The Rent’s Still Too Damn High — Here’s How to Lower It, by Kevin Carson


http://c4ss.org/?p=5808

I frequently argue that, far from being the result of the “free market,” the recent speculative bubble was the result of over a century’s worth of government intervention. The bubble resulted from vast disparities of wealth — disparities of wealth created by the state and its enforcement of privilege — with a growing share of income going to classes looking to use it for investment rather than consumption.

Someone recently challenged me to describe exactly what government interventions I’d eliminate to remedy this situation, and exactly what effect I’d expect them to have. So here, without further ado, is my free market agenda for macroeconomic stability.

I’d eliminate all patents and copyrights. This would eliminate the portion of the price of manufactured goods which consists of embedded rents on artificial property rights. It would also eliminate the legal barriers to full-fledged competiton from modular product designs for ease of repair and reuse, which currently make planned obsolescence artificially profitable.

I’d eliiminate all legal barriers to the competitive supply of secured credit (i.e., no minimum capitalization requirments as a condition for licensing a bank that only lends money against the property of its members), all legal tender laws that limit the use of LETS systems, and all banking laws that either limit LETS systems from advancing credit against the future labor of their members, or limit practices like Tom Greco’s credit clearing systems which allow members to run account deficits.

I’d cease to enforce all absentee title to vacant and unimproved land, which would result in market competition driving out a major part of current land rents and mortgages.

I’d fund all long-distance transportation with user fees, and make the heavy trucks pay 100% of the cost of the roadbed damage they cause. This would have a huge indirect effect toward making the centralized “warehouses on wheels” model less profitable, and promoting a decentralized, relatively low-capital, demand-pull model based on lean production, without the imperative of artificially inflating demand to fully utilize the capacity of expensive specialized machines.

I’d eliminate zoning laws which impose enormous costs on small producers by making it illegal to run microenterprises out of their homes, and force them to be able to engage in large batch production to amortize the costs of stand-alone commercial real estate if they want to be in business at all. Ditto for all “health” and “safety” codes whose main effect is to mandate outlays for industrial-sized equipment if they want to be in business at all. There would be a lot more home-based microbakers, microbrewers, home-based daycare and assisted living, unlicensed cabs with just a car and cell phone, and clothing makers, all with next to zero overhead to service because they use spare capacity of capital goods most people already own.

And I’d eliminate “safety” codes whose main effect is to outlaw vernacular building techniques and give professional contractors with high-overhead and high-capital techniques a monopoly on the creation of housing.

The effect of the last two planks would be to radically increase the share of total consumption needs that could be met through low-overhead production in the home, or by trading with others engaged in such production, and to reduce the total amount of wage labor required to meet one’s needs.

The effect of all the previous ones would be to lower the total real cost of obtaining stuff that had to be obtained through the cash nexus, and hence of the total labor time required to earn the money to pay for them.

The overall effect would be a significant shift of labor time at the margins from wage labor to labor in the informal and household sectors. There would be more part-time workers, more households with only one full-time wage worker where there are now two or more, and more early retirees. And there would be more people who could afford to ride out periods of employment while waiting for a job offer more to their liking, rather than desperately grabbing onto the first offer that came their way.

Taken all together, that would mean reduced demand for hours at wage labor compared to the available supply. There would be relatively fewer workers competing for jobs, and more jobs competing for workers.

There would be reduced rents on large concentrations of accumulated property, and increased bargaining power of labor. Macroeconomically, this would mean a smaller share of national income going to super-rich rentier classes with a high propensity to save, and a larger share going as a direct reward to labor. A much larger part of GDP would be spent by the producers buying back their product, rather than to coupon-clippers seeking profitable outlets through Ponzi schemes in the FIRE economy.

Ta-daaa! There you have it: A free market agenda for economic stability.

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14 responses to “The Rent’s Still Too Damn High — Here’s How to Lower It, by Kevin Carson

  1. chris southern

    On the issue of copywright and patents, patents create manopolies as such I agree that they should be abolished. Copywright on the other hand forces creativity without creating a manoploy.

    Take for instance razor blades, the designs are patented, as such you can not market a product that sharpens the blades as that classes as “modifying” the patented product! With copywright only you could produce such an item but you could not directly copy the same product without enough changes to make it different.

    In a few inustries no copywright would literaly destroy smaller companies due to people not needing to develop their own ideas (how would you stand a chance of stopping recasters?)

    It is patents that are the problem (goverment granted manopolies) in my opinion.

  2. That’s a fair list, but to some extent you are nibbling at symptoms.

    The key is to scrap all taxes on incomes and replace them with taxes on the value of state-protected monopoly rights, be that patents, copyrights or land titles (whether occupied or unoccupied), setting the tax so that their values sinks close to zero.

    To the extent that the revenues exceed the cost of the ‘core functions of the state’ (which to be frank is barely 5% of GDP), you dish out the surplus as a Citizen’s Dividend, job done.

    PS, lorries and cars more than pay for the value of the roads they ‘consume’, it’s called ‘fuel duty’, that being one of the few ‘good taxes’ which we have in the UK.

  3. “Copyright” not “Copywright.”

    Tony

  4. chris southern

    Tony Hollick | 14 January, 2011 at 10:58 pm | “Copyright” not “Copywright.”

    Tony

    Thanks for the correction Tony :)

  5. [ FX: Pedant Spill Chucker Mode OFF ]

    Grins

    Tony

  6. Chris Southern; indeed. The issues regarding patents and copyrights are very different. The arguments tend to go round in circles though. Art thieves tend to label copyrights as “artificial” property rights, as Carson does here, while ignoring the fact that all property rights are “artificial”; that is, inventions of the human mind and agreed by society. It’s a fallacious argument. To call a person selling a novel a rentier is extremely perverse.

  7. Graham Davies

    I don’t think any IP laws are justified at all. Ideas do not need to be rationed in the way that personal and real property does, because their possession by one person does not deprive others of their use. IP laws result in a state enforced monopoly when the chief benefit of thinking up ideas should be that as the originator of something new, you get to have a crack at the market first.

  8. chris southern

    With respect Graham, without copyright laws their is no real financial insentive to be creative. If you only copy then you have not had to spend time and resources needed to create something new.

    If you spend time and resources to create a service or product and I copy said service/product I can then undercut you with ease as I do not have to pay for the initial outlay of time and/or resources.
    Who does that benefit? In the long run it does not benefit the people as a whole as less and less people will be prepared to create.

  9. Chris, that’s perfectly logical and I wouldn’t take issue with it. I think you’re approaching this from a more pragmatic standpoint, whereas I’m more interested in it’s conceptual basis. The fundamental justification for property rights is that property is finite – ideas are not and so cannot be justly regarded as property by this reasoning.

    However, merely stating that is of little use if, as you say, IP laws benefit society. The problem with them though is that while they reward those with the means to make practical use of their ideas, they do this by preventing others from refining and improving them. They at once reduce the possibility of refinement of products and ideas by blocking out competitors and have the ultimate effect of driving wealth and privilege into the hands of the wealthy and privileged, which has further deleterious political and economic effects. And of course, all this protectionism has an enormous cost in time and money. So I do agree that without IP laws there would be less, but certainly not no, incentive for individuals/companies to put large investments in research and innovation, I would not be so sure that they are on balance a good thing.

  10. Graham Davies, you state that ‘The fundamental justification for property rights is that property is finite – ideas are not and so cannot be justly regarded as property by this reasoning.’

    I think you are missing an important point, property is also the fruit of someones work. They have created it, therefore they have a moral entitlement to it. I cultivate an apple or make a chair or craft a pot, i own those items because they are the fruit of my work.

    The exact same principle is applicable to intellectual property. I labour at creating an idea, invention, novel, it is the result of my efforts, therefore it is my property. I have a moral right to it.

    That is not a ‘pragmatic’ argument, it is a conceptual, fundamental and moral argument.

  11. CH, I entirely agree with your last post. I would add tho that there is also a very straightforward “pragmatic” argument for IP. That is that you cannot have a market without property rights and we know from all the collectivist experiments that you cannot have production without a market. There are two elements to the “tragedy of the commons”; the first is that the commoners will exhaust the commons because everything is “free”- not a problem with infinite property like IP. But the second aspect is that without property rigths, nobody will cultivate the commons in the first place because anything they grow is immediately taken by free riders.

    Anti-IP zealots always try to only focus on half the economic position “it’s infinite so it shouldn’t cost anything”. They deliberately ignore the capital costs. Anyway, that’s the pragmatic argument: no rights=no market=no production. You get unlimited redisribution of… nothing at all.

  12. I quite agree that there are solid pragmatic grounds for accepting IP, however, Graham Davies had particularly stated that he thought that there were no ‘conceptual’ grounds, only pragmatic grounds for IP so i decided to address that in particular.

    I also note that almost all of Graham Davies ‘pragmatic’ arguments against IP could be made against all property rights. Any property ownership means that others will not have

    ‘means to make practical use of them’

    ”they do this by preventing others from refining and improving them”

    ”They at once reduce the possibility of refinement of products and ideas by blocking out competitors”

    All these arguments can be equally applied to ownership of physical property just as much as intellectual property.

  13. I have a personal interest in the strict enforcement of the copyright laws. However, I do not believe they could exist without a state. I have never seen a credible argument to the contrary. Any comments from the anarchist community on this Blog?

  14. No laws or rights can exist without some kind of hegemonic state-like entity that enforces a common ruleset. Without one, you can have insurance of various types, or in practical terms gangsta style protection, but no rights or laws.[1]

    That’s why I’m increasingly drawn to a “microstates” idea as a way of organising the emerging global polity.

    [1] The essential problem with any “anarchist” system is it immediately decays like a subatomic particle into something else; most likely (from historical precedent) a society based on “you f*cked my sister Luigi? I f*cking kill you you motherf*cker!”, which would only be cool if you’re a particular fan of Martin Scorsese movies.