The economic concept of rent is where a firm in an advantageous position uses that position to extract wealth without doing anything productive. Much of the divisiveness between the two dominant U.S. political parties can be explained in these terms:
The Left thinks that corporate privilege enables rent-seeking behavior (e.g. finance), while the Right thinks that government privilege enables rent-seeking behavior (e.g. regulatory capture, public sector unions).
It may seem like all economic activity is rent-seeking, and this is true to an extent -- everyone wants to sit back and let prior work bring in income today. Competition is what checks rent-seeking -- such behavior often goes hand-in-hand with a monopoly position, which is why you see it where there is heavy government involvement (e.g. patents, public sector services).
What I would like to see is the calling-out of rent-seeking behavior from both sides. This is the way forward to a more united, wholesome, just economic / political system.
...everyone wants to sit back and let prior work bring in income today
This isn't rent seeking. This is simply enjoying rents from value creation. Rent seeking is when actively seek out rents by engaging in unproductive/harmful activities in order to continue receiving rents.
For example, getting a patent to prevent others from building similar works is rent seeking [1]. Or forming a union to prevent others from undercutting you is rent seeking. Similarly, creating regulatory requirements that crush small players (e.g., Walmart's attempts to raise the minimum wage, Phillip Morris attempts to increase tobacco regulation) is also rent seeking.
[1] Of course, patents might still be beneficial if the rents extracted are smaller than the value created which would not otherwise be created in the absence of patents.
>What I would like to see is the calling-out of rent-seeking behavior from both sides.
Oh yes, certainly. We should ensure fairness to the fullest extent by making workers fight just as hard for their wages as the largest multinational corporations do for profit. Really, who do they think they are, shamelessly organizing themselves to guarantee access to medical care, education, basic living necessities? Thank goodness for our discerning even-handedness.
Just once I'd like to find out that reality doesn't turn out as rotten as I can possible imagine it. To hear somewhere, someone, on some board said, "ya know, we've made enough this quarter, lets not make giant asses of ourselves by usurping and corrupting the system that allowed us to do so."
Move to my native Sweden, it is a not-so-capitalistic economy which is clean, with very little corruption and backroom dealings. Just ask the politicians.
But before you go, I wonder if you might be interested in buying a bridge to a really good price...?
(At least you get to find out some of this stuff in the US. In many other countries the 'ol boy's clubs are just too tight. I think I'll send money to WikiLeaks, even though they seem a bit weird.)
Edit: Thanks, dexen. Sigh, I aimed for humorous and informative, not sarcastic. (I can't upvote you, since my "avg" is too low after questioning news sources which people claimed were good without having references. I probably came off as sarcastic then, too.)
What's amazing is how little money was involved. $30K / month, about $360K / year. In return, millions in extortion fees and a huge drag on the economy.
I always think the same thing about lobbying. The contributions to politicians are really small in comparison to the benefits received. Maybe we should make bribing more competitive to raise the price in order to make it less profitable?
It's also rather likely that unions and patent holders have some shared interests, so I doubt this is solely about the money.
Both patent holders and unions are rent seekers. Strict patent laws make monopolies/oligopolies easier to form, and unions find it easier to extract rents from monopolies/oligopolies than from competitive markets.
In a monopolistic/oligopolistic situation, the monopoly can extract rents from customers, and the union can demand their cut. In a competitive market with many players, profit margins will be thinner, and it's likely that the non-union shops will undercut the union shops. So this move might be as much about shared interests, or at least shared ideology, as it is about money.
Is it actually true that unions find it easier to extract rents from monopolies or oligopolies than from competitive markets?
Imagine that all software without exception is made by Microsoft. Then (near enough) all software developers have to work for Microsoft. That gives Microsoft a lot of bargaining power against its employees, unionized or ionized. The only way in which the Universal Programmers' Union is better off in this world than in the real one is that Microsoft (having a monopoly) may be under less pressure from the market to sell its software cheaper, and therefore may be better able to pay rent to the unionized programmers. Fair enough, but is there any actual reason to think that that outweighs MS's gain in bargaining power over its employees? (Which exactly parallels the gain in bargaining power over its customers that makes it better able to afford to pay what its employees demand, if that seems worth doing.)
A monopoly and a union have equivalent bargaining power. The union members have only vastly inferior substitutes for employment (e.g. Dairy Queen), and the company has only inferior substitutes for labor (temps). It's in both of their best interests to eventually agree to split the rents.
In a competitive market, there is less rent to split (e.g., 5% profit margin instead of 15%) and there is always a third possibility: the unionized employer goes bankrupt and only non-unionized employers remain. So producers (as a class, not any individual one) get to survive, while the union (as a class) is destroyed.
But don't take my word for it. Go take a look at the world. The primary bastions of unionization seem to be monopolies or oligopolies: the government, Big 3 automakers (in their heyday, at least), cable companies and the like. Unionization also declined (outside the government) as the country became more competitive.
Think about what nearly happened to the auto industry. Consumers suffered with crappy overpriced cars, and the Big 3 + unions enjoyed their rents. Then the market became more competitive, and absent government intervention, the unionized part of the sector would have died. The unions seem desperately afraid of this effect in education which is why they fight tooth and nail against charters/vouchers.
This made me angry at first, and then I thought that IV were being smart and doing what everybody else does in a political fight: attempt to exert influence by paying for it.
I am more inclined to blame the representatives who make legislative decisions based on who is funding them .
I thought this story was about paying someone that could influence the unions. The unions have serious political clout. I don't see any evidence that anyone on the unions were paid to change their stance. They basically paid this guy to be a lobbyist, but to lobby union leadership rather than Congress.
The Reps need the money. More money means more ad campaigns and better chance to stay in power. The system is to blame I think. Not enough oversight or regulation?
It's called the Golden Rule: he who has the gold, makes the rules.
It's best to have a two-pronged attack, both from the outside (change the rules so congress is less corrupt, appeal to justice and rationality) and from the inside (buy your own damn congressman).
Hrm -- this seems a little too... nihilistic? I mean, I agree, the system is highly flawed and quite possibly broken, but it's the system we live in. If we don't like the system, we can either withdraw from it completely, as you're advocating, or at least try to change it for the better. If you withdraw, it's only going to get worse.
He had four big campaigns. One was Hindu-Muslim unity. Another was to block the import (into India) of British textiles. The third was ending "untouchability". The fourth was to get the UK out of India.
The latter succeeded, but since the UK couldn't afford to be in India and its PM at the time was an anti-Imperialist, it's unclear how much effect Gandi had. As to the others ....
Yes but the loophole of funneling money through PAC's and other interest groups needs to be closed. If you want to get money to a rep but don't want to disclose it directly or have to comply with finance laws, atm all you need to do is register your own PAC
I otherwise have no problem with funding and don't think public financing of campaigns is viable. As long as we know where the money is coming from, in theory there can be accountability.
I don't think regulation will help (maybe a little). They will find other ways.
The whole culture needs to change. As long as they can get away with blatantly unethical behavior nothing will change. Not sure how to achieve a cultural change though. The current system is very profitable for both parties.
I think a third party or a press that reports facts and calls out blatant untruths may help.
Let me try this again, more verbosely, since I appear to have overestimated the audience when I tried to ask this more concisely:
So? How is this different from what pretty much every other company large enough to afford lobbying (Apple, Google, Microsoft, IBM, Red Hat, Amazon, Wal Mart, Comcast, and a gazillion others) does?
There's only one interesting (in the sense that it is at all out of the ordinary) thing in that article, and no one has mentioned it.
Lets say you were married, lets say you had an affair, lets say that the news of this came to light and your spouse yelled and screamed at you.
How do you think they would answer the question: "So? How is this any different from what every other person who has had an affair?"
The answer is that the question itself is flawed, whether or not other companies attempt to game the system is irrelevant if the gaming itself is an insult.
We know people will attempt to manipulate society and governments to their ends, we can all be offended when they do so in an attempt to enrich themselves at the expense of the greater good.
There's a company. They have an opinion on a piece of proposed legislation. They present their arguments to another organization and ask the other organization to support their position.
That is not gaming the system. That's ordinary participation in the political process.
If an organization objects to legislation and presents those objections themselves, its fairly transparent what they want and why.
When an organization attempts to inject objections to legislation through an obfuscated channel (in the above case unions) to both take advantage of the political capital of unions (on which many politicians rely for campaign contributions) and to avoid the obvious conflict of interest that would come out of a company that makes its living as a patent troll objecting to patent reform. That is 'gaming' the system.
Note that gaming isn't illegal, its just politics, but as someone once said, "Maneuvering the system for the public good is leadership, maneuvering the system for the public good and your personal benefit is public - private cooperation, but maneuvering the system for your benefit and harming the public good in the process, well that's just dirty politics."
"They also asked him to try to keep Intellectual Venture's involvement in derailing patent reform quiet, since top investors in IV, such as Bill Gates, supported patent reform."
Are you American? I'm not, but it seems to me unions are important force in american politics.
From time to time, news surface how unions surprisingly stand up and take strong stance on something unrelated to protecting the empoyees. <weasel words>Which makes some suspect corruption</weasel words>. This story seems to validate that.
Depending on who you believe, patents are either a vital component of keeping companies innovating and profitable (which is good for employees), or they are dragging companies down and making them waste money working around bad patents and dealing with patent troll lawsuits (which is bad for employees).
Either way, they seem within scope for unions interested in protecting employee interests.
You seem to believe there are only two sides to the discussion. There are three, actually: two very vocal partizan sides, and a third side doing actual research. Scientists have spoken on patents and other forms of Intellectual Property protection. I believe [1] in science, do you?
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[1] in the figurative sense ONLY. Science is not matter of belief; nor the beliefs I hold personally have anything to do with science.
The economic concept of rent is where a firm in an advantageous position uses that position to extract wealth without doing anything productive. Much of the divisiveness between the two dominant U.S. political parties can be explained in these terms:
The Left thinks that corporate privilege enables rent-seeking behavior (e.g. finance), while the Right thinks that government privilege enables rent-seeking behavior (e.g. regulatory capture, public sector unions).
It may seem like all economic activity is rent-seeking, and this is true to an extent -- everyone wants to sit back and let prior work bring in income today. Competition is what checks rent-seeking -- such behavior often goes hand-in-hand with a monopoly position, which is why you see it where there is heavy government involvement (e.g. patents, public sector services).
What I would like to see is the calling-out of rent-seeking behavior from both sides. This is the way forward to a more united, wholesome, just economic / political system.