Money for Nothing: The Rentier Class Versus the Precariat

Who are the Precariat?

Precariat is a portmanteu word of precarious and proletariat. Most people are wage earners, both hourly workers and those who get paid a straight monthly salary. In many cases, all the straight salary means is that they do not get paid for overtime, unlike those who are paid an hourly rate. In any case, the precariat are people whose jobs and incomes are insecure. In today's world, the great majority of people belong to the precariat. Even most of the people whose salaries place them in the upper middle class actually belong to the precariat, since, in today's business world of "maximizing shareholder value," even their jobs cannot be considered "safe" longterm jobs.

As Adam Smith wrote in 1776 in his masterpiece, The Wealth of Nations:

As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the labourer only the trouble of gathering them, come, even to him, to have an additional price fixed upon them. He must then pay for the licence to gather them; and must give up to the landlord a portion of what his labour either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land.

Adam Smith popularized the term "free markets" to describe markets free from "rentiers," where rentiers meant those who collect money without adding value. He specifically referred to absentee landlords, such as cable monopolists. He DEFINITELY didn't mean "markets free from government regulation."

How can politicians say we have a free market system when patents guarantee monopoly incomes for 20 years, preventing anyone from competing? How can they claim there are free markets when copyright rules give guaranteed income for 70 years after a person’s death? Far from trying to stop these and other negations of free markets, governments are creating rules that encourage them.

According to Landing, the five lies of rentier capitalism are:

1. The claim that global capitalism is based on free markets.
2. The claim that intellectual property rights encourage and reward risk takers.
3. The claim that the institutional structure of global capitalism built in the globalization era is “good for growth.”
4. The claim that profits reflect managerial efficiency and returns to risk-taking.
5. The claim that work is the best route out of poverty.

To have a free market in the neoliberal sense of the term, the market must meet the following characteristics to a large extent:

• Each firm is small relative to the market and has no influence on price.
• Firms and products are substitutable.
• Each consumer is small relative to the market and has no influence on price.
• Perfect information about prices and quantities is available.
• There is easy entry into and exit from the market.

More information about each item is given in The Conditions of Perfect Competition.

(TO BE CONTINUED)

Joseph Stiglitz Says Standard Economics Is Wrong. Inequality and Unearned Income Kills the Economy

On Feb. 14, 1876, Elisha Gray entered the U.S. Patent Office. Like Bell, he meant to patent a device for "transmitting vocal sounds telegraphically." Unlike Bell, the device in his patent actually worked. But Gray was a few hours too late. Bell's representative had come earlier in the morning to assert Bell's claim. In the log books, Bell is the fifth applicant that day and Gray is the 39th. And so it is Bell's name we remember. Meanwhile, Antonio Meucci, an Italian stage technician, had applied for a "caveat"—a placeholder patent—five years before either Gray or Bell. But lacking the $10 necessary to pay the patent office, his claim lapsed.

The Solow residual is the portion of an economy’s output growth that cannot be attributed to the accumulation of capital and labor, the factors of production. The Solow residual represents output growth that happens beyond the simple growth of inputs. As such, the Solow residual is often described as a measure of productivity growth due to technological innovation. The Solow residual is also referred to as total factor productivity (TFP).

Great Depression: breadline
Detail of a sculpture by George Segal depicting unemployed men in a breadline during the Great Depression; part of the Franklin Delano Roosevelt Memorial, Washington, D.C. Publisher: Encyclopædia Britannica. Access date: March 25, 2022

The line for lunch at Sharing Caring Hands on Tuesday, March 24, 2022, in Minneapolis, Minnesota. David Joles/Star Tribune/AP