tag:blogger.com,1999:blog-2761684730989137546.post7208754696394099586..comments2024-03-28T07:50:06.102-04:00Comments on Mike Norman Economics: "Rent Theory" as a Symptom?mike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-2761684730989137546.post-28011596022535765802012-08-02T11:08:45.660-04:002012-08-02T11:08:45.660-04:00marris, it's kind of like Justice Potter Stewa...marris, it's kind of like Justice Potter Stewart reflection the criteria for distinguishing hard pornography.<br /><br />In Jacobellis v. Ohio (1964), Stewart wrote in his short concurrence that "hard-core pornography" was hard to define, but that "I know it when I see it."<br /><br />While Justice Stewart was criticized for relying on a subjective criterion and later admitted it, the fact is that subjective criteria are used in human decision-making all the time and to try to make human action into a science, e.g., by reducing it to amoral rational utility maximization defies the facts about humans actually behave. See the Robert Shiller interview on behavioral economics that I just posted.<br /><br />I agree that there is a grey area between productive and non-productive. It is either going to take admission of a subjective criterion or else acceptance of the gratuitous assumption of amoral rational utility maximization.<br /><br />Obviously, those who subscribe to rational utility maximization by individuals as the basis of human action in society will reject that there is any difference.<br /><br />In the end, to the degree that this is matter of tax policy it will be decided politically.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-59228979682730568102012-08-02T10:39:27.202-04:002012-08-02T10:39:27.202-04:00> It's not nothing, but it produces nothing...> It's not nothing, but it produces nothing.<br /><br />The counter-argument is still the same:<br /><br />Successful speculation creates futures prices to which producers can respond.<br /><br />"Research" also produces "nothing" ... except knowledge. That is what futures markets do.<br /><br />> Consumption is not nothing and it is taxed as something that is not production.<br /><br />Uh, yeah... It's *not* only the case that consumption is "not productive." It is the *opposite* of production. A consumer takes goods and services that could go to *other* consumers (even future generations) and removes them.<br /><br />It's a fun little game of words to call this "non-extractive," but whatever.<br /><br />Obviously ALL trades contribute to flow, circular or otherwise.marrishttp://leavesofliberty.wordpress.comnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-29459126999752896822012-07-31T20:36:26.340-04:002012-07-31T20:36:26.340-04:00marris: "I don't get it. Since when is ma...marris: "I don't get it. Since when is market liquidity nothing?"<br /><br />It's not nothing, but it produces nothing. It's an economic activity that should be taxed more than production instead of being privileged, e.g., capital gains tax rate instead of regular income from production. <br /><br />Consumption is not nothing and it is taxed as something that is not production, e.g., sales tax, luxury tax, sin tax. Consumption is contributory to circular flow, but it is not extractive, so it is not rent.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-10902086533266805902012-07-31T20:12:21.694-04:002012-07-31T20:12:21.694-04:00> speculators provide market liquidity, which p...> speculators provide market liquidity, which produces nothing<br /><br />I don't get it. Since when is market liquidity nothing?<br /><br />This is also not the only role of speculators, right? Successful speculation creates futures prices to which producers can respond. How do we know that the PKs are not just dawdling?<br /><br />If it took "modern economists" time to jump off the Classical LTV ship, then why should we be surprised if it takes them longer to see productivity in speculation?marrishttp://leavesofliberty.wordpress.comnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-20988962696382874142012-07-31T20:03:47.895-04:002012-07-31T20:03:47.895-04:00"entrepreneurs and speculators gain profit on..."entrepreneurs and speculators gain profit only by dynamically valuing goods and services correctly"<br /><br />Putting entrepreneurs and speculators in the same sentence is a non sequitur. Entrepreneurs make a productive contribution, speculators provide market liquidity, which produces nothing.<br /><br />I don't think that modern economists hold the Classical LTV anymore. Post Keynesians have developed a modern LTV in which price is cost-based and a chief cost is labor. Materials have to be extracted, refined, and delivered by labor, and both capital and consumer goods are produced by labor. Management is an aspect of labor. Intellectual property recognizes the role of discovery, invention, and creativity.<br /><br />Anything not needed to produce goods for market involves rent. Artificial scarcity and special privilege also lead to rent. Externality leads to rent.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-5117542713931326012012-07-31T19:15:16.484-04:002012-07-31T19:15:16.484-04:00Please explain why I can't use your own ideas ...Please explain why I can't use your own ideas to attack this post:<br /><br />> Classical political economy had used the labor theory of value to isolate the elements of price that had no counterpart in necessary costs of production. Economic rent - the excess of price over this "real cost" - is unearned income.<br /><br />Couldn't I just put on my Roger Erickson hat and say the classical political economists were focused on "static value," and that the non-labor price components reflect "dynamic value" ?<br /><br />After all, the entrepreneurs and speculators gain profit only by dynamically valuing goods and services correctly. In a static economy, they would not do much.marrishttp://leavesofliberty.wordpress.comnoreply@blogger.com