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The Rent Hypothesis

esoltas.blogspot.com

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Re: The Rent Hypothesis

#31

Post by baddox »

> 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 "rent" is defined as "profits earned above what would be earned in a competitive market," but "competitive market" isn't well-defined until you define a system of rights (namely property rights). Markets are just systems of trade, and "trade" is the exchange of ownership.

Thus, an action which most of us believe constitutes a violation of property rights (e.g. I buy a laptop and someone takes it from a cafe without my permission and then sells it to a third party) is not "trade in a competitive market." So is an IP right a legitimate instance of ownership? Many people (and most Western legal systems) consider it to be so. There are also people who don't consider it to be so, pointing out differences between physical property and intellectual property. And, to be clear, there are people who don't even accept certain aspects of well-accepted physical property rights.

Re: The Rent Hypothesis

#32

Post by boomzilla »

wppick wrote: post #23

At the beginning of civilization, the research budget for the invention of fire was zero, while the benefits of fire were incalculable. Compare this to the development costs of the next generation of Boeing aircraft relative to the small improvements in air travel. This dynamic has enormous implications for the presumed benefits of increases in government spending beyond some low base. Over time and with increasing c…

This is over simplified. Research budget measured by amount of money is not a good metric. Money, after all, is just a human's invention to smooth out transaction costs, or to scale the size of a coherent community.

Research budget could be measured by the percentage of thinking time the whole humanity is spending on improving their lives (potentially times how long it takes on research before a solution is found), which probably reflects better the effort we put on something.

Re: The Rent Hypothesis

#33

Post by dragontamer »

jfoutz wrote: post #27
dragontamer wrote: post #8

Earlier quoted context omitted.

No robot is 100% self sufficient. There will always be a need for skilled labor to maintain and update robots. Even the most magical electric self-driving car requires maintenance in the form of software updates, tire rotations and the like. I think we are entering a period of "super industrialization", where even fewer workers are needed to do greater amounts of work. Careful care needs to go into making sure we don…

I've been thinking more and more about "super tools". Not so much humans and machines working together to build things, like cars or highways. More like one person orchestrating an array of automation to solve a specific problem. A tool is so much more versatile than a die press stamping out the same object over and over. Tools imply flexibility and adaptability to different circumstances. I think automation will hap…

Yeah. I and I think that housing workers (from patio-builders to roof-workers) will benefit from "Handibot" portable CNC machines. A CNC Machine custom-cutting all your lumber to the proper shape should make life easier for workers.

Similarly, a self-driving car fleet will require repairs and maintenance, as well as regulators who will ensure safety compliance (whatever those saftey measures are).

In any case, its the industrial revolution again. We're replacing legions of factory workers with machines. Rent-seeking occurred in the late 1800s / early 1900s as children were used to control absurdly powerful machinery (and put into dangerous situations... and paid extremely cheaply for it).

We need to ensure proper economic growth while balancing the needs of future workers... ideally while allowing older workers to transition their skills to the economy somehow.

Re: The Rent Hypothesis

#34

Post by fauigerzigerk »

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.

I don't know about entrepreneurship but investment is definitely struggling. As a share of GDP it is relatively low right now compared to the long run average (in the U.S). And that is in spite of exceptionally low interest rates.

However, investment as used in GDP calculations comprises more than just business investment. It also includes construction of new homes for instance. So to compare investment to corporate profits, which are indeed relatively high, you would need to know the level of business investment and I don't know where to find that data right now.

Re: The Rent Hypothesis

#35

Post by Houshalter »

jerf wrote: post #14
ccvannorman wrote: post #6

This is a very important topic as robotics and automation begin their exponential curve of running our lives. Who will own the robots? Will the majority of humanity be enslaved to rent-seekers who own patents on a robot hinge?

"Will the majority of humanity be enslaved to rent-seekers who own patents on a robot hinge?" Actually, that's easy: No. Humanity will not be enslaved to a small number of capital owners. But the reason isn't necessarily a happy one, which is that humanity will revolt and start destroying and probably kill lots of people and even potentially kill the goose laying the golden egg by destroying the robotic infrastructur…

Technology is making war increasingly unfair. If you look in the past, a decent percentage of wars were won even one one side had massively less resources. Not the majority, but still like 30% IIRC.

With mass surveillance you can detect and stomp out rebellions long before they amount to anything. With automation you barely even need the support of your own troops. With modern technology you can keep most of the population fed and happy enough they aren't willing to risk fighting.

And so we could get stable authoritarian states like 1984.

But really you don't need all that to begin with. The vast majority of societies through history were pretty unequal. Even today much of the world has pretty high levels of inequality. Technology just prevents that from ever changing.

Re: The Rent Hypothesis

#36

Post by gohrt »

toomuchtodo wrote: post #21
jerf wrote: post #14

Earlier quoted context omitted.

"Will the majority of humanity be enslaved to rent-seekers who own patents on a robot hinge?" Actually, that's easy: No. Humanity will not be enslaved to a small number of capital owners. But the reason isn't necessarily a happy one, which is that humanity will revolt and start destroying and probably kill lots of people and even potentially kill the goose laying the golden egg by destroying the robotic infrastructur…

I think you're wrong. Humanity won't destroy the golden goose. The next Aaron Swartz will release it to the public, whether that's distributing the software to everyone, or finding a way to freely build/distribute high-level robotics. Just as Prometheus brought fire to the humans, someone will find a way to prevent the future from being locked away. Once you achieve the necessary level of automation, you only need on…

You are ignoring the cost of acquiring resources. Robots will run society before the problem of unlimited energy is solved.

Re: The Rent Hypothesis

#37

Post by panglott »

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, were the rents generated by idle 18th and 19th century gentility simply for inheriting the land at the basis of economic production in an agricultural economy, rather than for contributing useful labor towards agricultural production. This idea has gained renewed attention with the rise of extreme inequality and inherited capital.

He also seems to be conflating these different kinds of rents together: land rents, monopoly rents, IP rents. The economic value of IP rents can be easily seen in patent trolling, defensive patents, &c. But trying to explain the corporate profits in terms of unspcified "rents" sound more like a project to discredit the idea of economic rents by conflating a lot of variables. That might be because I'm skeptical that economic rents are a predominant explanation of rising corporate profits, of course.

Re: The Rent Hypothesis

#38

Post by gohrt »

crdoconnor wrote: post #15
ccvannorman wrote: post #6

This is a very important topic as robotics and automation begin their exponential curve of running our lives. Who will own the robots? Will the majority of humanity be enslaved to rent-seekers who own patents on a robot hinge?

The idea that robots are on the cusp of subsuming all human labor is itself a tool of rentiers: https://pandodaily.files.wordpress.com/2014/07/imag0016.jpg?... (advert by California's restaurant association in protest against minimum wage hikes that will likely deplete their profit margins) Of course, the idea doesn't necessarily have to be true in order to serve its purpose.

The idea doesn't have to be false to be dishonestly used, either.

Restaurants already replace servers by ipads, wherever customers tolerate it.

Re: The Rent Hypothesis

#39

Post by logicallee »

ngoel36 wrote: post #2

Unrelated to the content - do people find that the bolding of linked words/phrases makes the article easier or harder to read?

Holy cow!! I didn't read the whole thing, but going back, I thought it was just the author's very peculiar style of emphasis! Like writing comic-book style: (1)

I thought he was doing it to be engaging, and make you really focus on his point!

[1] http://www.comicbookbrain.com/_imagery/_2007_07_27/bb119_pg5...

Re: The Rent Hypothesis

#40

Post by moron4hire »

jerf wrote: post #14
ccvannorman wrote: post #6

This is a very important topic as robotics and automation begin their exponential curve of running our lives. Who will own the robots? Will the majority of humanity be enslaved to rent-seekers who own patents on a robot hinge?

"Will the majority of humanity be enslaved to rent-seekers who own patents on a robot hinge?" Actually, that's easy: No. Humanity will not be enslaved to a small number of capital owners. But the reason isn't necessarily a happy one, which is that humanity will revolt and start destroying and probably kill lots of people and even potentially kill the goose laying the golden egg by destroying the robotic infrastructur…

I don't think violent revolt is quite necessary. We certainly seem to be seeing a non-violent revolt happening in the entertainment industry. People, unhappy with the way the music and movie industry have been trying to leverage their monopolistic power over certain franchises, have turned to non-violently pirating media, to the point that, for a lot of people, and many properties, the easiest mode of obtaining them is piracy.

Étienne de La Boétie wrote in one of his earliest writings 'Discourse on Voluntary Servitude"[0] that tyrants only have power because people voluntarily give it. All that the people must do to overthrow the tyrant is to just sit down on the ground and give up helping him, because the tyrant has no true power of his own.

One of the more reassuring aspects about the Internet and the global economy is that ideas can spread in an instant, and it really enables people to be able to freely associate, even in many cases despite their governments' express attempts to prevent them from doing so. I think the Internet is growing a sense of global community, where it's a lot harder for the average joe to think of someone on the other side of the planet as a faceless enemy, specifically because it puts a face on people.

And it also allows us to trade with so much more ease. It doesn't matter if it's in dollars or bitcoins or euros or whatever. Currency is whatever is convenient. And the technology we have today makes it incredibly more convenient than ever before.

So in sum total, I think it means that it's so much easier today to just ignore the tyrants and go about life in your own way, on your own terms. The more people do that, the less support the tyrants have, until they either capitulate to be able to capture at least some of the pie for themselves, or starve to death.

[0] granted, the full text is a bit childish in its view of the world, but I think there are some decent take-aways to be had.

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