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The Rent Hypothesis

esoltas.blogspot.com

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Re: The Rent Hypothesis

#91

Post by esoltas »

panglott wrote: post #37

It seems that he's mostly considering the value of the idea of economic rents in terms of how well they explain corporate profits as a means of testing the idea of economic rents themselves. However, the core idea of economic rents comes from analyses of land rents and monopoly rents in the 19th century: application to contemporary corporate profits is a derivative application of the idea. Land rents, for example, we…

It's true that I'm talking about all different types of rents in the article. I've written about land rents and land taxes here, if you're interested: http://esoltas.blogspot.com/2012/06/on-land-taxes.html. Also, as old as the Henry George analysis of land rents is, it is still quite relevant. If you look at some of the rebuttals to Piketty's capital (eg., this one: https://ideas.repec.org/p/spo/wpecon/infohdl2441-30nstiku669...), what you see is that most the growth in capital/income ratios comes from increases in the value of land capital. That would suggest George is still relevant to our world, and that conversations about IP might be secondary.

Re: The Rent Hypothesis

#92

Post by esoltas »

cowsandmilk wrote: post #53
pinky1417 wrote: post #13

Wow, impressive article especially considering it comes from (I think) a junior at Princeton https://www.linkedin.com/pub/evan-soltas/29/5/b44 My only gripe is that he thinks that entrepreneurship and investment are struggling. If they're struggling now, then they've been struggling through all of human history.

> My only gripe is that he thinks that entrepreneurship and investment are struggling. Entrepreneurship is extremely hyped right now, despite being at a relative low historically (Figure 1 of [1]). More companies are failing in their first year (Figure 4, 5, D1, D3 of [2]) and an increasing percentage of employment is at firms 16+ years old (Figure 2, A2, C2 of [2]). Less people starting companies, more companies fai…

Someone beat me to posting the Kauffman research... Also, the investment to GDP ratio is here, although a lot of the decline was housing: http://research.stlouisfed.org/fred2/graph/?g=14LZ.

Re: The Rent Hypothesis

#93

Post by bcg1 »

logicallee wrote: post #63
bcg1 wrote: post #56

Earlier quoted context omitted.

What you're describing is just smart business. Producing a desirable product that people choose to buy is not rent-seeking, it is the free market fulfilling a need/want at price people are willing to pay. An example of rent-seeking however would be if Apple set up deals with schools and colleges to roll the cost of devices into their tuition, which is really mostly malinvestment paid with student loan debt. If the am…

you didn't read the author's definition of rent, which was more technical than "rent-seeking". For example, if you self-publish an ebook for $49, nearly 100% of that would be considered rent by the author. Read his definition carefully.

My apologies, I got lost inside my own brain, as I often do. After re-reading I realize that I did not detect the tone of your commentary, so I respectfully withdraw any criticism of it. I still stand by my own statement however :)

Re: The Rent Hypothesis

#94

Post by baddox »

drcube wrote: post #83
baddox wrote: post #31

> Rents are not always bad. Protections for intellectual property make sense not in spite of the rents they generate, but rather because of them. A patent, after all, is a temporary monopoly. These monopoly rents give incentives for innovation and allow innovators to cover the costs of research and development. This is a weird way to talk about IP and rent. Is profit from IP necessarily rent? The problem is that "ren…

I don't know if I've got it wrong or the author does, but I think about it like actual rents. Landlords don't make money by providing a service or selling goods. They make money by sitting on something no one else is allowed to have. They don't have to do anything more than sit back and collect checks. Sure, they bought the land originally, but there's no more investment to be made after that. They can invest in a ni…

> Landlords don't make money by providing a service or selling goods. They make money by sitting on something no one else is allowed to have.

Is that second sentence any less true of any other trade, including the traditional selling of goods? After all, the only reason you have to give a food vendor money for food is that the vendor (or someone on the vendor's behalf) will use violence if necessary to defend the vendor's exclusive claim on that food.

> Sure, they bought the land originally, but there's no more investment to be made after that.

That isn't true. There are maintenance costs and property tax, and less obvious things like the opportunity cost of risk of purchasing a house in order to rent it out.

Re: The Rent Hypothesis

#95

Post by baddox »

downandout wrote: post #79
baddox wrote: post #31

> Rents are not always bad. Protections for intellectual property make sense not in spite of the rents they generate, but rather because of them. A patent, after all, is a temporary monopoly. These monopoly rents give incentives for innovation and allow innovators to cover the costs of research and development. This is a weird way to talk about IP and rent. Is profit from IP necessarily rent? The problem is that "ren…

>And, to be clear, there are people who don't even accept certain aspects of well-accepted physical property rights. Yes, but they tend to be in jail. In any event, he appears to be talking about rent and the profits from IP in the context of Western civilization, in which IP rights are indeed a legitimate instance of ownership.

They don't tend to be in jail. In fact, they tend to be prominent academics.

Re: The Rent Hypothesis

#96

Post by skilesare »

I'm going to be proposing a solution to the issues with economic rent in a upcoming talk at the Texas Bitcoin Conference on March 29th at 9am.

The solution involves insuring the inalienable right to the full output of one's labor and a social contract that lets the economic rent seeking continue. It probably won't work, but sure has been fun unwinding the thread.

Re: The Rent Hypothesis

#97

Post by skilesare »

baddox wrote: post #31

> Rents are not always bad. Protections for intellectual property make sense not in spite of the rents they generate, but rather because of them. A patent, after all, is a temporary monopoly. These monopoly rents give incentives for innovation and allow innovators to cover the costs of research and development. This is a weird way to talk about IP and rent. Is profit from IP necessarily rent? The problem is that "ren…

Economic rent is the amount above the COSTs, not the just above a competitive market, unless you're considering that all competitive markets drive profits to zero. (Which a lot of people argue is one issue with perfect markets)

It turns out, that they're both immoral and awesome. we have to find a way to have our cake and eat it too.

-@hypercapital

Re: The Rent Hypothesis

#98

Post by skilesare »

baddox wrote: post #94
drcube wrote: post #83

Earlier quoted context omitted.

I don't know if I've got it wrong or the author does, but I think about it like actual rents. Landlords don't make money by providing a service or selling goods. They make money by sitting on something no one else is allowed to have. They don't have to do anything more than sit back and collect checks. Sure, they bought the land originally, but there's no more investment to be made after that. They can invest in a ni…

> Landlords don't make money by providing a service or selling goods. They make money by sitting on something no one else is allowed to have. Is that second sentence any less true of any other trade, including the traditional selling of goods? After all, the only reason you have to give a food vendor money for food is that the vendor (or someone on the vendor's behalf) will use violence if necessary to defend the ven…

It is a little bit different. Commodities can be produced by multiple people and end up being the same thing. Now there are other factors involved I can contribute to economic rent being charged. For example, the hotdog vendor at the bottom of my building can charge 1.05 for the hotdog, whereas the guy at the other side of the park will have to charge .65 for me to walk past the guy charging 1.05. It's tough to get away from economic rent.

Re: The Rent Hypothesis

#99

Post by SilasX »

tolmasky wrote: post #76
SilasX wrote: post #73

Earlier quoted context omitted.

The way I reconcile it is usually, "Monopolies are okay when the the good in question only exists because of the monopolist." My monopoly on SilasX's labor? No problem. Creator's monopoly on patterns that only exist because that creator found them? Reasonable. Monopoly on all trade in salt? No, just no. (It gets trickier for physical property because of what counts as creating, but you get the point.)

Monopoly on life-saving medicine created by a scientist? Sold at prices out of reach for most people?

Still better than their non-existence.

Re: The Rent Hypothesis

#100

Post by jjoonathan »

skilesare wrote: post #97
baddox wrote: post #31

> Rents are not always bad. Protections for intellectual property make sense not in spite of the rents they generate, but rather because of them. A patent, after all, is a temporary monopoly. These monopoly rents give incentives for innovation and allow innovators to cover the costs of research and development. This is a weird way to talk about IP and rent. Is profit from IP necessarily rent? The problem is that "ren…

Economic rent is the amount above the COSTs, not the just above a competitive market, unless you're considering that all competitive markets drive profits to zero. (Which a lot of people argue is one issue with perfect markets) It turns out, that they're both immoral and awesome. we have to find a way to have our cake and eat it too. -@hypercapital

Competitive markets drive profits to 0, and then the only people who are making profits are behemoth rent-seekers in the exceptional markets.

Yaay.

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