Team Human" back then had a better team batting average than we on the "team" have today...
rsp,
Where am I getting it?! From the standard MMT line that taxes drive the value of fiat! Taxes are voluntary, you say? Try that on the IRS or your county tax collector some time.
As for zero interest, is that what the banks are charging?? Hmmm? Or are you pulling the standard dodge that credit isn't money? Even though credit drives up prices just as well?
Of course government has authority and power and a sword too or are you ignorant of the New Testament too?
Btw, the true nature of mere human government is spelled out in 1 Samuel 8:10-18. Nevertheless, we are commanded to be subject to it. And so we should be but let's not imagine it to be other than what it is.
I have NO problem with fiat being backed by force since that is what government is. It's folks who imagine otherwise who'll see no problem with a gold standard. Is that what you want?
F,
If you didnt notice, most if not all of the MMT leadership are libertarians so their work will of course reflect this characteristic... but the historic record laid down from Aristotle here tells a different contemporaneous account of what was going on the last time we humans here in the west used state currency.... (if the writings of Aristotle are to be believed I suppose...)
If we didnt have our current crop of morons who still think we are under the metals, these morons who think they have to get our govts own state currency from the non-govt to be able to spend, then taxes would become a formality and largely a symbolic gesture whereby we would exhibit our subjection TO EACH OTHER via the payment of a reasonable tax, at a rate adequate to exhibit our subjection to each other...
This tax would of course be enforced via the tax laws we would establish via our democratic institutions of govt... VOLUNTARILY... (this is where the 'voluntary' part comes in F. not whether you pay the tax or not...)
" let's not imagine it to be other than what it is."
What is it then?
How are we humans supposed to enforce the social/legal contracts we establish amongst ourselves? Via what institution if not government?
The "church"???? Christendumb???? LOL!
"Better be nice to each other or you will go to "hell" to be tormented forever...."????? That old pagan canard??? LOL!
"There is one God the Father, out of Whom ALL is..." 1 Cor 8:6
"ALL" includes our earthly human authority administered via the institutions of our civil government...
rsp,
then taxes would become a formality Matt Franko
That might work IF government did not overspend relative to the real economic growth rate. But if government did overspend relative to the real economic growth rate then government would be levying an inflation tax on the population. But that would harm those on a fixed income (such as retirees on SS, the unemployed, etc.) unless enough government spending was directed toward them to compensate. Also, since wage increases tend to lag price inflation then wealth disparity would continue to widen between capital and labor.
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