The following are my thoughts after reading Our 'Rentier Capitalism' Is One More Nail in Earth's Coffin, an article by Paul Street.
Abstract
The growing inequality in the United States and other “affluent capitalist democracies” is largely due to a proliferation of rent seeking behavior that appears to create a positive feedback loop. As individuals and corporations grow more wealthy, they can buy the favor of politicians and bureaucrats which in turn makes them more wealthy and so on. Street uses the term, “renteir capitalist plutocracy”, to describe countries such as the United States, where the three most wealthy individuals (Bezos, Gates, and Buffet), have a net worth equal to the bottom half of the US population.
For those unfamiliar with the term “rentier” (pronounced rɒntieɪ), it refers to someone such as a landlord or owner of a toll bridge that profits from money earned by property and investments. Mr. Street explains that the Privatization of once-public commodities paves the way for the super-rich to widen the wealth gap even further.
Why is our society heading in this direction? I feel there are two narratives that can explain the advent of rentier capitalism, and will explain my take on both.
Two Perspectives
One perspective is similar to the story as told by Street: the positive feedback loop of rentier capitalism is bad for people and the planet, and without decisive action by you and me, our future is not looking bright. Growing income inequality contributes to an increasingly divisive social and political climate, due to the inherent unfairness in our so-called “free market”. The super-wealthy are living with no regard for the rest of us and will continue to do so by any means necessary.
The second narrative, the one that is likely used by the rentiers to justify their actions, is also important to understand. Essentially this view is that “rentier capitalism” is the natural result of a free market that is constantly creating more efficient and profitable services. For example, consider the United States Postal Service (USPS), a federal postal agency. USPS has not been able to maintain their market share as they compete with private counterparts UPS and FedEx, recording over a decade of declining revenue.
An Economist would tell you that USPS’s decline is due to UPS and FedEx having the advantage of financial incentive. Urged by shareholders and enterprising managers, UPS and FedEx are more flexible and quick to act than the slower moving USPS, which exists to serve a function and not to maximize profits. The result is that UPS and FedEx are known to have better customer service, and a wider range of options for shipping heavier objects. In short, USPS declines because consumers prefer UPS and FedEx.
As scary as you may find it to imagine Amazon dominating the healthcare market, it is likely to happen because they possess the means and the financial incentive to do so. If their plans come to fruition, Bezos will probably become the richest man in the world, but the healthcare Amazon provides will have to be preferable to what is currently available to their potential customers. In other words, society will benefit.
This view is hard to empathize with when there are so many problems in United States society today, but it must be noted that benefits to society are subjective and most often not received in equal portions. It is anyone’s guess whether the “benefits” to society from a hypothetical Amazon Healthcare would outweigh the problems it will also cause.
When considering the social effects of inequality I was reminded of a recent article about children as young as four frowning on “freeloaders”. Humans are naturally wired to identify unfairness and punish it. The camel will eventually be one straw away from collapse—or rampage.
I believe that there is a third option, aside from revolution and extinction, that we can find to resolve the issues plaguing society. We must consider the trade-offs between the rapid innovations generated by capitalist competition, and the harms caused by inequality and rent seeking. The super-rich rentiers that are so easy to despise are the inevitable result of current institutions, not a problem within themselves. Education and healthy dialogs are the seeds of something greater, I am eager to hear your thoughts.
image from Pixabay
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