Not Scarcity, But Surplus is the Problem
Not Scarcity, But Surplus is the Problem (Just as Dismal, though)
by Noni Mausa, lifted from comments at Economist’s View
They were discussing scarcity last week at Economist’s View. But to my mind scarcity isn’t our core problem. I wrote (and then edited a bit for this post):
=======
Yes, scarcity of resources is fundamental to econ theory, and it’s a real concern, not just an abstract factor for calculations.
But less often mentioned is the truism that human beings, working in concert, produce surplus. Generally this is very great surplus. In any society beyond the most desperately poor, this surplus is sufficient at least to support the 1/3 to 1/2 of the population who cannot support themselves– children, and the elderly and disabled…
This surplus … inevitably leads to the specialized class we would call the wealthy. This clan has existed as far back as we have written records. They may be more useful, or less useful, to their host societies, but they can only exist when those societies produce large surplus.
Economics talks about managing scarcity, but … our real problem is managing the surplus.
Sandwichman takes a stab at Ecological Headstand with Tenacity of Textbook Truism.
what is being missed is that this surplus is being skimmed off via rents and rising land values.
Rent is the dominant expense in nearly everyone’s life yet modern economics completely ignores it.
By design, actually.
http://www.politicaleconomy.org/gaffney.htm
We are in fact immensely productive. We can collectively produce more than we consume. But we’ve got a lot of rentiers with their hands in the till.
Plus our trade deficits aren’t doing us any favors over the long-term, either.
Marx called this notion “surplus value”. The idea had been around for some time prior to Marx, and is nearly as old as the formal study of economics itself.
The Old Testiment recognized the same issue, calling it “fat kine” instead of “surplus value”.
So what else is new, the surplus of the productive class has always been skimmed by the folks at the top, else how could the pyramids be built? The labor expended there could have been used for more productive purposes than piling stones on stones. Or the cathedrals in europe or … The comment skates close to the concept that capital has no value only labor, which is close to marxism. However even the communist societies took rent from the masses, after all what paid for the ruling class.
Today as production more and more is based upon capital investment, and less on the sweat of the brow it is only going to increase. Taking ag as an example, compare ag 200 years ago to ag now let alone to what it will look like in 50 years (unless things go bust completly), today one worker can do a lot more because so much capital has been deployed to support the worker. Go a step further and add some of the autonomous driving capacity worked on by DARPA, and you may not have any human on the farm implement at all on the leading edge. There will be a central facility that one person monitors a number of implements all working autonomously. In that case what is surplus, unless we start saying that the machines are entitled to a wage.
Put the question another way, if you automate a process does not the cost of the automation have to come from somewhere, yet this would be termed rent by the comment.
An important distinction was made in the Grundrisse by Marx betwee surplus, which is essential to any dynamic economy, and superfluity. People tend to get unnessecarily indignant about surplus when it is the condition of superfluity that is the real kicker. You can handle surplus by stimulating investment through fiscal policy. But fiscal policy is impotent in responding to superfluity. All it can do is generate even more superfluity.
The problem for us presently is that we don’t have a way to accurately measure the surplus which is in fact growing by the day. When discussion ensues about bringing work to as many unemployed as possible (as the primary goal), there is just one problem, that of a specific defined monetary efficiency. The random efficiency of many individuals (that may or may not be considered substandard) would strech efficiency goals out of recognition. The way to overcome this problem is by developing measurements for human skills capacity by time units, wherever work and wealth can be created beyond money. Anytime something is measured, it gains much more value than it previously carries.l
Noni,
“Surplus is the Problem”
Most people think a surplus is a good thing. It means plenty of food and other necessities. But apparently, not to a Liberal, because it “inevitably leads to the specialized class we would call the wealthy.” Darn it, having a lot of resources leads to wealthy people.
Now I understand Obamanomics (no drilling, no resource development, taxes on the wealthy, regulation). If we reduce the surplus, we reduce the problem, excepting, of course, those who “manage the surplus.”
“
Becky
I think you are missing the point. Back in the old old days when people were happy work was what you did to provide the necessities for the tribe and a few “treasures” for your self or that special someone. There was no money so no one felt the need to measure “skills.”
The invention of money, and the understanding of it, as by Sammy and Lyle is generally considered the invention of the Devil.
We could use money as a medium to facilitate exchange, but instead we have chosen to worship it.
And of course measure the worth of a human being by it.
@Sammy, a surplus is not a positive thing necessarily; a surplus of garbage, for instance, makes for an unpleasant experience. Try again.
coberly,
And of course measure the worth of a human being by it.
It doesn’t measure how good of a human being you are, but it does measure, in most cases, how much value you have provided to your fellow man. How is this true? Because your fellow men have chosen to give you their money for your service.
Sammy says:
“It doesn’t measure how good of a human being you are, but it does measure, in most cases, how much value you have provided to your fellow man. How is this true? Because your fellow men have chosen to give you their money for your service.”
This ain’t necessarily so. Rentiers collect, but they need not contribute. They exalt themselves, and devalue labor.
In the past 30 years, nearly all the increase in surplus has been skimmed off by the top few percent in wealth. The top 1% used to control 7% of the nation’s personal income. They now control over 21%. Has their contribution to the rest of society tripled? Not so. They have manipulated the system, to force labor to hand over its share of the increase in surplus.
Their contribution to the rest of society has not changed. Their contribution to themselves has tripled.
If labor’s share of the nation’s output had remained constant, (and the top 1%’s) the middle and working class would all be about 15% better off than they are now. And the economy would be in much better shape.
Batmansc,
a surplus of garbage, for instance, makes for an unpleasant experience.
You are not using the word “surplus” correctly in this context. The definition of “surplus” is: “the amount that remains when use or need is satisfied” http://www.merriam-webster.com/dictionary/surplus?show=0&t=1310792218
Since garbage is not “used” or “needed” (else it wouldn’t be “garbage”) the entire totality of garbage “remains when use or need is satisfied.” So you saying “a surplus of garbage” is a redundancy. A more succinct phrasing on your part would be: “….garbage, for instance, makes for an unpleasant experience”
This I would agree with. But this has nothing to do with the post, or my comment. Try again.
Greg,
Rentiers collect, but they need not contribute.
I need to get you libs a dictionary. The definition of rentier is: ” a person who lives on income from property or securities” http://www.merriam-webster.com/dictionary/rentier
So if a landlord rents you land or a building, he must “contribute” to your life or business, else you wouldn’t voluntarily pay him. Right?
Same with a secuity. The rentier either “contributes” equity (dollars) or “contributes” loans(dollars) to a company that wants or needs dollars.
See how often the word “contributes” appears in this comment?
“your fellow men have chosen to give you their money for your service.”
…the top 25 hedge fund earners took in $22.07 billion in 2010…
@sammmy: You are the pragmatic fool. Do you think a surplus is a static entity? Quick run to your Glen Beck authored “Economics for Small Dicks” handbook and see if you can scratch your nuts hard enough that some straw-man argument like jizm will emit from your keyboard and allow you to save “face” on an internetz cyte. Dismissed.
A landlord is not contributing to one’s life. The landlord is recieving from one’s life a portion of the earnings from the labor expended. That a landlord decided to become a landlord with the property they labored to aquire is not a contribution.
Same with securities. The securities have value as a result of those who labored in the sector the security is written. Securities have a value as a result of those who purchase them, but those who purchase them base their oppinion what the value is based on the input of the laborer.
Of course we have learned that our economy can now allow securities of such to exist falsly without the actual input of labor’s value.
Yeah that was some service The Donald provided his fellow man creating those bankrupt casinos and failed condos and TV shows and whatnot. Not to mention the service Steve Forbes provided wrestling himself from between Mrs. Forbes legs. Or Steinbrenner’s heirs etc.
I apologize that it took so long to get back to this vital discussion, for recognizing productive surplus is the key to our immediate future. However, money is by far the best measurement for physical resources, for manufacturing and production. just not human skills. Human skills and knowledge have an infinite component which is completely different from the real scarcity that money-based economies were built upon. The functions of money were severely distorted in the 20th century as the tax base on production attempted to pay for the more highly valued human services that were connected to healthcare: a valuation predetermined before the Industrial Revolution. The human services we need to measure are those that can return previous numbers of healers and educators in every community, that were once far more extensive than they are today. When people are able to do this economies can be brought back into balance.
IMO, Sammy continues to fail Logic 101 by completely ignoring a multitude of factors. Of course, he does that on every topic.
A landlord is not contributing to one’s life.
Of course he is. He is providing you the use of his asset for shelter. Else you wouldn’t give him your money. Right?
This whole Marx capital-labor theory thing has got you all overthinking and confused.
In other words: The problem is not that some people have too little, but that others have too much. The solution is not to eliminate poverty, but to eliminate wealth.
It is funny how such a view has no real concern for the poor. It only cares about the rich and their undeserved prosperity. It is rare to see it stated so openly.
Anyone who is concerned for the poor should look to reducing scarcity (the cause of poverty) not reducing surplus (the source of investment).
rjs,
…the top 25 hedge fund earners took in $22.07 billion in 2010…
Hedge funds get paid a percentage of the increase in their clients portfolio, so they earned this money.
In addition, hedge funds (try to) provide returns that are not correlated to stock and bond markets. This is very valuable to their investors, which includes pension plans, so much so that they are willing to pay the high fees associated with hedge funds.
Greg speaking of the top 1 percent, you might find interesting an unusual article at VOX yesterday: http://www.voxeu.org/index.php?q=node/6751 Looks like our Founding Fathers might recognize as familiar the percentage of income for this group during the 50s, 60s, 70s, and early 80s, when it varied roughly 8-11 percent ( http://elsa.berkeley.edu/~saez/saez-UStopincomes-2007.pdf ). The figure has been over 20 percent for 6 years now, higher than in the Britain that Ben Franklin knew. Imho history is just one more thing to keep in mind when somebody suggests that income share reflects “how much value you have provided to your fellow man” (Sammy’s words that prompted your rejoinder).
heart-of-flint
Sorry if I left the wrong impression, for not only am I an advocate for the homeless, I am also presently homeless (and jobless) which actually helps with my perspective. What I am saying is that we should not tear down the society that exists but rather help it evolve into a greater understanding of wealth creation that the poor can actively participate in.
sammy
sounds good. but it’s casino gambling. and the people who get hurt are the workers and schoolteachers who “invest” their pension money in the gambling without understanding the nature of the game.
sammy
what happens is you get stuck with your ideological catechism and never look at the world around you.
i never read marx but i can tell when labor is paid too little because they have no leverage to bargain for a fair wage, and i can tell when workers pay too much rent because the supply of housing is either limited by an effective monopoly, or because prices of land and houses are driven up by the people who have acquired wealth by being in a position to take windfall profits.
taking profits is not inherently evil, but a system that worships profits tends toward evil uses.
heart of flint
brain of stone.
no, the problem is still not that some people have too much. the problem is that we still haven’t figured out how to run an economy so that no one has too little.
i am not in favor of “taxing the rich” to give to the poor. i am in favor of taxing ourselves enough to provide a human quality of life to all the people who find themselves caught up in our economy.
i believe this benefits the rich as well as the poor.
people like you seem to think that any money they pay in taxes is stolen from them because they cannot understand how raising the standard of living of the “least of us” raises the standard of living of the wealthy as well.
btw no one stated “it” so openly. like most people with a neurosis you read meanings into what you hear that were never intended.
The argument regarding the taxation of the rich can be used as a straw to divert attention away from the many other factors that contribute to the exploitation of workers in favor of greater wealth for the already wealthy. We have been experiencing a steady erosion of worker protection legislation for maybe ten or twenty years. This trend has culminated with various states enacting draconian anti worker legislation, as in Wisconsin only the most publicized example. The near total elimination of employer funded retirement plans and the need for workers to reduce their discretionary income as they now have to plan to fund their own retirement income. The current attack on the Social Security program is an extension of this process of elimination. The triumph of supply side economic planning over good sense has seen worker exploitation take on a global perspective. Capital moves easily around the globe in search of the most exploitable labor in an effort to expand the supply of goods in search of markets for those products. That the market for goods shrinks in one part of the globe, but is balanced by expanding markets in emerging markets. Note that the homeland is not emerging and no one seems to be too concerned about the affect on the homeland economy.
Then taxation becomes an issue as the economy cannot generate sufficient income for all so that the tax base is eroding. The shift of income share up stream should be followed by taxation, but then the argument begins anew and takes on that straw character. The tax issue is the result not the cause of the income problem for the working class. When used as a primary focus of attention that issue distorts the focus in a way that draws attention away from the income distortion in the economy and its connection to wage suppression and labor exploitation.
Jack
I think I agree with you. the tax problem in this country is a smokescreen for political power. the really rich understand the need for taxes. but politicians can exploit the ignorant who resent taxes because they are too stupid to see how they benefit from them. this gets them elected where they make money by doing favors for their friends. some of their friends are rich, but most of them are just money monkeys,
i would stop there but i don’t think the politics would work if the rich did not support it.. at least much of the rich. but that’s Koch rich, not Kennedy rich. and that does seem to make a difference.
there may be some underlying political reality here… people can’t understand “government” and taxes beyond a certain point, so that inevitably we lose Camelot and end up in the Jungle.
Thanks, PJR. I wonder if the effects of the relative distributions of wealth in the North and South can be teased out of the data.
I see Saez’s graph, so I’ll have to check my 7% figure. The top 1% income for 2007 is up to 23%, so the 15% the other 99% of us would be better off still pertains.
there is no way to respond to someone who believes that 25 money changers are worth more than a half million school teachers…
rjs
there is no way to respond to someone who believes that 25 money changers are worth more than a half million school teachers…
I didn’t say they are “worth” more. I just said the hedge funds “earned” it.
coberly:”too stupid to see how they benefit from them”
I wonder if we are misunderstanding. From my experience as lower worker class growing up in MS, I would say embarrassed or insulted may be more the feeling than stupid. It comes out of the attitude about charity which was local and public. People whose families were seriously in need would refuse charity because it said something about you and your manhood for the community to know you were a “charity case”. For example, it was important to my father that Social Security and Medicare were earned by his own effort. That gave him cover to hate welfare people and other, especially ethnic, bums. However, he was not stupid, just keeping to the logic stream that kept him respecting himself. He would be one of those that said he never benefited from a government program because government programs people benefit from are those that they didn’t earn.
QED: “Economics talks about managing scarcity, but … our real problem is managing the surplus.”
Anna Lee
let my apologize for my choice of words. most people are not any stupider than the rest of us. but they get locked into stupid ideas because … well, because human intelligence is generally not up to going beyond a few catch phrases…. and that’s both the right and the left, and a few highly respected ph.d’s as well.
i have been arguing here for some time that SS is not welfare. and that’s a hard case to make because the Petersons argue on the unstated assumption that it is. and the poor confiding liberals bite, and counter argue… on the unstated assumption that it is…. and offer to turn it into welfare in order to “solve” “the problem” which doesn’t exist.
i tend to agree with your dad about staying off welfare if you can. i don’t agree with him that everyone who ends up taking welfare is a weakling or lazy. but welfare should not be the routine way of dealing with a normal part of life.
with SS the worker pays for his own retirement. because it is configured as insurance, those workers whose luck is bad will end up with a better ‘return on investment’ than those who don’t. but it’s still insurance and not welfare. those who ended up well off had no way to be sure they were never going to have crippling bad luck. but you simply can’t explain this to people anymore. they have been told it’s “government spending.” and even the President believes it’s “the government’s money.”
see what a billion dollar propaganda campaign can accomplish.
coberly,
You know I agree with everything you are saying.
I guess I was addressing the fundamental issue of the way people see government. If my Dad saw that SS and Medicare were consider in the community as just a couple of “government programs” he would have been ashamed, in private, to receive them. He would not have refused them as he needed them but he would have jumped on the band wagon with the crowd that wants to kill them for the future. This is how support for doing things against your interest tended to be gained in our community.
With this latest tendency for some pundits to group SS and Medicare with welfare and Medicaid, I can’t help but wonder how people like my Dad are beginning to feel. You know, the Leninist Strategy does have a lot of merit with respect to the strategy part.
And the brief exchange between Coberly and Anna Lee demonstrates yet another divergence from the central issue of economic equality for the working class. We have been reading repeated news stories about the unemployment “problem,” the need for public workers to give up compensation in one form or another, the burden to the budget that are popular programs like Medicare (and Social Security, but that is an out right deception), the need to cut back any and all government functions that benefit the majority of the people, but we can’t even discuss the need for revenue. We can only cut costs. We can’t raise revenue when it comes to government budgets. I thought that we’re supposed to run the government like a business.
“The man of great wealth owes a peculiar obligation to the State, because he derives special advantages from the mere existence of government” – Teddy Roosevelt
We need to hear about cutting the wars and the baseline pentagon plans for more wars and perpetual mobilization for fictitious wars.
The house last week passed a $649B pentagon budget, with most of the serious tea partiers on board who will neither raise taxes nor the debt limit ot keep paying for the war fictions.
“Every [weapon] signifies, in the final sense, a theft from those who hunger and are not fed.” – Dwight D. Eisenhower
Ike as yet did not think the plundering would impoverished the aged by wasting FICA.
Jack
not sure that we were distracting from the central issue. the strange fact is that SS is not welfare, but it’s the best program for preventing poverty yet devised.
i am not a big fan of “economic equality.” i would like to see a decent standard of living for “the least among us.” that need not be equal. but it would depend on those with a little economic power understanding that there are better things in life than money.
and while “running government like a business” is idiocy, the fact is that the idiots don’t even do that. they just make reassuring noises to justify… tho themselves… stupid greed. that’s not normal human acquisitiveness; that’s when the drive to acquire becomes psychotic.
Interesting that the Kochs and Petersens and Norquists are so interested in destroying our government. What special advantages do they hope to gain, that this government does not provide them?
Greg
I don’t think they are in it for the advantage. There might be some short sighted hope for gain by paying less taxes, but I don’t believe they can be that dumb.
I think they do it out of pure hate. You can hear a bit of it in Peterson’s brief rant about people sitting around on welfare for twenty years. It does not occur to him that ordinary people having paid for their own retirement might find better things to do with their lives than polish his shoes.
This may not quite look like pure hate to you, but it sounded like hate to me when i heard it, and I think the willful self blindness that makes such statements possible comes out of the same kind of hate the Nazis had for the Jews. After all, if we are so cruel to them, they must deserve it.
All I can say is that automation doesn’t always fit into your theorists neat plans. There are prices to be paid (repurcussions) of automating society and they won’t necessarily be good.
Or how clever you were able to trick your fellow man. Is that “value”?
Scarcity is not the cause of most poverty altho it may be the result. The causes are many but individual ignorance and sloth are right up there and not given the importance they deserve.
Seems like a good venue to rant on the benefits of increasing the estate tax (which was actually lowered in recent years). If we have to have a tax increase that would be one of the most ripe areas. How many kids of rich people do you know that truely benefitted by their windfall? I’ve only seen dissension among siblings, laziness & absent ambition while growing up and a profound ignorance among these offspring (trust-funders) for the realities of life.
On the other hand I am certainly not a fan of welfare, to the extent that we have it today.
I think we need both tax increases for the wealthy AND cuts in spending.
Ed
individual ignorance and sloth are real facts of life. it is not clear the extent to which sloth is the appropriate response to no-real-opportunity. nor is it clear the extent to which ignorance is the predictable response to mis-education.
the Republican response to sloth and ignorance is to let them get hungry enough and they will all of a sudden get smart enough to find a job even during recessions when the rich can’t find “work.”
so while it makes you feel okay to blame the poor for their poverty, the rest of us would like to find better ways to solve the problems of ignorance and sloth, not to mention poverty among people who are obviously neither ignorant nor lazy.
Ed
of course the issue is what cuts in spending. who’s income are you going to cut. i could think of a few places to cut, but i am not so sure that the unintended consequences of those cuts would do me any good in the long run.
that doesn’t mean we can spend public money on every good cause we can think of. i’d be happy with the normal political compromises, but we have insane people running the country right now who want to cut the programs that are doing the most good, and of course cut their own taxes if not the other guys.
I am so glad we are discussing the issue of managing a surplus rather than managing scarcity.
The law of abundance is working in America. The issue with distribution of wealth may have to do with competition. We may have an issue of getting fair competition between main street and wall street.
Wages are a good example, we hear to often of wage inequality. How can we bridge this gap. The answer is COMPETITION. What if we make a game of it, we know right off many players would get a chance to make an excellent wage. So how do we make work pay, we can no longer ignore the huge trade deficit caused by low wages offshore. So how can we pay more Americans better wages with out causing inflation.
We are stuck between a Welfare State where we count on the wealthy class to pay for the underclass, given we can’t employ labor at a fair wage and be globally competitive. We are being torpedoed by forces hungry for a way of life we inspired. Good so we must move out and embrace the KNOWLEDGE Revolution and employ Americans to be smart. We may need to invest in PEOPLE to do the low cost behavior while we COMPETE Globally.
If we paid a cigar smoker to smoke less a few points off their health insurance, this would go as well for giving point reductions in health insurance for cutting Fructose consumption. We would hurt the Corn Industry for a second, only they are a RESOURCE and Corn Syrup is not far from Car Fuel.
You see America has been changing the way people WORK for over 100 Years, We could argue the STEAM ENGINE & SUBSEQUENT OIL AGE ended the need for Slavery, the CIVIL WAR ended Slavery.
You See America is full of Promise.
We can solve this CRISIS and LEAD the WORLD
Because this is who we are
We got to unite
Quote of the Decade – “You are worth what you Owe”
SF Kropfl
Got to go, got to cook dinner
A couple of points to illuminate. Let’s begin with the definition of “rent.” Yes, in colloquial English it means the money you pay in return for dwelling space that you don’t own. But that’s not the formal meaning. Rent means any payment for something someone else controls — it can be deserved or undeserved, proportional to the service provided, or extortionate.
In economics, rent-seeking is an attempt to derive economic rent by manipulating the social or political environment in which economic activities occur, rather than by adding value…
(An example might be the troll under the bridge, who demands a billy-goat in payment for every crossing even though he neither built nor maintains the bridge.)
Many current studies of rent-seeking focus on efforts to capture various monopoly privileges stemming from government regulation of free enterprise competition. The term itself derives, however, from the far older practice of appropriating a portion of production by gaining ownership or control of land.
[Thanks to Wiki for putting this into words — after several years at Angry Bear we should all have long since learned the meaning of rents and rent-seeking.]
When essential resources are controlled in the absence of competition, these resources become bottlenecks and those who control them generally extract payments out of proportion to their fair value.
Secondly, I am not for or against surplus as part of this argument : what I propose is that human societies always produce surplus, always will, and some people in all societies will learn how to tap that surplus for themselves. I’m inclined to believe that the wealthy serve the rest of society in part by drawing away some of this surplus, thus keeping the flow of production and resources moving at a good clip.* Also, their store of excess can be used to undertake difficult, quirky or long-term projects which might not happen otherwise.
BUT when a overlarge fraction of the surplus is allowed to be captured (whether used or wasted) and not returned to the population that generated it, the system operates badly or even breaks down
Proportionality is the key. Given that there will be surplus and ought to be surplus, way beyond what the whole population requires to flourish, what are the proportions af allocation which lead to the most vigorous, healthy society, and what are the proportions that lead to calamity?
Noni
* Rather in the way leeches can be used to promote good circulation in fingers and toes.
A couple of points to illuminate. Let’s begin with the definition of “rent.” Yes, in colloquial English it means the money you pay in return for dwelling space that you don’t own. But that’s not the formal meaning. Rent means any payment for something someone else controls — it can be deserved or undeserved, proportional to the service provided, or extortionate.
In economics, rent-seeking is an attempt to derive economic rent by manipulating the social or political environment in which economic activities occur, rather than by adding value…
(An example might be the troll under the bridge, who demands a billy-goat in payment for every crossing even though he neither built nor maintains the bridge.)
Many current studies of rent-seeking focus on efforts to capture various monopoly privileges stemming from government regulation of free enterprise competition. The term itself derives, however, from the far older practice of appropriating a portion of production by gaining ownership or control of land.
[Thanks to Wiki for putting this into words — after several years at Angry Bear we should all have long since learned the meaning of rents and rent-seeking.]
When essential resources are controlled in the absence of competition, these resources become bottlenecks and those who control them generally extract payments out of proportion to their fair value.
Secondly, I am not for or against surplus as part of this argument : what I propose is that human societies always produce surplus, always will, and some people in all societies will learn how to tap that surplus for themselves. I’m inclined to believe that the wealthy serve the rest of society in part by drawing away some of this surplus, thus keeping the flow of production and resources moving at a good clip.* Also, their store of excess can be used to undertake difficult, quirky or long-term projects which might not happen otherwise.
BUT when a overlarge fraction of the surplus is allowed to be captured (whether used or wasted) and not returned to the population that generated it, the system operates badly or even breaks down
Proportionality is the key. Given that there will be surplus and ought to be surplus, way beyond what the whole population requires to flourish, what are the proportions af allocation which lead to the most vigorous, healthy society, and what are the proportions that lead to calamity?
Noni
* Rather in the way leeches can be used to promote good circulation in fingers and toes.
A couple of points to illuminate. Let’s begin with the definition of “rent.” Yes, in colloquial English it means the money you pay in return for dwelling space that you don’t own. But that’s not the formal meaning. Rent means any payment for something someone else controls — it can be deserved or undeserved, proportional to the service provided, or extortionate.
In economics, rent-seeking is an attempt to derive economic rent by manipulating the social or political environment in which economic activities occur, rather than by adding value…
(An example might be the troll under the bridge, who demands a billy-goat in payment for every crossing even though he neither built nor maintains the bridge.)
Many current studies of rent-seeking focus on efforts to capture various monopoly privileges stemming from government regulation of free enterprise competition. The term itself derives, however, from the far older practice of appropriating a portion of production by gaining ownership or control of land.
[Thanks to Wiki for putting this into words — after several years at Angry Bear we should all have long since learned the meaning of rents and rent-seeking.]
When essential resources are controlled in the absence of competition, these resources become bottlenecks and those who control them generally extract payments out of proportion to their fair value.
Secondly, I am not for or against surplus as part of this argument : what I propose is that human societies always produce surplus, always will, and some people in all societies will learn how to tap that surplus for themselves. I’m inclined to believe that the wealthy serve the rest of society in part by drawing away some of this surplus, thus keeping the flow of production and resources moving at a good clip.* Also, their store of excess can be used to undertake difficult, quirky or long-term projects which might not happen otherwise.
BUT when a overlarge fraction of the surplus is allowed to be captured (whether used or wasted) and not returned to the population that generated it, the system operates badly or even breaks down
Proportionality is the key. Given that there will be surplus and ought to be surplus, way beyond what the whole population requires to flourish, what are the proportions af allocation which lead to the most vigorous, healthy society, and what are the proportions that lead to calamity?
Noni
* Rather in the way leeches can be used to promote good circulation in fingers and toes.