Entries Tagged 'Economics and Investing' ↓

Rent seeking is the petitioning of governments for special privileges or monopolies that are made possible by governments’ power to coerce citizens to do things, e.g., pay money or obey laws. The purpose of rent-seeking is to gain a higher income.

Why isn’t rent-seeking called “profit” seeking?

Some say rent-seeking should be called profit-seeking. It is income-seeking via government privileges, but rents and profits are different kinds of income. Successful rent-seekers  gain “economic rents“.

If this is too technical, you could focus on the “privileges” government gives rent seekers. Special privileges containing words like “rights” or “incentives” or “subsidies” that governments grant political income-seekers are usually of a finite duration – one can only lease or rent them.

An example of rent-seeking

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This week fast food workers in New York City are demanding a raise to their minimum wage of $7.50 an hour. Why are American workers’ wages so low, and why aren’t American companies paying higher wages?

Bill Clinton opened up the “third world” to American investment and trade. This brought in new customers abroad for American goods. It also created a pool of foreign workers for US multi-national companies. Foreign consumers and workers are making Amercian corporations wealthy, so wealthy they don’t know what to do with all that “junk in their trunk”.

George Bush Jr. took up the challenge offered by Bill Clinton. Bush clumsily attempted to open up the Middle East to American economic expansion. Barack Obama and his former Secretary of State, Hillary Clinton followed more delicately in Bush’s footsteps. Sooner or later,  the “democratization” of the Middle East will make US corporations even richer.

But what about US, the American people?

A new survey says “Eighty Percent of U.S. Adults Face Near-Poverty…” We hear constantly how wages in the US have steadily declined over the past three decades. Headlines also show that US corporations increasingly use bankruptcy as a means to shrug off their contractual pledge to provide employee pensions. Now cities are doing the same, and some states in the US are on a similar path.

Working Americans face a crisis. We can accept the inevitability of the new cheap-global-world-labor force or get creative. I suggest we get more creative. Continue reading →

The discussion of the Trayvon Martin case, oops, I meant to say the George Zimmerman case, is currently focusing on the jurors. I can’t help but think it should focus on the judge, attorneys, and witnesses. This is where the real racism, sexism, homophobism and injustice really lies.

This case, a case branded from the start as chiefly about the victim rather than the defendant charged with committing a crime, hit me really hard for a couple of reasons.

One reason is that I’ve lived in the South. Continue reading →