As the FT notes this morning:
France's Socialist government has vowed to continue squeezing the rich, despite therejection of its controversial 75 per cent tax rate by the country's constitutional council.
Quite right too, with the explanation coming from Phillip Inman in the Guardian:
As Fred Harrison, research director of the London-based Land Research Trust, points out in his new book, The Traumatised Society, rent-seeking by a wealthy class of people hooked on accumulating even greater wealth is the cancer that has brought down many more civilisations than the present one.
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It should perhaps be pointed out to passers by that by ‘rent seekers’ you don’t mean avaricious landlords, rather those who seek to establish a recurring income from the misfortunes of others. Taking away independence from disabled people, granted to them at very low cost through the Independent Living Fund which the Coalition are scrapping, declaring them incapable of living independently and stuffing them into care homes where the standards of ‘care’ are increasingly unregulated and already in some cases demonstrably appalling – this at far, far greater cost to the taxpayer than simply leaving things as they were – might be described as a consequence of ‘rent seeking’ by Cameron’s business friends who are in the care home business. Rent seeking like that.
It should be noted that part of the care homes scandal was literally ‘rent-seeking’ activity. The Southern Cross business model, like so many other chains providing privatised care services, was to separate the property ownership from the management side and then charge the management company exorbitant rents.
Fred Harrison is a land economist and rent is about land (that given by nature, which is NOT capital). He was the only one who not only predicted the financial crisis but said when it would occur (see Boom Bust, House Prices Banking and the Depression of 2010 published in 2005).
I have read a few articles recently which detail actual French citizens leaving France due to the increased tax situation.
A few….
And they will come back
They almost always do
@Chas – A few – as Richard says – so the net loss to the economy is not great.
And they usually DO return – where else can they continue to carry out their rent-seeking activities, as they siphon off their unearned income from the tax-paying many? Where would Gerard Depardieu be without his fans, the 99%? Probably an obscure fishmonger in the French equivalent of Billingsgate.
If the plebeians all went on strike – as they did in Republican Rome, more than once, winning significant political changes (though ALWAYS less than what would have brought about REAL change – it took bloody civil war to achieve that, and NOT for the better!) – as I say, if the 99% went “on strike” by simply refusing to let their money be embezzled, you’d soon hear how the 1% would squeal, crying “insurrection”, and wheeling out their militias to whip the 99% back in line.
Our job is to occupy the intellectual barricades – this Blog is one such – stand shoulder to shoulder, and face these scoundrels in our kleptocratic Government and financial establishment down, before they steal everything built up for the common good, built by common endeavour, and belonging to us all.
So, all power to President Hollande, and lets hope we see something similar here in the UK – SOON.
Hi Richard, I found your reference to rent-seeking so intriguing that I checked definition of the term to see whether my understanding of it became outdated. Rent-seeking from what I see occurs when existing wealth is appropriated rather than created by given individual’s actions.
You claim all those subject to new French taxation (high-earners) are rent-seekers.
Let’s take Gerard Depardieu.
If Gerard does a movie project, and people enjoy it and want to pay good money to see it (and later buy dvds etc) surely new wealth was created? Can’t see rent seeking here.
Unless you claim that while new wealth was created, Gerard’s remuneration from this new wealth was inflated compared to other people contributing to the project. But if Gerard was replaced with one of those average-earners would the same amount of wealth be created? I don’t think so, so it’s his added value. Still no rent-seeking to me.
I don’t see anything rent-seeking-like about the French taxation at all, it’s just a primitive “tax the rich” scheme.
Depardieu makes all that by himself
And not off the back of others on the film?
Pull the other one
Well, if movie with Gerard makes 100m and movie without him (same other people) makes 1m, then yes, I would say it’s because of him.
Again, what does it have to do with rent-seeking? If I create new wealth with or without cooperation of other people I’m still a profit seeker.
Depardieu provides a classic example of one commanding economic rent, which is what this is all about. He ‘produces’ nothing extra how ever much he is paid for a performance.
Just obtaining economic rent is not rent-seeking.
Rent-seeking is “an attempt to obtain economic rent by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth”.
Depardieu in my understanding would be a rent-seeker if eg. he tried to close his profession to new comers (to improve his market position) or something similar.
Let’s stop this nonsense
Depardieu undertakes some labour, maybe a few weeks a most for a film. We can benchmark the rate for that: the fee due for performing at a theatre can provide that. Anything earned over and above must be for another reason.
That other reason is copyright: he makes an excess fee solely because the right to collect a fee many times over comes from the right granted and enforced by the state to collect a fee for many years.
Now that makes the vast majority of his fee a rent.
A state created and enforced rent as well, which he is refusing to pa for
Your economics is wrong
His morality is
Doesn’t a benchmark assume that his talent has many and equal substitutes? Easily interchangeable and the end product would be just as enjoyable for the consumers?
No – a benchmark means we can establish a day rate for even a great actor without the mp act of copyright by looking to he theatre
Completely sound economics
Are you suggesting copyright law is unfair?
Some is, undoubtedly
And it does allow rent seeking behaviour, certainly
The worst form of rent seeking is that of the banks – the interest and seniorage forgone by creating the money supply as debt is worth several billions per year. This has been fermented over the years by neoliberal governments by privatising council houses and deregulation. The Maastricht and Lisbon treaties have also been a way for banks to control the money supply by preventing governments from borrowing from central banks and running up deficits beyond 3%.
While governments give up any control of the money supply, the rent seeking of banks will be relentless and give the right wing politicians the perfect excuse for austerity. The burden of debt will act as a drag on the economy.
Until polititicians recognise governments right and duty to create debt free money at least in part – this rent seeking will cause cuts for the ninety nine percent.
As banks are the worst for using tax havens, the profit they make does not even get recycled for people to earn and repay debt. It gets spent in the casino banking arena or on the luxury lives of bankers. We need a government to be prepared to create debt free money, and spend it directly into the economy, and also have debt jubilees to clear the unpayable debt.
True. And bank loans are mostly backed up by land as collateral whose values have been massively inflated owing to the credit creation which banks have controlled. So, in effect, banks are the main landowners and the interest income is true rent.