Rent-seeking

The Devil’s Advocate™ →Go uptown In which the curmudgeonly old sod puts the world to rights. Index — Click ᐅ to expand: The Devil’s Advocate Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

Rent-seeking is what happens when a fellow (a “rentier”) monopolises access to property (including, for modern readings, intellectual property) and takes profits out of it that arise purely because of that monopoly right (or barrier to entry).

It comes in many guises:

• Physical property: you know, literal rent-seeking
• Intellectual property: Rather than using the fruits of your blood, toil, tears and sweat you use antediluvian intellectual property rules to gouge everyone else. In this way Mick Jagger and Keith Richards can extract tens of millions over 60 years from 15 minutes of work — in Richards’ case, while, on his own account, he was asleep — composing Satisfaction.
• Franchising: Taking an idea or a business model someone else has invented — McDonald’s is the best example — and paying them a franchise fee to operate it. Here is double rent-seeking: the franchisee pays the franchisor, and the customer pays the franchisee.
• Software as a service: The simple answer to the question why is reg tech so disappointing? — is that tech businesses can’t make money if all they get paid for is writing software. This would be like Mick Jagger only getting paid for fifteen minutes’ work — where is the logic, or the justice in that?

See also

• ClauseHub: theory
• Reg tech
• Intermediaries