Poverty equilibrium keep existing despite the increases in productivity due to economic rents. Every time there is some slack in the system, renters raise their prices and capture the wealth. UBI itself is not enough, but UBI+LVT combo is what will allow to move to a much better equilibrium in our world. In Anoxistan, likewise, there would be needed an Air Value Tax, working by the same Georgist principles to erradicate their brand of poverty.
Moloch is the name of this force, and rent-seeking is one of its faces. (edit: I stand corrected; rent-seeking itself isn’t Molochian competition, but it’s enabled by Molochian competition from those paying the rent. See below comments)
I think this is basically correct, although as others have noted it doesn’t completely counteract progress.
There is a form of rent-seeking from other sources than land ownership, like the rising college tuitions. Arguably, zoning is a separate form of rent-seeking that’s not directly based on land ownership but control of government to make ones own life better at the expense of others’ opportunities.
Those two are more clearly Moloch. Competition for good degrees and good zoning drives prices as high as people will pay.
I was tempted to agree, but on a reflection, no I don’t think that it’s correct to classify rent-seeking as a work of Moloch.
Classical example of economical facet of Moloch is a capitalist who would love to give their workers a living wage, but doing so would make the product more expensive, therefore leading to being out-competed by those who did not pay their workers decent wages. Optimization leading to the sacrifice of all our other values.
On the other hand a landlord who raises the price of the rent due to a new business opening nearby doesn’t do it because otherwise they would be out-competed by the landlords who do. They just do it because they want to earn more and can earn more this way. This is not some complicated game theoretic equilibrium that a landlord is a hostage of. In this case, this is just greed.
And the reasons why landlords can get away with this is because the molochian optimization mechanism selectively does not apply to them! While market forces push the capitalist to make the goods and services as cheap as possible, without LVT, this pressure doesn’t exist for the landlord. They are the part of the system that has actual slack. And they can use it to siphon the slack from other parts. Which is, in turn, what leads to such ruthless competition in the other domains of the market and the existence of the market equilibrium which we call “Moloch”.
So rent-seeking isn’t the Moloch. On the contrary, it’s the absence of Moloch in a small privileged domain, which prevents Moloch from consuming itself, and therefore allows its existence. Rent-seeking is what makes the economic facet of Moloch possible.
I agree: rent-seeking isn’t Moloch, for the reasons you give.
But it’s enabled in part by Molochian competition to rent that particular space.
And rising prices of degrees is similar. It’s rent seeking, which is pure greed, but it also is enabled by Molochian competition. Zoning is more pure Moloch. I expect there are other similar factors contributing to the proliferation of poverty despite wealth increase.
NIMBYism is competition for a better living environment and property value at the expense of the commons. And colleges and landlords can only keep raising tuition because people are competing for prestigious degrees and good locations, at the expense of the commons.
Edit: It doesn’t seem like an absence of rent-seeking would do much to prevent Molochian effects in economic trade.
If you analyze the situation from a greater distance (drawing wider boundaries to the system), you can clearly observe that Moloch is the core of rent-seeking in the first place, not the action of hiking prices.
What purpose does rent-seeking serve? What greater good is society drawing from it?
If, in this case, we claim that this is allowed as a mechanism to incentivize private investment into housing development (so that the “right” amount of houses are built), we can see Moloch (i.e., the sacrifice of real value in pursuit of efficiency) very clearly.
Moreover, the construction of prices in a market is not determined wholly by one side. What allows landlords to raise the prices is the willingness of someone to pay that new price. If we assume the landlord is a kind of self-sacrificing saint and refuses to raise the prices, in the not-so-long run, he will face bankruptcy. I.e., he will no longer be able to keep up with inflation. Remember, property taxes are a thing. If the neighbors can charge higher prices, the value of the property rises. If the value rises, so do the taxes.
I would say that the situation is what allows rent-seeking, and the Moloch is the power that says that if rent-seeking is allowed then it will definitely happen (otherwise those who don’t rent-seek or even don’t rent-seek as much as they could, will be outcompeted by those who seek as much rent as possible).
We might be saying the same thing in different terms. From your statement I am confused as what do you mean by the “situation allowing for rent-seeking”? and Moloch being a “power”?
When I used the term “situation” in my previous comment, situation meant the dynamic described by Seth Herd (i.e., land lords rising prices).
Moreover, if “the situation is what allows rent-seeking” but Moloch is the power that determines (when rent-seeking is allowed) that “it will definitely happen” implies that Moloch is a fundamental part of the “situation”.
In other words, without Moloch the “situation” of rent-seeking would never had existed in the first place.
By “situation” I meant that in a hypothetical system where e.g. all land belongs to the state (or king) and everyone is renting it, and the land is always rented to the highest bidder… or something like that, the incentives and therefore behaviors could be completely different. (Not necessarily better, but different.)
The winning strategy is determined by the rules of the game.
Yes, the winning strategy is determined by the rules of the game, but more importantly, what constructs the definition of winning is also determined by those rules. That’s why defining the boundaries of a system is crucial for exploring the nature of incentives.
I continue to struggle with your explanations because I can’t understand where you are drawing the boundaries of the system.
If by “all land belonging to the state (or king)” you mean an absolutist system (i.e., assuming his power is so strong that he faces no competition from within the system’s boundaries), then the nature of competition shifts the target, but the practices remain the same. A rent-seeker is someone who evaluates the system, diagnoses bottlenecks, and positions himself as a gatekeeper.
By “absolutist,” I mean, in historical terms, systems that functioned as totalitarian within an artificially determined boundary (e.g., feudal lords, the USSR, slave plantations, etc.). These systems faced competition from the outside. If a king faces competition from outside his kingdom, he is obliged to maximize the exploitation of people and resources. If he doesn’t, he’s at risk of being conquered by outside forces that adhere to Molochian efficiency. The USSR did not have markets and prices, but it still had a system with many layers of quotas and incentives.
If what you’re describing is a universal totalitarian system, then it would be a completely different system, without historical precedent, but with the same incentives. The nature of Moloch emerges when surplus creates the need for criteria to allocate the newfound scarcity. Unless true abundance exists, the natural order is for status to determine access. In such a context, competition will be Molochian competition. To my understanding this is the exact reason why governments exist in the first place. To enforce Ostrom’s solution to the tragedy of the commons.
Poverty equilibrium keep existing despite the increases in productivity due to economic rents. Every time there is some slack in the system, renters raise their prices and capture the wealth. UBI itself is not enough, but UBI+LVT combo is what will allow to move to a much better equilibrium in our world. In Anoxistan, likewise, there would be needed an Air Value Tax, working by the same Georgist principles to erradicate their brand of poverty.
Moloch is the name of this force, and rent-seeking is one of its faces. (edit: I stand corrected; rent-seeking itself isn’t Molochian competition, but it’s enabled by Molochian competition from those paying the rent. See below comments)
I think this is basically correct, although as others have noted it doesn’t completely counteract progress.
There is a form of rent-seeking from other sources than land ownership, like the rising college tuitions. Arguably, zoning is a separate form of rent-seeking that’s not directly based on land ownership but control of government to make ones own life better at the expense of others’ opportunities.
Those two are more clearly Moloch. Competition for good degrees and good zoning drives prices as high as people will pay.
I was tempted to agree, but on a reflection, no I don’t think that it’s correct to classify rent-seeking as a work of Moloch.
Classical example of economical facet of Moloch is a capitalist who would love to give their workers a living wage, but doing so would make the product more expensive, therefore leading to being out-competed by those who did not pay their workers decent wages. Optimization leading to the sacrifice of all our other values.
On the other hand a landlord who raises the price of the rent due to a new business opening nearby doesn’t do it because otherwise they would be out-competed by the landlords who do. They just do it because they want to earn more and can earn more this way. This is not some complicated game theoretic equilibrium that a landlord is a hostage of. In this case, this is just greed.
And the reasons why landlords can get away with this is because the molochian optimization mechanism selectively does not apply to them! While market forces push the capitalist to make the goods and services as cheap as possible, without LVT, this pressure doesn’t exist for the landlord. They are the part of the system that has actual slack. And they can use it to siphon the slack from other parts. Which is, in turn, what leads to such ruthless competition in the other domains of the market and the existence of the market equilibrium which we call “Moloch”.
So rent-seeking isn’t the Moloch. On the contrary, it’s the absence of Moloch in a small privileged domain, which prevents Moloch from consuming itself, and therefore allows its existence. Rent-seeking is what makes the economic facet of Moloch possible.
I agree: rent-seeking isn’t Moloch, for the reasons you give.
But it’s enabled in part by Molochian competition to rent that particular space.
And rising prices of degrees is similar. It’s rent seeking, which is pure greed, but it also is enabled by Molochian competition. Zoning is more pure Moloch. I expect there are other similar factors contributing to the proliferation of poverty despite wealth increase.
NIMBYism is competition for a better living environment and property value at the expense of the commons. And colleges and landlords can only keep raising tuition because people are competing for prestigious degrees and good locations, at the expense of the commons.
Edit: It doesn’t seem like an absence of rent-seeking would do much to prevent Molochian effects in economic trade.
If you analyze the situation from a greater distance (drawing wider boundaries to the system), you can clearly observe that Moloch is the core of rent-seeking in the first place, not the action of hiking prices.
What purpose does rent-seeking serve? What greater good is society drawing from it?
If, in this case, we claim that this is allowed as a mechanism to incentivize private investment into housing development (so that the “right” amount of houses are built), we can see Moloch (i.e., the sacrifice of real value in pursuit of efficiency) very clearly.
Moreover, the construction of prices in a market is not determined wholly by one side. What allows landlords to raise the prices is the willingness of someone to pay that new price. If we assume the landlord is a kind of self-sacrificing saint and refuses to raise the prices, in the not-so-long run, he will face bankruptcy. I.e., he will no longer be able to keep up with inflation. Remember, property taxes are a thing. If the neighbors can charge higher prices, the value of the property rises. If the value rises, so do the taxes.
I would say that the situation is what allows rent-seeking, and the Moloch is the power that says that if rent-seeking is allowed then it will definitely happen (otherwise those who don’t rent-seek or even don’t rent-seek as much as they could, will be outcompeted by those who seek as much rent as possible).
We might be saying the same thing in different terms. From your statement I am confused as what do you mean by the “situation allowing for rent-seeking”? and Moloch being a “power”?
When I used the term “situation” in my previous comment, situation meant the dynamic described by Seth Herd (i.e., land lords rising prices).
Moreover, if “the situation is what allows rent-seeking” but Moloch is the power that determines (when rent-seeking is allowed) that “it will definitely happen” implies that Moloch is a fundamental part of the “situation”.
In other words, without Moloch the “situation” of rent-seeking would never had existed in the first place.
By “situation” I meant that in a hypothetical system where e.g. all land belongs to the state (or king) and everyone is renting it, and the land is always rented to the highest bidder… or something like that, the incentives and therefore behaviors could be completely different. (Not necessarily better, but different.)
The winning strategy is determined by the rules of the game.
Yes, the winning strategy is determined by the rules of the game, but more importantly, what constructs the definition of winning is also determined by those rules. That’s why defining the boundaries of a system is crucial for exploring the nature of incentives.
I continue to struggle with your explanations because I can’t understand where you are drawing the boundaries of the system.
If by “all land belonging to the state (or king)” you mean an absolutist system (i.e., assuming his power is so strong that he faces no competition from within the system’s boundaries), then the nature of competition shifts the target, but the practices remain the same. A rent-seeker is someone who evaluates the system, diagnoses bottlenecks, and positions himself as a gatekeeper.
By “absolutist,” I mean, in historical terms, systems that functioned as totalitarian within an artificially determined boundary (e.g., feudal lords, the USSR, slave plantations, etc.). These systems faced competition from the outside. If a king faces competition from outside his kingdom, he is obliged to maximize the exploitation of people and resources. If he doesn’t, he’s at risk of being conquered by outside forces that adhere to Molochian efficiency. The USSR did not have markets and prices, but it still had a system with many layers of quotas and incentives.
If what you’re describing is a universal totalitarian system, then it would be a completely different system, without historical precedent, but with the same incentives. The nature of Moloch emerges when surplus creates the need for criteria to allocate the newfound scarcity. Unless true abundance exists, the natural order is for status to determine access. In such a context, competition will be Molochian competition. To my understanding this is the exact reason why governments exist in the first place. To enforce Ostrom’s solution to the tragedy of the commons.