What Capital Never Told You About Rent(humansontheloop.com) |
What Capital Never Told You About Rent(humansontheloop.com) |
In fact it rather sounds like an intentionally foolish theory invented by someone practicing usury as the only possible reason anyone could disagree with them, and then incorrectly attributed to any opposition to their practice. You can sort of tell this is the case, because if you reverse the theory you get “usury creates wealth while other activities just shuffle it around”, which is a very flattering thing for an usurer to believe.
Unfortunately today usury is so endemic that people can't see any other way of living, even though debt-free publically issued money is an obvious possible solution to many issues we face today. See social credit (canadian, not chinese)
And much of the popular critique of capitalism is driven by those who don't distinguish between profit and rent, when in fact the near entirely of the extraction that is causing inequality is from rent extraction and not "profit" as used in this piece. Especially when it comes to real estate, which is most people's largest expense, growing, and one of the biggest political challenges we face today. (Broad homeownership has created a lot of people that benefit from increasing residential housing costs, or at least don't see any problems with them).
Glad to see Schumpeter get mentioned, as Schumpeterian rents are perhaps defensible for a while, I think.
You're suggesting that capital holders restrict the supply of capital so that they can extract rent on it? And if they didn't do that we'd just have unlimited capital and everybody would get to be arbitrarily rich?
Then what do capital holders get out of restricting the supply? Wouldn't they rather be arbitrarily rich instead?
> Every claim on human effort that exits the productive system as rent is a claim that cannot circulate internally, cannot pay workers fairly, cannot fund the next big idea or reduce the cost of the next product.
What? Why? When you pay rent do you think your landlord isn't going to spend that money?
In neoclassical economics, savings never pay off compared to investment. But in the real world, savings have important advantages:
1. They help you sustain longer in the case of strike (be it labor strike or investment strike).
2. They allow you to react to the market (for example, buying a promising startup winner after a competition consolidation) instead of being a first mover.
3. They allow you to price dump rapidly if a competitor threatens oligopoly pricing (usually the status quo), to drive them out of business.
That's why savings give you an actual power, which increases the richer you are.
Also, in my worldview, savings are liquid/reversible investments, while real capital investments are iliquid/irreversible - if you decide to build a factory you're commiting to an irreversible decision, if you buy an index fund, the decision is reversible, so it's basically savings. Making as few irreversible decisions as you can gives you an edge compared to others.
I recommend Keen/Standish paper on the theory of the firm: https://www.paecon.net/PAEReview/issue53/KeenStandish53.pdf
They show that profit-maximizing agents communicating via price-setting only will happily restrict output in order to reach oligopoly prices.
Generally no, though you won't get this answer directly.
Many people prefer to be rich relative to others than arbitrarily rich. If you ask a bunch of random folks if they'd rather be in the middle class in their current country of residence in 2005, or of noble birth in ~1100 CE, you'll get the latter answer _a lot_ despite that being an objectively worse quality of living.
Only thing I can think of is moving abroad, but sending lots of young people abroad is not very sustainable from a domestic economy perspective.
(Labor theory of value, they got rich by stealing what was rightfully yours, lots of linguistic games, private ownership is the root problem, yada yada...)
They didn't say the words, but they sure painted the picture (plus the usual Marxist game of moving the meaning of words around to keep the grift going).
Modern Capitalism Is Weirder Than You Think: It also no longer works as advertised
https://nymag.com/intelligencer/2022/03/how-asset-managers-h...
Because taking 20% of the former leaves a lot of the population unable to pay for essential living expenses because they effectively have zero of the latter.
What disposable income? When I was younger I had none, I was too busy paying rent and tuition,
I have observed people from the very poor homeless all the way up to multi-millionaires - his observation hold true for the vast majority. Nearly all of them are living paycheck to paycheck despite the massive amount of difference in income.
When you are young investing in education - that is tuition - is the correct call. When you finish school though many people stop investing at all instead of investing in equities.