Rent seeking behavior:
https://fivethirtyeight.com/features/the-rent-seeking-is-too-damn-high/
Until 6 months ago, I hadn't known this term existed, but I believe it encompasses most of the things I find wrong with govt and business practices, resulting in the consolidation of industry under the fewest people, at the cost of everyone else.
B&I board, do you have any opinions on this type of behavior?
When is it a good thing?
Should it be restricted? Or are we attempting that already, but poorly?
How do you change this behavior?
Have you or your businesses used "rent-seeking" means to restrict competition?
Is it "just the way things work" and "stop trying to change things you can't control"?
FANG companies are going to be excellent (and are already) rent-seekers.
I'm mortally terrified about the monopolization of user generated data, the analytics of said data, and abuse, and the disinterested public. But that's a personal thing.
In my eyes, this is a dramatic problem, but I see things differently than some of you and would love perspective.
Quote:
Imagine you run a barbershop and you learn that someone is planning to open a rival business down the street. What do you do?
One option, of course, would be to compete the old-fashioned way by offering lower prices or better service. But the old-fashioned way is hard! Wouldn't it be nice if you could keep your competitor from setting up shop in the first place? There's evidence that a growing number of businesses in the U.S. are trying to do exactly that. And while that may be good for them, it's bad for entrepreneurs, workers and the economy as a whole.
On Tuesday, a Senate subcommittee held a hearing on "occupational licensing" laws, which require government-issued licenses to perform certain types of work. Such laws have long existed for doctors, lawyers and others in highly skilled professions, but they are increasingly spreading to low- and mid-skill jobs as well. A White House report last summer found that occupational licensing requirements have increased fivefold since the 1950s, covering more than a quarter of all workers in 2008. Cosmetologists, tree trimmers and even interior designers need licenses in some states.
Defenders of occupational licensing typically argue that the rules help protect consumers and workers, and that's undoubtedly true in some cases. I want the people filling my cavities to know what they're doing. But it's hard not to suspect that in many cases, these rules serve another purpose: to make it harder for new competitors to enter the marketplace. In Nevada, according to Politico, barbers need more than two years of training to qualify for a license; that's a high bar to anyone looking to break into the business.
Economists call this kind of behavior "rent-seeking," which is another way of saying "gaming the system to make more money than you've earned." (A company that wins a no-bid contract through political connections is a rent-seeker. So is a CEO who gets a raise by stacking the board of directors with friends.) Occupational licenses are good for existing businesses, which face less competition, and for workers who already have licenses, who according to one study earn roughly 15 percent more than they would in a free market. But they're bad for everyone else. Research has found that occupational licenses inhibit entrepreneurship, especially among low-income workers. They also raise prices, lower productivity and limit workers' ability to change careers or cities. One recent study estimated that licensing laws cost the U.S. as many as 2.85 million jobs. (Cont.)
https://fivethirtyeight.com/features/the-rent-seeking-is-too-damn-high/
Until 6 months ago, I hadn't known this term existed, but I believe it encompasses most of the things I find wrong with govt and business practices, resulting in the consolidation of industry under the fewest people, at the cost of everyone else.
B&I board, do you have any opinions on this type of behavior?
When is it a good thing?
Should it be restricted? Or are we attempting that already, but poorly?
How do you change this behavior?
Have you or your businesses used "rent-seeking" means to restrict competition?
Is it "just the way things work" and "stop trying to change things you can't control"?
Quote:
Occupational licensing is just one example of rent-seeking. For another, see this Aruna Viswanatha story in The Wall Street Journal on the rise of noncompete agreements in fields such as journalism and fast food. Yes, fast food: The sandwich chain Jimmy John's has had some employees sign contracts barring them from working at any other sandwich shop near its locations. University of Maryland economist Evan Starr has found that such policies inhibit workers from changing jobs, hurting their bargaining power and thereby benefiting companies at the expense of their employees.
There is evidence that rent-seeking, in various forms, is becoming more common in the U.S. economy. In a recent paper, economist Dean Baker argued that rent-seeking has driven much of the recent increase in income inequality. And while Baker is a liberal, conservatives are also concerned about rent-seeking, such as land-use restrictions that make it hard to build housing in high-priced coastal cities. The White House is worried about occupational licensing, but it was Mike Lee, one of the Senate's most conservative members, who called Tuesday's hearing.
I've written previously about the long-term decline of dynamism in both labor and business Americans are changing jobs less often and they're starting fewer companies. Incumbent businesses, meanwhile, are thriving the U.S. economy has never been as dominated by big corporations as it is today. Rent-seeking behavior isn't the only explanation for those trends, and perhaps not even the main one, but it may be the one most easily addressed by policymakers.
The everything store
After spending 20 years convincing us that, yes, it really does make sense to order our cat litter, peanut butter and frying pans online, Amazon.com might be about to start telling us to (gasp!) go to the store.
The details here are a little fuzzy. On Tuesday, The Wall Street Journal reported that General Growth Properties, a big mall owner, said Amazon plans to open 300 to 400 physical bookstores in coming years. General Growth backed away from those comments the next day, but only partway; Amazon, for its part, hasn't commented.
Moving from virtual to bricks-and-mortar might seem counterintuitive, but there is precedent for the move. Sears, Roebuck began as a mail-order catalog, the 19th century version of the World Wide Web. It wasn't until the 1920s that Sears began opening retail stores to serve urban consumers who wanted to browse products before buying.
FANG companies are going to be excellent (and are already) rent-seekers.
I'm mortally terrified about the monopolization of user generated data, the analytics of said data, and abuse, and the disinterested public. But that's a personal thing.
In my eyes, this is a dramatic problem, but I see things differently than some of you and would love perspective.
