Rent Seeking
- Brain: We must prepare for tomorrow night.
- Pinky: What are we doing tomorrow night?
- Brain: The same thing we do every night, Pinky—seeking out some rent!
I really enjoyed this.
My friends,
In the last week or two, I have heard frequently from you that the current financial mess has been caused by the failures of free markets and deregulation. I have heard from you that the lust after profits, any profits, that is central to free markets is at the core of our problems. And I have heard from you that only significant government intervention into financial markets can cure these problems, perhaps once and for all. I ask of you for the next few minutes to, in the words of Oliver Cromwell, consider that you may be mistaken. Consider that both the diagnosis and the cure might be equally mistaken.
Consider instead that the problems of this mess were caused by the very kinds of government regulation that you now propose. Consider instead that effects of the profit motive that you decry depend upon the incentives that institutions, regulations, and policies create, which in this case led profit-seekers to do great damage. Consider instead that the regulations that may have been the cause were supported by, as they have often been throughout US history, the very firms being regulated, mostly because they worked to said firms’ benefit, even as they screwed the rest of us. Consider all of this as you ask for more of the same in the name of fixing the problem. And finally, consider why you would ever imagine that those with wealth and power wouldn’t rig a new regulatory process in their favor.
—Steve Horwitz
The modern corporation is a legal entity chartered by the State. Corporations benefit from an arsenal of privileges, such as personhood and limited liability, which serve to set the rules of the market on terms favorable to corporate investors and managers. The trend has always been to correct any perceived problems with big business by large, top-down regulation, rather than to reexamine the quite blatant decisions made long ago about how to treat these entities.
For instance, it is conceivable that a firm could argue effectively in front of a judge for certain of the rights of being a human citizen on a case by case basis, but current established law mandates a clumsy legal equivalence between living human beings and abstract organizations of people and assets (which is historically dubious). The benefit to big business, of course, is to regularize and simply business legal proceedings, setting aside the legal advantages this gives corporations over individual humans. The ability to exercise first and fourth amendment rights as if the firm were a human being results in corporate campaign contributions and protection from random inspections, for instance – very different from the way those rights were intended to be invoked by the founders.
Obviously, limited liability is a fiat subsidy to corporate investors, the value of which is vast when one calculates the total capitalized value of the stock market, for instance. But the utility of the subsidy goes even further, because it allows investors to hire managers who have a legal mandate to pursue profits while maintaining a distance from the way profits are pursued. Highly capitalized firms, who by their sheer size wield far more potential for harm than any single individual, essentially obfuscate the way decisions are made so that if third parties to the stockholder-manager relationship are harmed, stockholders cannot lose more than their investment.
The imbalance of responsibility this enables cannot be underestimated, for it goes to the very heart of corporate economic behavior. What would be different about business, socioeconomics, and politics if stockholders knew that their managers’ activities would leave them fully liable for the actions of the corporation and could lose their savings, their car, their house? Limited liability and corporate personhood make possible a way of doing business in a far riskier way than normal people would.
In a free market, corporations would not be able to rely on the State for their very existence. Any ability they’d have to do business as an entity would come from the consent and cooperation of the market – customers, suppliers, contractors, service providers, banks, but most importantly management. Without an SEC and intrusive reporting requirements, oversight, and regulatory enforcement, it would be very hard to prevent the larger and more complex firms from being subjected to outright fraud in a variety of ways. The legal relationships that govern so much capital finance and business activity would become much more ad hoc and less predictable. Risk would skyrocket, which is a much more favorable environment for the small-time entrepreneur than the big, clumsy, bureaucratic corporation.
—Jeremy Weiland
It’s a good word. And frankly, I’m sick of people debating etymology for modern interpretations of words. Rather, they should understand meaning is determined by the decoder, not the encoder. So, just the simple—and obvious—statement that humans are hermeneuts, not etymologists, is key in comprehending how people function more as individual interpreters rather than historical interpreters.
Obviously words have socio-historical meanings. But in the grand scheme of things, people interpret and develop understandings within their socio-cultural environment.
Oh, here’s the post we’re discussing. I explained my understanding of 1) Anarchism, 2) Capitalism and 3) Corporatism.
This is a pretty dang good speech. I seriously recommend you all to read it.
I tried hard to be proud of my service; but all I could feel was shame. And racism could no longer mask the reality of the occupation. These were people; these were human beings.
I’ve since been plagued by guilt anytime I see an elderly man, like the one who couldn’t walk, who he rolled onto his stretcher and told the Iraqi police to take him away. I feel guilt anytime I see a mother with her children, like the one who cried hysterically and screamed that we are worse than Sadam as we forced her from her home. I feel guilt anytime I see a young girl, like the one I grabbed by the arm and dragged into the street.
We were told we were fighting terrorists; the real terrorist was me—and the real terrorism is this occupation.
Racism within the military has long been an important tool to justify the destruction and occupation of another country. It’s long been used to justify the killing, subjugation and torture of another people. Racism is a vital weapon employed by this government. It is [a] more important weapon than a rifle, a tank, a bomber or a battle ship. It’s more destructive than an artillery shell, or a bunker buster or a tomahawk missile. All those weapons are created and owned by this government. They are harmless without people willing to use them.
Those who send us to war do not have to pull a trigger or allow the mortar round. They do not have to fight the war; they merely have to sell the war. They need a public who’s willing to send their soldiers into harm’s way. They need soldiers who are willing to kill and be killed without question. They can spend millions on a single bomb; but that bomb only becomes a weapon when the ranks in the military are willing to follow orders to use it. They can send every last soldier anywhere on earth; but there would only be war if the soldiers are willing to fight.
And the ruling class, the billionaires who profit from human suffering, care only about expanding their wealth, controlling the world economy. Understand that their power lies only in their ability to convince us that war, oppression and exploitation is in our interest. They understand that their wealth is dependent on their ability to convince the working class to die to control the market of another country. And convincing us to kill and die is based on their ability to make us think that we are somehow superior.
Soldiers, sailors, marines, airmen have nothing to gain from this occupation. The vast majority of the people living in the U.S. have nothing to gain from this occupation. In fact, not only do we have nothing to gain, but we suffer more because of it. We lose limbs, endure trauma, and give our lives. Our families have to watch flag-draped coffins lowered into the earth.
Millions in this country without healthcare, jobs, or access to education, must watch this government squander over 450 million dollars a day on this occupation. Poor and working people in this country are sent to kill poor and working people in another countries, to make the rich richer. And without racism, soldiers would realize that they have more in common with the Iraqi people than they do with the billionaires who send us to war.
I threw families onto the street in Iraq only to come home and find families thrown onto the street in this country. And it’s tragic and unnecessary for a closure crisis. I mean: to wake up and realize that our real enemies are not in some distant land. … They’re not people whose names we don’t know and cultures we don’t understand. The enemy is people we know very well and people we can identify. The enemy is a system that wages war when it’s profitable. The enemy is the CEOs who weigh us off from our jobs when it’s profitable. It’s the insurance companies who deny us healthcare when it’s profitable. It’s the banks who take away our homes when it’s profitable.
Our enemy is not 5,000 miles away; they are right here at home. And if we organize and fight with our sisters and brothers, we can stop this war, we can stop this government, and we can create a better world.
—Mike Prysner
I don’t agree with it in its entirety; wait … yes, I pretty much do. If you have any questions concerning the reasons why, feel free to ask.
Individualism, and its economic corollary, laissez-faire liberalism, has not always taken on a conservative hue, has not always functioned, as it often does today, as an apologist for the status quo. On the contrary, the revolution of modern times was originally, and continued for a long time to be, laissez-faire individualist. Its purpose was to free the individual person from the restrictions and the shackles, the encrusted caste privileges and exploitative wars, of the feudal and mercantilist orders, of the Tory ancien régime.
Tom Paine, Thomas Jefferson, the militants in the American Revolution, the Jacksonian movement, Emerson and Thoreau, William Lloyd Garrison and the radical abolitionists — all were basically laissez-faire individualists who carried on the age-old battle for liberty and against all forms of State privilege. And so were the French revolutionaries — not only the Girondins, but even the much-abused Jacobins, who were obliged to defend the Revolution against the massed crowned heads of Europe. All were roughly in the same camp. The individualist heritage, indeed, goes back to the first modern radicals of the 17th century — to the Levellers in England, and to Roger Williams and Anne Hutchinson in the American colonies.
For imperial powers, every war is supposed to be the geopolitical equivalent of a homecoming game: The opponents are carefully selected to guarantee that the “good guys” not only win, but run up the score and pad their individual statistics.
The biggest difference, of course, is that such “homecoming games” are always fought on the other country’s home turf. But the point, as Captain Blackadder acknowledged just before going “over the top” to be pitilessly cut apart by German machine guns, is that imperial warfare is a lot of fun until the Empire’s soldiers are thrown into combat against people who know how to fight back.
Barely a century passed between America’s War of Independence and the emergence of an imperial ruling caste in Washington. Even before the 1890 Massacre at Wounded Knee (for which twenty soldiers were awarded Medals of Honor for gallantry of the type displayed by Captain Blackadder’s African regiment) heralded the fulfillment of Manifest Destiny, powerful and ambitious figures were seeking to build an overseas American Empire.
One of the first lands to fall beneath this esurient gaze was the Kingdom of Hawaii, which was already under the rule of a corporatist sugar plantation clique. In 1887, that clique, with the full support of Washington, blessed the Islands with a constitution that thoughtfully removed from the native Hawaiians the burden of self-government.
—William Grigg
Glenn Greenwald dug through wikileaks to discover that Ghadafi has been demanding ever tougher terms from U.S. oil companies, threatening their investments and annoying U.S. officials, and that this happened prior to U.S. intervention. That’s why Obama went into Libya but ignores all other oppression in the region. And so he concludes: “The very idea that the U.S. Government woke up one day and suddenly decided that it can no longer abide a leader who mistreats his own people — and that’s why we went to Libya — is so ludicrous that it’s actually painful to hear that people believe that.”
It is for reasons such as this that Marxists tend to regard the government and its foreign policy not as something separate and distinct from the private sector but merely an extension of it: corporatism with a fist. This is reckless theory (big business seeks favors and government seeks money and power, and thus does the codependency between them develop) but it is not entirely crazy. In some ways, the Marxists make more sense that the civics textbooks.
Can we be a little more accurate with this?
Sure, Republicans may use that rhetoric more. But the family shown is a reflection on the policies driven bipartisanly. The Bailouts were not a Republican thing. The Bailouts were not a Democrat thing. The Bailouts were a “my buddies on Wall Street want some more money” thing.
So, whether or not Republicans say that is insignificant in the fact that the representation is of the actions of both Republican and Democratic Corporatists (Mainstream Capitalists).
(via fuckyeahradicalcartoons)
Corporatism Caused Poverty for Blacks in the South
I just didn’t see how the Negroes in Madison County could be so badly off. They should have had everything going for them—out-numbering the whites three to one and owning just about as much land as they did. When I discussed this point with Mrs. Chinn, I discovered that, although they did own the land, they were allowed to farm only so much of it. Cotton is the main crop in Mississippi, and, as Mrs. Chinn explained that night, the federal government controls cotton by giving each state a certain allotment. Each state decides how much each county gets and each county distributes the allotments to the farmers. “It always ends up with the white people getting most of the allotments,” Mrs. Chinn said. “The Negroes aren’t able to get more, regardless of how much land they have.” Most of the farmers in Madison County were barely living off what they made from their land. Besides, they were never clear from debt. The independent farmers were practically like sharecroppers, because they always had their crop pledged in advance. The more I thought about it, the more it seemed that the federal government was directly or indirectly responsible for most of the segregation, discrimination, and poverty in the South.
-Anne Moody, Coming of Age in Mississippi
(Source: stfucorporatists)
Reblog forever.
“Fight of the Century” Lyrics.
Written by John Papola and Russ Roberts
KEYNES
Here we are… peace out! great recession
thanks to me, as you see, we’re not in a depression
Recovery, destiny if you follow my lesson
Lord Keynes, here I come, line up for the processionHAYEK
We brought out the shovels but we’re still in a ditch…
And still digging. don’t you think that it’s time for a switch…
From that hair of the dog. Friend, the party is over.
The long run is here. It’s time to get sober!KEYNES
Are you kidding? my cure works perfectly fine…
have a look, the great recession ended back in ’09.
Surely, I deserve credit. Things would have been worse
All the estimates prove it—I’ll quote chapter and verseHAYEK
Econometricians, they’re ever so pious
Are they doing real science or confirming their bias?
Their “Keynesian” models are tidy and neat
But that top down approach is a fatal conceitREFRAIN
Which way should we choose?
more bottom up or more top down
…the fight continues…
Keynes and Hayek’s second roundit’s time to weigh in…
more from the top or from the ground
…lets listen to the greats
Keynes and Hayek throwing downKEYNES
we could have done better, had we only spent more
Too bad that only happens when there’s a World War
You can carp all you want about stats and regression
Do you deny World War II cut short the Depression?HAYEK
Wow. One data point and you’re jumping for joy
the Last time I checked, wars only destroy
There was no multiplier, consumption just shrank
As we used scarce resources for every new tankPretty perverse to call that prosperity
Rationed meat, Rationed butter… a life of austerity
When that war spending ended your friends cried disaster
yet the economy thrived and grew ever fasterKEYNES
You too only see what you want to see
The spending on war clearly goosed GDP
Unemployment was over, almost down to zero
That’s why I’m the master, that’s why I’m the heroHAYEK
Creating employment’s a straigtforward craft
When the nation’s at war, and there’s a draft
If every worker was staffed in the army and fleet
We’d be at full employment with nothing to eatREFRAIN
HAYEK
jobs are the means, not the ends in themselves
people work to live better, to put food on the shelves
real growth means production of what people demand
That’s entrepreneurship not your central planKEYNES
My solution is simple and easy to handle..
its spending that matters, why’s that such a scandal?
The money sloshes through the pipes and the sluices
revitalizing the economy’s juicesit’s just like an engine that’s stalled and gone dark
To bring it to life, we need a quick spark
Spending’s the life blood that gets the flow going
Where it goes doesn’t matter, just get spending flowingHAYEK
You see slack in some sectors as a “general glut”
But some sectors are healthy, and some in a rut
So spending’s not free – that’s the heart of the matter
too much is wasted as cronies get fatter.The economy’s not a car, there’s no engine to stall
no expert can fix it, there’s no “it” at all.
The economy’s us, we don’t need a mechanic
Put away the wrenches, the economy’s organicREFRAIN
KEYNES
so what would you do to help those unemployed?
this is the question you seem to avoid
when we’re in a mess, would you just have us wait?
Doing nothing until markets equil-i-brate?HAYEK
I don’t want to do nothing, there’s plenty to do
The question I ponder is who plans for who?
Do I plan for myself or leave it to you?
I want plans by the many and not by the few.We shouldn’t repeat what created our troubles
I want real growth not just a series of bubbles
Let’s stop bailing out losers and let prices work
If we don’t try to steer them they won’t go berserkKEYNES
Come on, Are you kidding? Don’t Wall Street’s gyrations
Challenge your world view of self-regulation?
Even you must admit that the lesson we’ve learned
Is more oversight’s needed or else we’ll get burnedHAYEK
Oversight? The government’s long been in bed
With the Wall Street execs and the firms that they’ve led
Prosperity’s all about profit and loss
When you bail out the losers there’s no end to the costthe lesson I’ve learned? It’s how little we know,
the world is complex, not some circular flow
the economy’s not a class you can master in college
to think otherwise is the pretense of knowledgeREFRAIN
KEYNES
You get on your high horse and you’re off to the races
I look at the world on a case by case basis
When people are suffering I roll up my sleeves
And do what I can to cure our diseaseThe future’s uncertain, our outlooks are frail
Thats why free markets are so prone to fail
In a volatile world we need more discretion
So state intervention can counter depressionHAYEK
People aren’t chessmen you can move on a board
at your whim–their dreams and desires ignored
With political incentives, discretion’s a joke
Those dials you’re twisting… are just mirrors and smokewe need stable rules and real market prices
so prosperity emerges and cuts short the crisis
give us a chance so we can discover
the most valuable ways to serve one anotherREFRAIN
Which way should we choose?
more bottom up or more top down
the fight continues…
Keynes and Hayek’s second roundit’s time to weigh in…
more from the top or from ground
…lets listen to the greats
Keynes and Hayek throwing down
(Source: baseballlibertarian)
State vs. State Hate
To whom it may concern,
The dangers of monopolization was really the crux of my argument. Democracy is deathly inefficient, but it’s far more accessible than the free market is. If it wasn’t expensive to build sewers, water mains, electricity grids and armies then I’d be 100% behind you. But right now it’s just too darn expensive. That’s not to say don’t privatise as much as possible. Just have the state reserve ultimate power.
Perhaps if humans lived a few hundred years, ultra long term investment would be personally incentivising and becoming an bad monopolist would be less attractive? Until that day comes I firmly believe that without the state the same power structures would continue to exist. They’d just be beholden to the highest bidder instead of the election process. I mean holy shit, aren’t they already?
That is why in my mind, it’s just too risky to give up the opportunity of a free vote every n years to select a new boss. Somebody needs the power to seize control of abusive institutions on behalf of the people.
A state whose constitution respects private contracts, gives citizens the right to bear arms and prohibits lobbying would be a good state. The state should be a freely elected fail safe army.
Simply put, let the free market do everything else and keep the state as a nuclear deterrent.
But you see, you’re still using evidence of corporatism’s failures as a condemnation of capitalism as a whole. I predict that you’ll say that one leads to the other, but I vehemently disagree because the fact remains that corporatism can never come about without the political institutions that allow corporations and lobbyists to wield their enormous power over the rest of society. If Congress had no power over the economy to speak of, then corporatism as we know it would not exist, as there would be nowhere from which politicians would derive their power to give special privileges to some, create barriers to entry, create regulations (that benefit the few at the expense of the many), raise taxes to give free shit to their political friends, bail out failing corporations, and the many, many other market distortions that are created in our corporatist (not free market capitalist) system.
If you have a problem with monopolies, then that’s even more of a reason for you to fight against corporatism. The worst kind of monopoly is the state-sanctioned monopoly. And the worst kind of monopolist is the one who lobbies politicians to give him monopoly power and then raises prices to enrich himself and those same politicians who are protecting him. And that what we have in the United States. We don’t have a free market, and we never have.
As for your argument for democracy, democracy sucks. You know democracy sucks. And electing a new asshole ever 4 years hasn’t worked very well for us so far, so I don’t understand where you get off thinking that you can “seize control of abusive institutions on behalf of the people.” When have you ever been able to do that? It doesn’t matter who’s in power, they all end up being the same. That should be pretty obvious by now, with Mr. Nobel Peace Prize and his 3 aggressive wars. Or with Mr. “Compassionate Conservative” and all his spending cuts. Or with Congress and all the change they promise every 2-6 years. Does anything ever change? Well, yes. What changes is that they give themselves more power over our lives, and they frivolously spend more and more of our money. But nothing else changes.
The fact is that power corrupts, and it doesn’t matter much whether a politician has an (R) or a (D) because at the end of the day, they will make the same choices, and those choices will benefit themselves first, and their friends second, and their constituents never. And voters will keep voting for the same assholes because they lack the incentive to educate themselves, and they wouldn’t have the resources to do anything about it even if they did. And bureaucrats will keep doing their thing because that’s what’s in their best interest to do. And corporations will keep lobbying for more power and privileges so long as there are power and privileges to be gotten because that’s what any rational person would do. And politicians will accept their money because that’s what any rational (rational, but not necessarily moral or ethical) person would do. And that’s how America works. And that’s essentially Public Choice Theory for you. And that’s what we will always have in this country so long as the state has the authority to make it happen.
"After the Food and Drug Administration granted KV Pharmaceuticals sole rights to produce progesterone, a drug that prevents premature births in mothers, the company has begun charging $1,500 per dose of a drug that formerly cost $10."
—
Price Of Premature Birth-Preventing Drug Goes From $10 To $1,500 Per Dose - The Consumerist (via robot-heart-politics)
but guys the FDA keeps us safe, they protect us from ~*~*EvIl*~*~ corporations
(via logicallypositive)
(via man-hastam)
"[W]hen [the law] has exceeded its proper functions, it has not done so merely in some inconsequential and debatable matters. The law has gone further than this; it has acted in direct opposition to its own purpose. The law has been used to destroy its own objective: It has been applied to annihilating the justice that it was supposed to maintain; to limiting and destroying rights which its real purpose was to respect. The law has placed the collective force at the disposal of the unscrupulous who wish, without risk, to exploit the person, liberty, and property of others. It has converted plunder into a right, in order to protect plunder. And it has converted lawful defense into a crime, in order to punish lawful defense.
How has this perversion of the law been accomplished? And what have been the results?
The law has been perverted by the influence of two entirely different causes: stupid greed and false philanthropy."
How has this perversion of the law been accomplished? And what have been the results?
The law has been perverted by the influence of two entirely different causes: stupid greed and false philanthropy."
— Frederic Bastiat, speaking on corporatism and forced-redistribution in his 1800’s writing, The Law
