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

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  •  Wrong. (0+ / 0-)

    "The argument depends on land having constant value, and not becoming depleted."

    No such assumption is made, or needed.

    "If you build a factory on my land, and pay me rent, there's a great likelihood when the factory closes my land won't merely be worth less, but will be a significant liability — have a negative value."

    That is extremely unlikely unless there is a problem of chemical contamination, etc., which should be handled by land use and nuisance laws.

    "So the contributor of land to either farming or industry is contributing capital, which is quite at risk in the enterprise."

    The landowner is not contributing the land, which was already there, ready to use, with no help from him or anyone else.  He is not contributing capital, as capital is a product of labor devoted to production rather than consumption.  His risk taking -- risking "capital" in the accounting rather than the economic sense -- is simply a normal part of his rent-seeking behavior.  Even criminals take risks.

    "This isn't to say the distinction of "rentier" isn't useful in the abstract."

    It's crucial in practice as well as theory, which is why it has deliberately been erased from the discipline of economics (one cannot call it a "science").

    "But the theft by Wall Street isn't best understood as high rent (although there's plenty of high rent in NYC), it's best understood as having been done by thieves."

    Rent seeking is effectively legalized theft.

    "Renting property is not in itself a fraud."

    Why else would the producer pay the landowner for what nature provided for free?

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