Comparing economic rent and common sense rent

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Comparing economic rent and common sense rent

• Colloquial subversion in the neo-classical age

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Excludability Economic inference in language

• Tacit in language yet its intent overtly
  exercised through economics, how rent is
  understood and applied is a narrative that
  illustrates not only schooling in comparison to
  education but offers some degree of insight
  into ones socio-economic situation
• We offer you some perspectives on the phenomenon
  of rent

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The Invisible Hand is not a fist

• Rent The income accruing to the owner for the
  services of a durable good such as a piece of
  land, property or a computer. (1)
• Rent-seeking behavior Firms or individuals
  influencing government policy to increase their
  own welfare. (1)
• ? Rent aka differential rent or in the case or
  NR, scarcity rent, is equivalent to producer
  surplus and is defined as payment over and above
  the minimum necessary supply price. (2)
• Necessary in terms of a common, normative
  value is an ethic, or at the very least a moral
  judgment, to which market demand, whatever the
  market can bear and all market equations would
  adhere to. Ecology becomes the new gold
  standard of accountability as apposed to fiat
  financing.

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What is economic rent?

• the difference between what enables economic
  activity to occur, which is known as factors of
  production (usually an individual or single
  corporation), is paid and how much it would cost
  (or need to be paid) to keep that factor in use.
• Examples

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Ricardian Rentand Differential Rent

• SAME THING as Economic Rent!
• payment of any such a 'surplus' to a factor
  of production over and above what was necessary
  to maintain that factor in its present use or
  form of production, above its opportunity cost.
• - Marc Blaug

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Francois Quesnay (1694-1774)Physiocratic Rent

• Physiocrats (Les Economistes) First organized
  group of economists
• Rule of Nature, Ideas developed (1756 1763)
• Surgeon and Physician
• Class assumptions developed from his observations
  of agriculture
• Rise of a new class (Agricultural Entrepreneur).
  Crucial distinction between share-cropper and
  this groupaccess to capital (3)

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Francois QuesnayAvances as Rent ?

• Quesnay's system of political economy was summed
  up in Tableau économique (1758), which diagrammed
  the relationship between the different economic
  classes and sectors of society and the flow of
  payments between them. In his Tableau Quesnay
  developed the notion of economic equilibrium, a
  concept frequently used as a point of departure
  for subsequent economic analysis. Of explicit
  importance was his identification of capital as
  avancesthat is, as a stock of wealth that had to
  be accumulated in advance of production. His
  classification of these avances distinguished
  between fixed and circulating capital. (4)

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David Ricardo (1772-1823)

• owners of high quality land would be able to
  extract the differential gain, or rent, from
  using higher instead of lower quality land by
  simply sitting back and letting the farmers bid
  amongst each other for the higher quality land.
  Competition would make every farmer's profits
  identical the productivity differential,
  however, would remain and accrue to the holders
  of higher than marginal quality lands.
• -Humberto Barreto
• A contemporary example

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Thomas Paine (1773- 1809)Quit-rent

• Should affairs be patched up with Britain, and
  she to remain the governing and sovereign power
  of America, (which as matters are now
  circumstanced, is giving up the point entirely)
  we shall deprive ourselves of the very means of
  sinking the debt we have or may contract. The
  value of the back lands which some of the
  provinces are clandestinely deprived of, by the
  unjust extension of the limits of Canada, valued
  only at five pounds sterling per hundred acres,
  amount to upwards of twenty-five millions,
  Pennsylvania currency and the quit-rents at one
  penny sterling per acre, to two millions yearly.
• It is by the sale of those lands that the debt
  may be sunk, without burden to any, and the
  quit-rent reserved thereon, will always lessen,
  and in time, will wholly support the yearly
  expense of government. It matters not how long
  the debt is in paying, so that the lands when
  sold be applied to the discharge of it, and for
  the execution of which, the Congress for the time
  being, will be the continental trustees. (5)

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Enclosures Paine-in-the-Ass

• There are two kinds of property Natural,
  Artificial invention of man
• The former is a birthright, the latter impossible
  to be equal
• Since birthrights were diminished by enclosure
  there ought to be indemnification for that loss
• Proposed a national fund for the loss of his
  or her inheritance (6)

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John Stuart Mill (1806 -1873)Keeping Ricardo
Alive Beyond

• Principles of Political Economy (1848 1st ed.)
  To retain Ricardian framework (in an attempt to
  update A Wealth of Nations) yet take into account
  the many points made by critics
• Distinction between laws of production Based in
  physical world) and laws of distribution (human
  institutions)
• Production of wealth depended on factors beyond
  human control (7)

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Henry George (1839 1897)Rent

• The man who cultivates the soil for himself
  receives his wages in its produce, just as if he
  uses his own capital and owns his own land, he
  may receive interest and rent the hunters wages
  are the game he kills the fishermans wages are
  the fish he takes. (8)

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Bibliography

• Intermediate Microeconomics and its applications,
  8th ed. Walter Nicholson
• Ecological Economics Principles and Applications,
  1st. ed. Herman Daly, Joshua Farley
• Ordinary Business of Life History of Economics,
  Roger Backhouse
• Encyclopedia Britannica On-Line
• Capitalism 3.0 A guide to Reclaiming the Commons,
  Peter Barnes
• Common Sense, Appendix, Thomas Paine
• Ordinary Business of Life History of Economics,
  Roger Backhouse
• Progress and Poverty, Book 1, Chapter 2 The
  meaning of terms, Henry George