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by anovikov 2392 days ago
Saying that there's something bad in 'rents' is a hypocrisy. Every income which is not a job, is rent. Profit from every business, economically, can be split into rent and (real and/or virtual) salary of the owner (with small business usually being wholly or mostly "salary"). You can tell there is some non-"salary" component when you can sell your business for the price higher than liquidation price of it's physical+financial assets. That price is a capitalized cost of the rent. There's nothing morally wrong with it.
2 comments
supercanuck 2392 days ago
A job digging a hole and refilling the whole and digging it again is rebt seeking.

Maybe you’re not understanding the concept of Rent Seeking and therefore don’t understand why it is detrimental to the economy as a whole.

There will never be a completely elimination if rent seeking as long ad humans are involved but it ahoulsnt be rewarded like it is

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clairity 2392 days ago
no, rent is (non-value-creating) income from simply owning capital. capital put to productive use, along with labor, generates profits, which is compensation for value creation.
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anovikov 2392 days ago
But owning capital comes about when you have a competitive advantage. Basically, if you make some profit but can't sell your company, you are just working your ass off: it's a job (say a typical software dev agency is). With maybe a modest premium for risks. Goal and only point of business is exactly rent-seeking, this is what capitalism is: profit you get on a capital is rent.

And yes, rent isn't value-creating. You created value when you well, created that capital which gives you rent. Value is the capital, not rent. Then yeah, you just sit on your ass and milk it, or just sell. Every capital is a monetary expression of the value of the unfair, rent-creating advantage you got. There's nothing wrong with that.

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RhysU 2391 days ago
> And yes, rent isn't value-creating.

Some rents create value.

Say that I am a construction company and I need a huuuuge crane to complete a building. I can borrow money to buy the crane (rent goes to the person who lent me capital) or I can lease the crane (rent goes to the person who lent me capital in the form of a crane). Either way, no rent no new building. Someone values the building otherwise I wouldn't be building it. Hence, rent creates value.

Suppose I am a working stiff and I need a huuuuge house to raise a family. I can borrow money to buy a house (rent goes to the person who lent me capital) or I can lease a house (rent goes to the person who lent me capital in the form of a house). Either way, no living space no family. I value my family otherwise I wouldn't be building it. Hence, rent creates value.

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clairity 2391 days ago
no, you're confusing (and trying to redefine) basic economic concepts that are generally well-understood and well-defined by economists (particularly you're conflating profits with rents[0]).

by definition, profits are rewards for productive use of capital, while rent is the income gained from simply having capital.

some lazy and greedy market participants (e.g., plutocrats) contrive to rent-seek, but capitalism (and economics in general) considers such a misallocation of resources the worst kind of economic sin. so yes, there is something wrong with that.

capitalism expects such situations to be short-lived, as compeition drives such profits to zero. if that doesn't happen, then the market is distorted (by some expression of power).

[0] "The word 'rent'... [refers] to Adam Smith's division of incomes into profit, wage, and rent." - https://en.wikipedia.org/wiki/Rent-seeking#Description

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