Andrew Lainton — @Asymptosis [Steve Roth] asks a good question – why isn’t #LVT Everywhere?

I think there are three reasons:

Decisions, Decisions, Decisions

@Asymptosis asks a good question – why isn’t #LVT Everywhere?
Andrew Lainton

Steven K. Vogel — Rethinking Stigler’s Theory of Regulation: Regulatory Capture or Deregulatory Capture?

Much government regulation does not fit the logic of Stigler’s theory of anti-competitive regulatory capture. In a new book, Steven Vogel of Berkeley argues that the theory of regulation needs to account for the phenomenon of captured regulators bent on deregulating—and that the critical consideration facing regulators is no longer how to enhance competition, but how different governance models favor different actors.

Rent capture.

ProMarket — The blog of the Stigler Center at the University of Chicago Booth School of Business
Rethinking Stigler’s Theory of Regulation: Regulatory Capture or Deregulatory Capture?
Steven K. Vogel | Il Han New Professor of Asian Studies and a Professor of Political Science at the University of California, Berkeley

Marshall Auerback — Trump’s Bogus Infrastructure Plan Takes the U.S. Further Down the Road of Rentier Capitalism

President Trump presented his infrastructure plan last week. If you’re keen on the idea of out-of-control privatized utilities gouging customers and manipulating energy markets, or consortia building overpriced, expensive toll roads (until they go bust), then you’ll love the president’s proposals. His mooted public-private partnerships are another variant of socialism for the rich and free market discipline for the rest of us. PPPs are like a religion that offers its adherents the promise of capitalist heaven via tax breaks, subsidized funding, and guaranteed returns, minus the discipline of private bank credit arrangements or potential bankruptcy, the costs of which are invariably borne by a public already experiencing the hell of significantly more restricted access (think toll roads and bridges), higher user fees or “slower lane” traffic (think the end of net neutrality), and the costs of bailouts if and when the venture goes bust....

No private market discipline is enforced on management because in most cases they are given control of what was once a public monopoly, which is simply converted into a private one. It’s rentier capitalism, plain and simple.... 

In essence, these public-private partnerships are one of the sick jokes that the neoliberal era visited on all of us in the name of economic efficiency and responsible government—a ‘joke’ because the beneficiaries of all this public largesse have been laughing all the way to the bank as stupid public officials continue to fall prey to their lobbying as they joyfully hand over the keys to the public purse. Trump is simply perpetuating the trend of allowing governments to continue to abrogate their true responsibilities to pursue and safeguard public purpose. Governments should never have become agents of private profit.…

Neoliberalism can be viewed as government as agent of private profit based on "free market" ideology that prioritizes private ownership over public because "efficiency," along with public policy that favors capital formation as the basis for growth, under the assumption that "a rising tide lifts all boats" (trickle down).

Naked Capitalism
Trump’s Bogus Infrastructure Plan Takes the U.S. Further Down the Road of Rentier Capitalism

Marshall Auerback

Cross-posted from Alternet

Putting an End to the Rent Economy — Vlado Plaga interviews Michael Hudson

Interview with Vlado Plaga in the German magazine FAIRCONOMY, September 2017.

VP: You are advocating a revival of classical economics. What did the classical economists understand by a free economy?

MH: They all defined a free economy as one that is free from land rent, free from unearned income. Many also said that a free economy had to be free from private banking. They advocated full taxation of economic rent. Today’s idea of free market economics is the diametric opposite. In an Orwellian doublethink language, a free market now means an economy free for rent extractors, free for predators to make money, and essentially free for financial and corporate crime.

Good one.

Counterpunch
Putting an End to the Rent Economy

Vlado Plaga interviews Michael Hudson, President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

Noah Smith — Bust Up America's Monopolies Before They Do More Harm

Economists have been sounding the alarm about this trend for a while now. John Kwoka, an economist at Northeastern University, has literally written the book on the follies of the modern age of antitrust. In a new report, he shows how much more complacent the government has gotten toward oligopolies. The government still doesn’t tend to let a single company dominate any industry, but it’s usually fine with just five or six. Kwoka traces the change in attitudes to the rise of the so-called Chicago school approach to antitrust policy:

Bloomberg View
Bust Up America's Monopolies Before They Do More Harm
Noah Smith, contributor

Chris Dillow — Two posts on power and rent-seeking

When capital is favored as a factor, asymmetrical power and consequent rent extraction result. The consequence is push back from those that perceive themselves as being cheated.

Stumbling and Mumbling

Reinventing The Wheel

Cronyism, & the Demand for Redistribution

Chris Dillow | Investors Chronicle

Brink Lindsey and Steven M. Teles — Worried About Concentration? Then Worry About Rent-Seeking

While concentration can lead to rent seeking, rent-seeking can also lead to concentration.

ProMarket — The blog of the Stigler Center at the University of Chicago Booth School of Business
Worried About Concentration? Then Worry About Rent-Seeking
Brink Lindsey, vice president for research at the Cato Institute, and Steven M. Teles | associate professor of political science at Johns Hopkins University and a senior fellow at the Niskanen Center
ht Mark Thoma at Economist's View

Michael Hudson and Ahmet Öncü — The Legacy of Veblen in the Age of Post-Industrial Capitalism

An important book has just been published from a 2012 conference in Istanbul on Thorstein Veblen: Absentee Ownership and its Discontents, edited by Michael Hudson and Ahmet Öncü. It is published by ISLET and is available on Amazon.…

The present collection of essays trace how Thorstein Veblen described the way in which the mid-19th century’s industrial capitalism was becoming centered on what today is called the Finance, Insurance and Real Estate (FIRE) sector. Each author in this volume discusses the character of today’s capitalism, and how and why the capitalist class remains politically dominant despite the fact that it repeatedly fails to fulfill the requirements of economic leadership it claims to fulfill. Together, these papers contribute to a better understanding of “capital in the twenty first century,” to use the phrase that has become popular following Thomas Piketty’s best seller.…

Excellent post on Veblen's prescience about economic rent and financial rent-seeking by FIRE becoming the basis of late stage capitalism.

Counterpunch
The Legacy of Veblen in the Age of Post-Industrial Capitalism
Michael Hudson and Ahmet Öncü

Extreme Inequality Is Not Driven by the Merit, but by Rent-Seeking and Luck — Sam Pizzigati interviews Didier Jacobs

Jacobs: Because meritocracy rates as the number one argument that defenders of inequality invoke. It is easy to make an ethical case against extreme concentrations of wealth, drawing from the perspectives of Marxism, utilitarianism, or the egalitarian liberalism of John Rawls. But going down that road requires people you’re trying to persuade to change their value systems, and that’s difficult.

Debunk the meritocratic argument on its own terms, by contrast, and all the defenders of inequality have left is libertarianism, a value system that has much less appeal among the American public than meritocracy.…

Altogether, my research traces 65 percent of the world’s billionaire wealth to the rents of cronyism, inheritance, and monopoly.

Evonomics
Extreme Inequality Is Not Driven by the Merit, but by Rent-Seeking and Luck
Sam Pizzigati interviews Didier Jacobs

Chris Dillow — Economics vs bankers

The problem is not economics but the misuse of economics. (I would add that this applies to math in economics. It's not math that's the problem but the uses to which math is put. Fit the tool to the job and not the job to the tool.)

My point here is not just that the financial system is deeply dysfunctional and serves the interests of state-subsidized rent-seekers much better than those of customers. It’s also that this fact is evident through the lens of standard economics. Conventional economics is not only correct in same ways, but can serve a radical purpose.

MMT is certainly radical in the current environment.

The post contains some useful links, too.

Stumbling and Mumbling
Economics vs bankers
Chris Dillow | Investors Chronicle

Nick Bunker — What are the factors behind high economic rents?

In research and debates about economic inequality in the United States, there’s been a resurgence this year in explanations for rising inequality that emphasize market power and market imperfections. In a recent piece for the New York Review of Books, Paul Krugman details how increasing market power seems to be a more attractive story of how inequality became so large in the United States. A paper that Krugman cites—by Jason Furman, Chairman of the Council of Economic Advisers, and Peter Orszag of Citigroup—emphasizes the role of “rents” in contributing to inequality and suggests increasing market power could be the reason for this trend. But an interesting new paper from Dean Baker, economist and co-director of the Center for Economic and Policy Research, proposes a very different reason for why those rents came about.…

WCEG — The Equitablog
What are the factors behind high economic rents?
Nick Bunker

Izabella Kaminska — Fintech and banking risk; cognitive dissonance de semaine

Thank god for the stream-lined logic of Mariana Mazzucato, innovation economist at Sussex University, who was on hand on Wednesday in the fintech session to remind the evangelists how financial innovation tends to increase not diminish rent extraction from the economic system.

Must-read on financing innovation. If pressed for time, you can just skip down to the above quote and read the rest on MM.

Short-termism goes hand and hand with rent-seeking. Real innovation rather than puff is long haul, the result of strategic investment.

The Financial Times — FT Alphaville
Fintech and banking risk; cognitive dissonance de semaine
Izabella Kaminska

Jared Bernstein — Imagine that…candidates actually debating substantive differences on economic policy

Democratic candidates, that is.

I think JB needs to spend some time reading Bill Black on control fraud and criminogenic environments.

On The Economy

Imagine that…candidates actually debating substantive differences on economic policy

Jared Bernstein

Chris Dillow — Markets need Marxism

All this poses the question. Why, then, haven't we seen state help to create what Robert Shiller has called financial democracy?

It's certainly not because of a commitment to laissez-faire: the massive implicit subsidy to banks tells us that the state is very happy to intervene in the financial system.

Instead, the answer was pointed out by Marx: the state serves the interests of capitalists, not the people. And financial capital would rather financial markets consisted of rent-seeking than of enhancing aggregate welfare. Crony capitalism has encouraged financialization (pdf), not financial democracy. 

In this sense, a well-functioning market economy requires that the state be freed from the grip of capitalists. In some respects it is capitalism that is the enemy of a market economy, and Marxism that is its friend.

Stumbling and Mumbling
Markets need MarxismChris Dillow | Investors Chronicle

John Quiggin — Thinking the unthinkable

On the failure of privatization of public services. It's documented. But the myth continues to transfer public funds to private coffers with less to show for it. Neoliberal rent-seeking.

John Quiggin
Thinking the unthinkable

Michael Hudson — Rewriting Economic Thought

Transcript of Eric Draitser interviews Michael Hudson.

Longish but good. About rent extraction and economic parasitism, and some of the key social and political and economic factors involved in neoliberalism that make it an illiberal theoretical construct, as revealed in its application in contemporary capitalism.

Rewriting Economic Thought
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, and Distinguished Research Professor of Economics at the University of Missouri, Kansas City

David F. Ruccio — The fundamental truth about American economic growth

 As James Surowiecki explains in his review of Joseph Stiglitz’s most recent books, “the fundamental truth about American economic growth today is that while the work is done by many, the real rewards largely go to the few.”

Just who are the makers and who are the takers?

Short and worth a read. It's about rent-seeking and the surplus resulting from increased productivity.

Occasional Links & Commentary
The fundamental truth about American economic growth
David F. Ruccio | Professor of Economics University of Notre Dame Notre Dame

Kanbur and Stiglitz — Rent Seeking as a Major Driver of Wealth and Income Inequality

Yves here. This post is wonky but important. While Stiglitz has written regularly about inequality as problematic from an economic perspective, and has mentioned rent seeking as a contributor, to my knowledge, this is the first time he’s said that old theories need to be tossed and that rent seeking is one of the main factors now driving wealth and income inequality.

Game-changer.

Naked Capitalism
Kanbur/Stiglitz: Rent Seeking as a Major Driver of Wealth and Income Inequality
Ravi Kanbur, T. H. Lee Professor of World Affairs, International Professor of Applied Economics and Management, Professor of Economics at Cornell University and Joseph Stiglitz, University Professor at Columbia University. Originally published at VoxEU

Brad DeLong — Thomas Piketty: On the Elasticity of Capital-Labor Substitution

As I have said before in Very Rough: Exploding Wealth Inequality and Its Rent-Seeking Society Consequences (backed up by the numbers

 ofhttps://www.icloud.com/numbers/AwBUCAESEClb5VcMwjLJSBQQ90kTwzMaKUxB6_WCLZAfXLz1z3UT9I4hfYXqx6Igi7h4ZLFMjXXKOR3hQyuhEeGhMCUCAQEEIJPCSiJ_LdTd3IlxVH0-VvhIG5nYypcMustkcP_RZXnB#20140602_Roughing_Out_a_Piketty_Model)

and elsewhere, in my view Thomas because he really needed a rent seeking society chapter in his Capital in the 21st Century. The underlying logic of his argument seems to be that wealth can take two forms: investments in capital-embodied technological wealth that boost wages in the economy, or investments in rent-seeking wealth that erode wages in the economy. And, I think, his argument is that we are headed for a society with a higher wealth-to-income ratio, and in such a society a greater share of wealth will find its way into the second channel.

Maybe that is not what Pikitty’s argument is. But I at least think that it is what Piketty’s argument should be–because I think it is highly likely to be true…

YES!!!

And that introduces the need for power to account for the ability to extract rent.

WCEG — The Equitablog
Thomas Piketty: On the Elasticity of Capital-Labor Substitution
Brad DeLong

Lynn Parramore — Joseph Stiglitz: Economics Has to Come to Terms with Wealth and Income Inequality

Clear and concise presentation of Stiglitz's position relative to the approach of Picketty. Many solid points including monopoly power and capital share versus labor share through exploitation based on market power favoring capital. Stiglitz also hones in on rent and rent-seeking.

I think that the thrust of my book, The Price of Inequality, and a lot of other work has been to question the margin of productivity theory, which is a theory that has been prevalent for 200 years. A lot of people have questioned it, but my work is a renewal of questioning. And I think that some of the very interesting work that Piketty and his associates have done is providing some empirical basis for doing it. Not only the example that I just gave that if you look at the people at the top, monopolists actually constrain output. People who make the most productive contributions, people who make lasers or transistors, or the inventor of the computer, DNA researchers, none of these are the top wealthiest people in the country. So if you look at the people who contributed the most, and the people who are there at the top, they’re not the same. That’s the second piece. 

A very interesting study that Piketty and his associates did was on the effect of an increase in taxes on the top 1 percent. If you had the hypothesis that these were people who were working hard and contributing more, you might say, ok, that’s going to significantly slow down the economy. But if you say it’s rent-seeking, then you’re just capturing for the government some of the rents.

INET
Joseph Stiglitz: Economics Has to Come to Terms with Wealth and Income Inequality
Lynn Parramore