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View Diary: Time to resurrect an old idea: Economic Rent (107 comments)

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  •   Instead of "rent-seeking" call it "skimming" (6+ / 0-)

    which is what we are really talking about in terms if the financial industry, and its a word that's self-explanatary. "rent-seeking" is more confusing. A lot of people who are not at all rich collect rent (ie, buying a 2-family house and renting out half, working part of a farm and renting out some acreage, etc.)

    A lot of finance is just collecting a percentage of money passing through, or taking advantage of small differences in price over short periods of time--it's skimming, pure and simple.

    "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

    by Alice in Florida on Mon Oct 24, 2011 at 03:13:30 PM PDT

    •  I like that. (6+ / 0-)

      I like that, "skimming".  The FIRE industry does nothing but "skim off the top".

      Our Dime Understanding the U.S. Budget

      by maddogg on Mon Oct 24, 2011 at 03:28:37 PM PDT

      [ Parent ]

    •  Yes .. (2+ / 0-)
      Recommended by:
      maddogg, Randtntx

      The classical definition of "Rent-taking" harks back to an earlier era, when societies were mostly agricultural, the foundation of wealth was land, and the nobility were wealthy and did not work due to their huge landholdings. Extending this term to encompass all kinds of unjust enrichment is a bit of stretch, although I do recognize economists do that. I do like "skimming" though.

      Marx has not even been mentioned. For Marx, capitalists take a cut out of the value created by workers. This cut is made possible only because they have private ownership of the means of production. That's not a very popular economic theory nowadays, but it captures the idea of unjust enrichment and extends it to capitalists in general, not just to owners of land.

      Today though we have a complex society and gaming that society to get extra gains is very common, in very many different ways. That doesn't always mean a completely free ride, but it can mean extra profits that would not otherwise accrue. What about Wall Street firms that profit by doing high-speed trading in special server rooms located right next to an exchange, so that they can beat other traders by partial seconds? What about monopolies such as Microsoft (convicted of monopoly practices in court, let off by a legal complication)? What about companies that legally avoid taxes, or pollute and don't get called to pay the bill for their pollution, due to lax regulation? Somebody is profiting in these cases, and somebody else is losing. Disproportionately, those at the top of the economic ladder are on the winning side, thus unjustly increasing their wealth relative to the non-favored rest of the population.

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