Economic rent

On Rent

My awesome colleague Jacob Shwartz-Lucas mused, in his recent WorkandWealth piece, on Rent — which, he notes, “has a very nuanced meaning in Economics.” Though Jacob said “meaning,” he talked about definition — which is understandable. He was making an economic point — and academic economics has done its best to make sure normal readers won’t get a handle on this vital concept. I’d like to muse a bit more on the meaning of Rent.

In economics, definitions pretty much have to be specified in the glossary of each particular discussion. However, it is consistently hinted that Rent isn’t something that’s earned, in a moral sense. It’s to be gotten, if you can get it, by playing your cards right, reading the fine print, greasing the right palm, getting in on the ground floor. It’s not something you get at hourly rates, by cutting the mustard, or building a better mousetrap. Econ texts distinguish (vaguely) between Rent and Profit; the latter being something honorably earned in a free-enterprise system. “Rent-seeking behavior” has an unsavory, back-alley-skulking-ness about it (despite its ubiquity); Profit-seeking behavior is a patriotic American duty (despite its enhancement via big-money politics).

The Landlord — the guy who gets Rent — is a black-hatted, rude and chubby chap who strikes you as ridiculous (but you won’t say so to his face). He can afford to be ridiculous; he laughs all the way to the bank. That’s the quaint cartoon version. It’s been superseded by a couple of more modern narratives. Neither are quite as obvious as the Old Villain, but they both have some power.

In the one on the right, landlords are an unthreatening subcaste of unkempt, harried proprietors who have to deal with lazy tenants and surly supers. Their rent isn’t a big deal; multiple “confirmed” statistical sources tell us that it’s a mere 2-3% of national income.

On our left — ah yes, on our left we find the dastardly FIRE sector: Finance, Insurance and Real Estate, those expert rentiers who suck up every scrap of Surplus Value that we poor workers work so hard to make. If they’re rentiers, they must be getting Rent, right? Are we mad yet? They demand large payments for every service we need just to live a normal life in the modern world! They’re either the one per cent, or they handle the one per cent’s money — are we FIRE-d up?

Neither of these political myths serve to clarify our situation or to point to a workable, fair way forward — but they do provide provocative talking points.

The impasse in which we’re stuck calls to my mind another meaning of “Rent” — one that has less to do with Econ, but maybe more to do with life. It’s the meaning suggested in the title of the popular musical from the 1990s, the one that was based on La Boheme. It wasn’t immediately clear to me, at the time, why the show was called Rent. But if you hear some of its incredibly moving songs, and situations, you start to get a notion.

I don’t remember Rent in detail, but I do remember a cohort of young people, powerfully alive, struggling to stay true to their developing visions, struggling to keep a roof over their heads, struggling to live (or die) with a new and terrifying plague. What did Rent mean to them? It wasn’t just a payment for a place to crash — heck, a bunch of them were squatters in abandoned real estate. Maybe it was a spiritual payment; it was the individually-determined fare (no bargains to be had) for crossing that lonesone valley, for crossing it by yourself. It had something to do with the payment James Baldwin referred to in the title of his collected essays: The Price of the Ticket. Another term that’s been used is Dues.

This seems to have little to do with Economic Rent — yet really, after all, it does have something to do with it. No sane person believes, after all, that nothing is owed. Maybe you can snag a Lower East Side squat to live in, but don’t think you can escape the Rent. Don’t think you can go there without paying — one way or another — for the ticket.

The question is, though — is the price too much? Not the price of mink coats, Ferraris or offshore tax haven vacations — the price of existing. The cost of having a place to live in. Is it more than we deserve to pay? Is it more than others have to pay, for existing?

Well, how can we answer that, except spiritually, artistically, on a whim, on a dance floor? There’s no moral quantity we can call Rent!

Is there?

Well, friends, it turns out that there is. There definitely is, and it takes no advanced education or secret decoder ring to identify it. It’s a simple distinction. You can look around you, right now, in your very own space and world, and see it. You can observe it using either of the following methods: 1) Start at twelve o’clock (an arbitrary directional spot; you can choose Due North if you like) and slowly move three hundred and sixty degrees, noting the things you see; or 2) Make a list of all the things you own, all of your assets. In either case: ask yourself one question about each item: was it made by human labor, or not? Let me ask that again: were those things created, fashioned, wrought, envisioned, designed, risked, loved, sweated over by the people who made them? Or were they there all along, parts of the natural world?

Answer that question, and you’ll understand the meaning of Rent in economics (to the extent that economics has any meaning).

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