Down with rentiers

Michael Lind has an interesting piece in Salon advocating for an “Anti-Rentier movement.” A rentier is someone that derives their income from economic rents. The precise definition of an economic rent is politically contentious, but the easiest — albeit somewhat over-simplified — way to think about is this: rents are income derived from owning, not from working. So profits, dividends, capital gains, intellectual property fees, land rents, and so on are all types of rents.

Theories of rent have a long intellectual pedigree, and the idea that income derived from rents is essentially unearned and undeserved has historically curried support among right and left wing thinkers. It is in this tradition that Michael Lind advocates for an Anti-Rentier program aimed at capturing economic rents:

Windfall real estate profits should be taxed away by property taxes or “land value” taxes. Severance taxes or superprofits taxes should be levied on energy and other resource windfalls determined by geography rather than human effort. Banks should be low-profit, publicly-regulated utilities and laws against usurious interest rates, struck down in the U.S. in the late twentieth century, should be restored. Infrastructure assets—water systems, electricity, roads, airports and airlines, rail, inland waterways—may be privately-owned utilities, but their prices need to be regulated in the public interest. While there are legitimate roles for both professional associations and labor unions, they should not be allowed to act as predatory labor cartels at the expensive of the economy.

The notion that an Anti-Rentier movement could gain currency in the United States is not a new one. Gar Alperovitz has been pushing it for a while now, and there is a lot to like about the basic idea. The right-wing in the US, having almost totally abandoned any sort of utilitarian thinking, regularly finds itself trafficking in desert theory arguments about who deserves what. That is what the “makers” and “takers” stuff is about, that is what the 47 percent stuff is about, and that is what the Randian silliness that Paul Ryan is a major proponent of is about. As Lind indirectly points out (and as I have pointed out before), this desert theory approach is ultimately irreconcilable with the right-wing’s policy preferences.

Sitting on piles of ever-multiplying cash — as the wealthy do — makes you a “taker” by any normal sense of the word. It is money for nothing, a rent, and as Bill Haywood famously said “If one man has a dollar he didn’t work for, some other man worked for a dollar he didn’t get.” A true desert theory approach to running an economy would have to try to cut off these kinds of rentiers. It would have to try to capture the very kinds of incomes that the right-wing is such partisans of: capital gains, profits, dividends, interest, and the other kinds of passive, unearned incomes that are at the heart of a capitalist economy. The only real right-wing desert theory is producerism, an ideology which attacks the poor and rich simultaneously as being parasitic takers that collect higher incomes than their labor entitles them too. But the right-wing never attacks the rentiers at the top, which is what makes their maker/taker rhetoric so obviously affected.

Generally, I think Lind is correct about the viability of anti-rentier rhetoric at least. Attacking rentiers as money-for-nothing looters will probably have considerable political purchase among the rank-and-file of both Republican and Democratic constituencies. Americans seem to line up their opinions about how much inequality should be permitted according to how much they think it is a consequence of differential amounts of hard work. But rents are not a consequence of hard work at all: they are income from owning, not from working. As much as I think desert theory is an utterly bizarre notion of what justice requires, the left would be remiss to ignore very lucid leftist approaches to desert theory given the amount of gut-level support there seems to be in the US for desert-based economic justice.

With that said, there are severe limitations to the viability of successfully implementing an anti-rentier program. First, the interests of the wealthy, through campaign donations especially, run the show in DC. For an anti-rentier program to get put into practice, elected representatives would have to start targeting the incomes of the very people who do the most to help them get elected. Good luck with that. Second, as Claus Offe famously explained, demanding too much of the owning class always risks a capital strike. In a world where the productive resources of society are privately owned, those private owners ultimately have a veto power against any state action they do not like. If you encroach too much on their unearned streams of income, they can and will pull the capital they control out of circulation and inflict massive harm on everyone else, including the government (see also capital flight).

Ultimately, an Anti-Rentier program that does not also attempt to socialize financial wealth is simultaneously too ambitious and not ambitious enough. It undertakes the ambitious project of trying to capture the unearned incomes of the super-rich while still leaving in their hands the power to frustrate that project’s realization. While we can doubtlessly scrape some small part of those rents back without unsettling status quo ownership relations, anything beyond that will require a considerably more radical project than the one Lind proposes.