
Great Problems: An Epidemic of Rent-Seeking - eevilspock
https://devinhelton.com/2013/04/14/rent-seeking-economy/
======
apathy
This is fantastic. My only concern is that, after the last election's results,
it's not clear to me whether enough members of the electorate are willing to
vote in their own best interests (rather than "cheering" for their "team",
which in similar fashion to football or baseball teams could not care much
less about the "fans").

Without something to motivate that, it'll be a tough slog.

~~~
Tempest1981
> willing to vote in their own best interests

There is a good discussion of this here:
[https://news.ycombinator.com/item?id=13151687](https://news.ycombinator.com/item?id=13151687)

~~~
tcbawo
Related to health care which was discussed in that other thread, it will be
interesting what happens in medicine as AI software begins to take on
functions of patient diagnosis. Will it reduce the cost of health care? Or,
will the likely monopoly of health care providers continue to charge ever-
exorbitant amounts of money for medical service?

------
Tempest1981
Seems like he didn't directly address property ownership (or did I miss it?) I
was expecting to see some mention of Henry George, and becoming rich by owning
land:

[http://qz.com/169767/the-century-old-solution-to-end-san-
fra...](http://qz.com/169767/the-century-old-solution-to-end-san-franciscos-
class-warfare/)

~~~
fashionplate
In another article [1], the author writes that property ownership, "gives
people the incentive to apply local knowledge and expertise in order to
generate wealth."

[1] [https://devinhelton.com/principles-of-
formalism](https://devinhelton.com/principles-of-formalism)

------
woodruffw
I found this post confusing. The author careens from attacking the "mega-
federal-state" and the corporations it protects, to hinting at protectionism
as a valid policy against the decline of America's industrial base.

~~~
danbruc
Without any judgment on those two points, there is not necessarily a conflict
between being against a state that protects some large business and being for
a state that protects the entire national economy. A conflict will of course
arise if you deem states to be inefficient in general or something along that
line.

~~~
woodruffw
What is meant by the "entire national economy"? Does the state prop up grocery
stores in small towns when the cost of imported foods rise naturally, or does
it only protect companies that it contracts to (or deems politically
convenient)?

Protectionism doesn't generally involve the former, and I suspect that the
author of the original post wouldn't appreciate the bureaucracy necessitated
by such a large...safety net. It's a form of nonviolent warfare, with the
state propping up those industries (and the strongest companies within those
industries) in order to remain internationally competitive. In that sense, as
far as I can tell, there is no meaningful difference between the current state
of affairs and that proposed by the author, beyond perhaps _which_
corporations get protected.

~~~
danbruc
It's unfortunately to late in the night for me to discuss this now but I would
really have liked to. I never really understood the arguments for unrestricted
free trade and against [some] protectionism in realistic scenarios.

~~~
woodruffw
The feeling's mutual, and I hope we can discuss at a later date (or on a later
article).

------
eevilspock
This complements nicely another post also on the front page: _Ask HN: What was
your best passive income in 2016?_
[https://news.ycombinator.com/item?id=13150144](https://news.ycombinator.com/item?id=13150144)

~~~
gech
Are you stating those implements mentioned there are forms of rent seeking? I
think not. Through real work at one time they still offer value on repeat.

~~~
danbruc
If you spent a year building something and then live from the income for ten
years, then you are at the very least selling at an inflated price. Your
customers should take their money, recreate your work, save 90 % and of course
put you out of business.

~~~
branchless
I think it's okay if the opportunity is there. If people choose not to
exercise the saving it may be they know the pitfalls better than outsiders.

Rent seeking is where an individual/business is exercising some kind of
monopoly, often granted by the state, to basically compel people to pay him an
income at no further effort to himself. Usually they are exploiting some kind
of situation where someone _needs_ something and they are erecting a barrier.
They are _appropriating_ wealth rather than creating it.

Examples of this would be people buying up land near a new development to
profit from it, given land is scarce and more cannot be made (though zoning
can in theory be changed). Or grabbing a patent to stop someone developing a
rival product as they know the barrier to entry is not high without using the
state legal apparatus. Or buying up apartment in the middle of an urban centre
in the expectation of being able to capture wages due to an extreme shortage
of accommodation. Or abusing your position as an issuer of fiat money to
capture labour. Or some big land owner in the UK or USA whose grandfather
grabbed land and now they descendants are sitting on this and demanding rent
for use.

If someone builds an app and people can replicate it but choose not to then
it's not stopping people doing that, also they can choose to simply not use
the app.

I haven't read the article yet btw I don't have time just yet, just responding
to this comment.

Compare this to the epi-pen thing where they are gouging because people are
desperate and they hold a patent. The patent being enforced by the state.

[http://ounodesign.com/wp-content/uploads/2013/02/henry-
georg...](http://ounodesign.com/wp-content/uploads/2013/02/henry-george-fay-
lewis.png)

[http://www.goodreads.com/book/show/552175.Progress_and_Pover...](http://www.goodreads.com/book/show/552175.Progress_and_Poverty)

~~~
danbruc
That is why I worded my comment carefully and called it _selling at an
inflated price_ instead of rent-seeking. As far as I can tell definitions vary
and at least some only call it rent-seeking if the state is involved in one
way or another.

If you take the definition Wikipedia currently gives, _[...] seeking to
increase one 's share of existing wealth without creating new wealth [...]_,
then you are looking at a very broad definition that also includes selling at
inflated prices, at least that would be my interpretation.

~~~
branchless
Hmm. I wouldn't take selling at inflated prices as rent seeking. It's just a
market inefficiency on the surface which may be efficient were we the person
deciding not to replicate it. I'd look to the reason behind the ability to
sell at inflated prices before knowing which side this falls on.

~~~
wycx
Isn't the market inefficiency to which you refer merely all market
participants choosing to sell at inflated prices?

In what scenario would universally inflated prices not be rent seeking?
Erecting artificial regulatory barriers via lobbying? Rent-seeking. Collusion
between market participants to keep the price significantly above the cost of
production? Rent-seeking.

~~~
branchless
I put that above.

------
webmaven
Really interesting analysis. But the following gave me pause:

 _> Software has very natural returns to scale, because all engineering costs
and up front. The marginal cost of serving one more customer is very low._

One of the interesting things that we've seen over the past decade is that
while Software-as-a-Product has nearly all of it's engineering costs up front,
Software-as-a-Service does not. And I don't mean that the software is being
improved continuously. There are significant ongoing engineering costs _simply
keeping the system working_ (consider, for example, the effort required to
stay ahead of advanced persistent threats).

That said, when you're operating SaaS at a large scale, generally speaking the
marginal cost of serving one more customer is still fairly low. Just not as
low as with SaaP.

------
dri_ft
Excellent. Depressed me.

~~~
internaut
Yes, and it's strongly connected to this other essay (2011) by Neal Stephenson
on innovation.

[https://news.ycombinator.com/item?id=13153558](https://news.ycombinator.com/item?id=13153558)

------
rsp1984
Perhaps someone should add "(2013)" to the title.

~~~
MaxfordAndSons
Eh, as far as I know none of the conditions the article describes have changed
significantly or at all since 2013.

