Economists have their own definition of "Rents". The best definition of economic "Rents" was giving to me by my economics mentor: "Rent" is the difference between actual price and what the price would be in a perfectly competitive market. Capitalism's ideal economic environment is one where Rents, in general, tend toward zero.* Thus modern capitalist countries enact statutes aimed at preventing monopolies that would reduce competition. How well these laws are enforced has varied under different administrations and has been influenced by various Supreme Court decisions. It's ironic that Capitalism flourishes best in an environment of low Rents and yet there can be no question that we Capitalists' seek to maximize Rents. Are Capitalists therefore among the worst enemies of Capitalism? ______________ *There are occasional exceptions where higher rents might result in a socially desirable outcome.
I think the issue historically was that capitalism produced fewer & fewer winners and that concentrated wealth among very few who curried favor with politicians to create a plutocracy of sorts. Standard Oil, AT&T, TBTF global Banks & now big tech monopolies. Then there is the issue of feel good regulations by politicians which just lead to more concentration of wealth via the regulatory capture which favors only large companies. I think this what increases economic rents. Ironically you need a strong regulatory arm of government but you also need more competitors in an industry which isn't easy to achieve. I think of the banking system with all its myriad of regulations which ultimately created only a few concentrated global banks because of regulatory capture. If the Clinton administration hadn't got rid of Glass-Steagall it might have turned out better but the momentum was towards free markets as Greenspan's ethos prevailed in the end.
The social purpose of capitalism is to harness human creative energy to most efficiently satisfy material wants. It’s a tool, not a religion. Nobody wants to work their ass off to survive in a brutally cutthroat marketplace even though this produces optimal outcomes, from a consumer and efficiency standpoint. Government regulation is therefore needed to prevent rent-seeking… which can be tough since government is maybe the biggest rent-seeker of all, limited only by how much the tax cows will bear.
It all comes down to supply and demand. Either increase the supply or kill the demand, and the price will automatically come down. Currently, there are too many companies concentrated in one area (eg. Silicon valley) with too many corporate ownership of rental properties. Who's the first?
I think the flaw in your thinking is called "Recency bias". what happened recently has always happened, and somewhat predictably. But that is not the historical case at all. The principals (e.g. JD Rock) had NO idea what a mature crude oil market looked like.Indeed guys like JD Rock were just trying to hold on. the biggest injustice that JD suffered were the accusations of price fixing of the shipping rates. His freight was between 1/4 and 1/2 of the average train. So he reasoned that he deserved a discount. Very reasonable today. Always a discount for multiple boxes.'Just ask UPS. But JD Rock was the beginning of the Industrial Revolution. So who knew? There were no rules.