Re: novel argument against taxing rents

On Thu, 30 Mar 2006 21:42:35 -0500, Robert Vienneau
<rvien@xxxxxxxxxxx> wrote:

In article <rdCdnVCWuZ3xL7bZnZ2dnUVZ_v2dnZ2d@xxxxxxxxxxx>, "sinister"
<sinister@xxxxxxxxxxxxxx> wrote:

To wit, that arbitrage is rent collection. See
http://delong.typepad.com/sdj/2006/03/wsj_interview_o.html#comment-1548438
5
and surrounding debate.

Apparently the following definition is from the Columbia
Encyclopedia, Sixth Edition (2001-2005):

"Rent 1. Economic rent: The premium that the owner of a resource
receives over and above its opportunity cost. 2. The payment to
the owner of land or other property in return for its use."

Neither definition covers Ricardo's use of "rent".

Clearly the second is equivalent to the vernacular usage and can be
ignored.

He gave a
technical definition, and this technical definition did not cover
the payment to the owner of a building for its use. And Ricardo
did not deal with "opportunity cost". The latter is a neoclassical
concept.

IMO it is a bogus concept. If we consider an epistemological parallel
between economics and meteorology, "opportunity cost" is equivalent to
what the picnic would have been like if it hadn't rained: nothing but
a guess. Of course, it also does some useful propaganda work:
creating, ex nihilo, a presumed risk-free return that society owes to
asset owners whether or not they contribute anything to production.

So the definition is deficient.

But it is not deficient merely because it does not match Ricardo's
definition. It is deficient because it obscures rather than
illuminating the underlying facts of objective reality.

But Stephen, do you know what the "marginal revenue product"
of a firm is? One has to learn such sorts of jargon to intelligently
critique mainstream economics.

But surely that is the point: the definition of "rent" was changed
precisely to eliminate a particular concept one needed in order to
make an intelligent critique of a particular part of mainstream
economics. No concept of rent, no critique. If you accept the
jargon, the critique is over before it begins. You might as well try
to critique intelligent design theories while lacking any concept of
differential reproductive success.

I don't find emoting about whether income is earned or unearned
at all convincing.

You see? You are not even able to conceive that one can think in
terms of whether a return is obtained in exchange for a contribution
to production or not. To you, such concepts do not even exist; so you
perceive their use by others as mere "emoting."

-- Roy L
.

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