Re: Smith: ground rents and land rents

On Wed, 24 Aug 2005 08:38:22 -0700, "The Trucker" <mikcob@xxxxxxxxxxx>
wrote:

><ruetheday@xxxxxxxxxx> wrote in message
>news:1124855431.414887.268040@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
>
>> Please note that I intentionally said opportunity costs _AND_ barriers
>> to entry. Without the barriers to entry part, neoclassical economics'
>> attempt to define rent as any return in excess of opportunity cost is
>> bogus, I agree. However, taken together, they provide a reasonable
>> definition of rent - a return in excess of opportunity costs due to
>> barriers to entry.
>
>The problem with the "opportunity costs due to barriers to entry"
>is that the barriers MUST be political force or the definition
>is no good.

I'm not sure that is invariably so. Consider a case that is currently
getting a certain amount of media attention: a power struggle in a
fundamentalist Mormon sect that practices polygamy. Apparently one
particular high priest of the sect is obtaining substantial economic
benefits from the older, wealthier male members of the church through
the exercise of his power -- based entirely on faith, not political or
any other kind of force -- to assign the nubile young females of the
church community to said wealthy older males as "celestial wives"
(i.e., effectively, concubines). ISTM that such benefits are economic
rents.

>It seems to me that political force is
>NECESSARY to the definition of the term "economic
>rent".

Whether or not that is so, the defining characteristic of rent is most
certainly its source, not its size. Consider the owner of a license
to collect tolls on a public road. He can sit in his toll booth and
collect the tolls, or he could spend the same amount of time and
effort keeping a shop, and obtain the same return. The fact that the
return to collecting tolls is the same as the return to keeping a shop
does not make the toll revenue any less economic rent.

The redefinition of rent as a return in excess of opportunity cost is
therefore nothing but an attempt to eliminate the concept of rent
entirely -- i.e., to make it impossible for anyone to even think about
rent. It is a real-life implementation of the Orwellian concept of
Newspeak, effected decades before Orwell described it.

-- Roy L
.

Relevant Pages

  • Re: Smith: ground rents and land rents
    ... Defining rent as a return in excess of opportunity ... >>licensure or other barriers to entry. ... Without the barriers to entry part, neoclassical economics' ...
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  • Re: Smith: ground rents and land rents
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  • Re: novel argument against taxing rents
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  • Re: Economic `Armageddon predicted
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