[janalsncm]

You are describing rent-seeking behavior: middle men who add no economic value yet inject themselves into transactions.

Yes, this is “normal” in the sense that it is common. It is “normal” in the same way that cancer is “normal”.

No, this is not “normal” in the sense of being behavior the government should just tolerate. It is in the same category of market failures as monopolies and externalities.

[brookst]

So is all demand-based pricing rent-seeking? Like selling gold or a house or any other scarce good for more than you paid?

[pibaker]

You are mixing things up. Just pricing your product based on demand does not necessarily make you a scalper. It's the fact that you are not the producer of the good itself that makes you one.

To use the real estate example, there is a difference between a developer selling a house it built, and an investor selling a house that he bought when it was cheaper.

[Brendinooo]

I think that if you poke at the term "rent-seeking" with the definition of "middle men who add no economic value yet inject themselves into transactions", you'll just end up arguing about what "adding economic value" means.

That said...if you can do that, you'll probably find that some additions of economic value are far more defensible than others, so it shouldn't all be flattened in the manner you're suggesting.

I mean, scalpers add economic value, right?! They allow (wealthier) people who didn't stand in line at the right time to have a chance to purchase a ticket!

[brookst]

Yeah. “Rent-seeking” is just a fancy rhetorical term for “people doing things I don’t like with money”.

Subscriptions are rent-seeking. Loans are rent-seeking. Spending millions in capital to buy a building and renting apartments for thousands? Rent-seeking. Copyright and patents, for sure, unless an AI company is involved in which case copyright is noble and must last a thousand years, because AI companies are rent-seeking.

[dwb]

No, too reductive. Rent-seeking is when people manipulate a situation to charge money without providing value themselves. Landlords are rent-seekers to the extent that they don’t do much, they mostly just own property - typical rent is many, many times the value of someone looking after the maintenance and building insurance for you (and anything else you want to argue a landlord does). The housing supply is naturally quite limited so the market doesn’t self-correct.

And anyway, if enough people don’t like the things people are doing with money, we can stop them from happening! So a pretty odd gotcha, to me.

[Brendinooo]

I mean, you saying that landlords don't do much is the exactly what I meant when I said "arguing about what 'adding economic value' means"

>typical rent is many, many times the value of someone looking after the maintenance and building insurance for you

I'm curious about this.

I'm not sure if there's a universal rule of thumb, but it's something like "expect 1-4% of the home's value in maintenance every year" - $4,000 to $16,000 on a $400,000 home. Take the lowest end of that - $333/month in expected maintenance a year. Add $100/month for home insurance.

You're claiming "many, many times" $433 a month in that scenario? Given more recent interest rates and the uptick in "maybe you should rent for awhile, actually" articles/videos I've seen, this doesn't strike me as plausible...

[dwb]

Certainly where I live, rents are many times that, yes. If landlords really were just charging cost plus a modest profit (despite that I really object to any profit on housing) I wouldn’t be outraged.

[Brendinooo]

Not sure what the intent behind this reply is but - I guess it's strictly true and I think we're agreeing in some sense, but to be clear I think it is totally fine to say that scalpers are doing things I don't like with money, and I'd like to see their excesses curbed.