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Rent/interest are payments for nothing. There is no service or goods exchange behind it, no labour involved. If this money is instead used for public consumption (as taxes) this money then circulates in the hands of wealth creators, labour and capital, not rentier. And when the interest of labour and capital grows, there will be more wealth and more exchange and more consumption. Both (real) investment demand and wage purchase power and equal income distribution.

(And there is also multiplier effect).

by kjr63 on Mon Jun 6th, 2011 at 03:47:58 AM EST
[ Parent ]
While I disagree that a modern monetary system works like that you probably have a case if we look at the lunatic Euro arrangement. And generally I find nothing wrong with taxing rentiers.
by generic on Mon Jun 6th, 2011 at 08:36:53 AM EST
[ Parent ]
Rent/interest are payments for nothing.

Well, no.

Rent is payment for the use value of the land you are occupying. That land could have been used for warehousing, farming, water storage, sewage treatment or any number of other things. The fact that you are living there means that it can't be used for those things. Rent is what you pay to make sure people don't use your living room for sewage processing. That has a real value.

Interest is payment for deployment of state power (money) to serve your goals. That, as well, has a real value.

If this money is instead used for public consumption (as taxes)

But taxes do not create or enable public consumption. Public spending creates public consumption. You do not need to tax in order to spend - you need to tax in order to prevent other people from spending (because you want to free up more capacity in the private economy than the inefficiencies in the private sector create automatically).

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jun 6th, 2011 at 01:49:04 PM EST
[ Parent ]
That has a real value.

Of course it has real value. And huge value indeed it has. But this is not created by the title holder. Paying rent to title holder, or interest extractor, without any labour nor entrepreneurship, creates additional cost to market prices.

Interest is payment for deployment of state power (money) to serve your goals. That, as well, has a real value.

I was talking about interest created over existing wealth. If interest is not a return to productive capital, whatever the mechanism is, it is just "rent" and again just an additional, unnecessary, cost.

by kjr63 on Mon Jun 6th, 2011 at 06:04:44 PM EST
[ Parent ]
Of course it has real value. And huge value indeed it has. But this is not created by the title holder. Paying rent to title holder, or interest extractor, without any labour nor entrepreneurship, creates additional cost to market prices.

No, the market price does not depend on whether it is extracted by the man who created the value or by someone else. If I can deny you an object of value, I can get you to pay for it, whether I created it or not.

There are advantages to taxing rents, but lower cost of living is not one of them.

Interest is payment for deployment of state power (money) to serve your goals. That, as well, has a real value.

I was talking about interest created over existing wealth.

Interest is still a payment for services rendered. Specifically, it is a payment for the service of not sending goons with guns to kick you out of your home. (That's also the service taxes are paid for.)

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Jun 7th, 2011 at 04:47:57 AM EST
[ Parent ]
No, the market price does not depend on whether it is extracted by the man who created the value or by someone else.

Yes it does. If i pay more production costs (less economic rent) in the markets, then there is more production incomes in the market. And so more supply relative to demand.

If I can deny you an object of value, I can get you to pay for it, whether I created it or not.

It is called rent, or monopoly profit. (Or perhaps interest).

There are advantages to taxing rents, but lower cost of living is not one of them.

Lower prices, equal income distribution, poverty abolished and meritocratic society. From pure economic point of view.

Interest is still a payment for services rendered, Specifically, it is a payment for the service of not sending goons with guns to kick you out of your home.

You mean mafia protection against the government?


(That's also the service taxes are paid for.)

And this second payment is for government protection against the mafia?

by kjr63 on Wed Jun 8th, 2011 at 06:11:15 AM EST
[ Parent ]
kjr63:

Interest is still a payment for services rendered, Specifically, it is a payment for the service of not sending goons with guns to kick you out of your home.

You mean mafia protection against the government?

More likely enforcers of the eviction order.

kjr63:


(That's also the service taxes are paid for.)

And this second payment is for government protection against the mafia?

In the larger order of things yes, but I think Jake is referring to the uniformed goons with guns and badges that the government employs to take people away when they do not pay their taxes.

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by A swedish kind of death on Wed Jun 8th, 2011 at 10:22:51 AM EST
[ Parent ]
Interest is still a payment for services rendered. Specifically, it is a payment for the service of not sending goons with guns to kick you out of your home. (That's also the service taxes are paid for.)

BTW, why only landless need this "protection?" Not owners? They pay neither interest, rent nor taxes.

One would think that property owners need protection against the poor, right?

by kjr63 on Wed Jun 8th, 2011 at 06:27:09 AM EST
[ Parent ]
That's why property owners pay taxes.

Anyway, John Stuart Mill altready theorised about private property along these lines:

Further, in the social state, in every state except total solitude, any disposal whatever of them can only take place by the consent of society, or rather of those who dispose of its active force. Even what a person has produced by his individual toil unaided by any one, he cannot keep, unless by the permission of society. Not only can society take it from him, but individuals could and would take it from him, if society only remained passive; if it did not either interfere en masse, or employ and pay people for the purpose of preventing him from being disturbed in the possession. The distribution of wealth, therefore, depends on the laws and customs of society. The rules by which it is determined, are what the opinions and feelings of the ruling portion of the community make them, and are very different in different ages and countries, and might be still more different, if mankind so chose.
(diary)

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jun 8th, 2011 at 06:41:23 AM EST
[ Parent ]
Why does labour pay taxes?

Mill is obviously right.

by kjr63 on Wed Jun 8th, 2011 at 10:35:10 AM EST
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..and even if we had this "protection money circle," that does make it right nor change economic laws.
by kjr63 on Wed Jun 8th, 2011 at 10:46:39 AM EST
[ Parent ]

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