Comment on the Article

"Time to Resurrect an Old Idea: Economic Rent," by Dustin

Edward J. Dodson

[Reprinted from the blog "Our Dime", October, 2011]

Tragically, what economists-in-training at most colleges and universities are taught is that "economic rent" is a return to any economic factor above the average return for that factor. In their theoretical construct, there is no distinction made between income that is earned by producing goods or providing services and income received by purely speculative activities, publicly-provided subsidies or long-standing entrenched privileges under law and taxation.

As a former market analyst in the financial services sector I worked with many corporate and other economists. They almost always had no clear understanding of the underlying economics of credit-fueled property markets or the implications of how the taxation of different categories of income flows or assets affected investment decisions and distributional outcomes. I should add that neither did the vast majority of the business professionals in our industry.

There is a real need for establishment of an econometric research organization with analysts on staff who have a full understanding of how markets are affected by socio-political arrangements and institutions. At present there are a few scattered individuals and organizations around the globe committed to this type of analyis and to promotion of sound public policies based on objective finding rather than on ideological bias. But, they have very limited influence.

What is also true is that in much of the world today the accepted path to individual wealth and corporate profit includes the quest for monopolistic control over nature, of which speculation in land -- whether agricultural, mineral-laden, the broadcast spectrum, or city and town lots -- is a significant component. For those of us committed to justice in the world, the challenge is as much a conflict of morality as it is a conflict of law.