Abstract
Scarcity rent was already identified and analyzed by Ricardo, but the concept of solidarity rent is the present authors’ innovation; then further sub-categories are introduced in this chapter. The rent-based interpretation of the importance of the natural resource sector is further generalized in this chapter. As Nicholas Kaldor and János Kornai have contended for decades, perfect competition exists only in economic textbooks. In reality, markets are oligopolistic not only in agriculture, in the extracting industries (as Ricardo thought), but also in the manufacturing and service sectors, too. The most efficient firms have always harness higher than average profits through larger mark-ups, or using this book’s own terminology: they collect scarcity rent.
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Notes
- 1.
On average across OECD countries, 30% of workers were members of a union in 1985. The corresponding figure in 2016 was only 17%. Today, union members tend to be predominantly male, middle-aged (between 25 and 54 years old), working with medium or high skills in medium or large firms, and on a permanent contract [http://www.oecd.org/els/emp/Flyer-Collective%20bargaining.pdf]. This decline was uniform across all member countries, with the notable exception of the Scandinavian countries and Iceland. Interestingly, the decline in union membership in the US has been rather small since the onset of the 2008 economic crisis, chiefly because the level was already low in 2006 already (11.5%) [https://stats.oecd.org/Index.aspx?DataSetCode=TUD]. The OECD websites were accessed on 5 August 2018.
- 2.
- 3.
It is noteworthy that in The World Top Income Database, the database underlying Piketty’s book , such pensions are not taken into account, although in many countries such pensions constitute the bulk or at least a significant part of incomes flowing to the elderly population.
- 4.
Wikipedia lists 18 country examples, https://en.wikipedia.org/wiki/Affirmative_action, accessed on 24 April 2018.
- 5.
Op. cit., p. 1536.
- 6.
Op. cit., p. 1537.
- 7.
https://data.oecd.org/emp/self-employment-rate.htm, accessed on 13 January, 2018. For the possible complications arising from this, see Guerriero (2012) paper.
- 8.
Op. cit., pp. 357–359.
- 9.
As we argued already in Chapter 1 (p. 1), the long-term world history justifies the opposite conclusion.
- 10.
http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/roe.html, downloaded on 29 March 2018.
- 11.
See e.g. a broad collection of papers devoted to rent-seeking in the English language journal of the German CESIfo DICE Report, Vol. 13. No. 3. Autumn 2015.
- 12.
In the context of globalization, however, there is a growing number of companies worldwide in every industry, thus competition is actually increasing at the international level, even if national governments try to protect the “national champions”.
- 13.
While it may be “politically incorrect”, we do not reject—short of alternative empirical evidence—the possibility that genetic disposition also can be the source of rents. There is no genetic evidence that such rents exist, but a great deal of empirical observations suggests that they may. See e.g. Clark (2014).
- 14.
Op. cit., pp. 240–243. Roemer’s main point was, of course, that to a certain extent income inequalities must exist even in an ideal (utopian) socialist society. The term “rent” is not even listed in the Index of Roemer’s book , entitled A General Theory of Exploitation and Class.
- 15.
This finding was first demonstrated by the founder of the Boston Consulting Group, Bruce Henderson (1976) and then later re-confirmed empirically on a much larger data set by Reeves et al. (2012). Since then, successful companies, like General Motors and others live according to this maxim. If they cannot become Number One or Two in an industry, they get out from that market and reinvest their resources somewhere else. 37See The Economist, 26 March 2016.
- 16.
The Economist, 26 March 2016.
- 17.
This research used the OECD-ORBIS firm-level productivity database of 300 thousand (!) companies pertaining to 23 OECD countries over the period 2001–2009. The industry details are at the 2-digit NACE level and comprise the nonfarm, non-financial business sector.
- 18.
As the 2014 Nobel Prize winner, Jean Tirole the nature of the so-called two-sided markets.
- 19.
Op. cit., p. 11.
- 20.
Quoted in The Economist, 1 October 2016.
- 21.
Autor et al. (2017).
- 22.
Op. cit., p. 268.
- 23.
See also Weeden and Grusky (2014, p. 476). Our typology is more elaborate, but similar.
- 24.
Having stated this as our conclusion, we are of fully aware of the opinion of others—e.g. Lindsey and Teles (2017)—who marshalled strong arguments against the current level of state protection of intellectual property rights.
- 25.
According to the ILO (2017), child labor is concentrated primarily in agriculture (71%), 17% in services; and 12% in the industrial sector, including mining. In other words, child labor is essentially a pre-capitalist heritage of the modern world.
- 26.
The Economist, 17 February 2014.
- 27.
The Economist, 24 March 2018.
- 28.
- 29.
In his interpretation, public wealth in the developed countries is insignificant, or even negative due to the accumulated public debt. Piketty (2014, p. 48.) We shall return to this issue above in a minute.
- 30.
Op. cit., Part I., p. 8.
- 31.
Op. cit., Part I., p. 26.
- 32.
Bureau of Economic Analysis, last revised on September 17, 2014. The value of land is not included in the NBER wealth account data cited here.
- 33.
The Economist, 13 June 2015.
- 34.
Op. cit., pp. 123–131.
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Mihályi, P., Szelényi, I. (2019). Thirteen Types of Rent in the Globalized World. In: Rent-Seekers, Profits, Wages and Inequality. Palgrave Pivot, Cham. https://doi.org/10.1007/978-3-030-03846-5_3
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