By JC Collins
Rent-seeking is a term which brings up various images in the human mind and often has multiple definitions depending on the socioeconomic position of those using the phrase. For our purposes there are two definitions which we will consider as the basis for the term rent-seeking.
One, the act or process of using one’s assets and resources to increase one’s share of existing wealth without creating new wealth.
Two, the act or process of exploiting the political process or manipulating the economic environment to increase one’s revenue or profits.
As readers progress through the Fundamentals of Multilateral Investing series with me we begin to realize the importance of the relationship between the savers of capital and the users of capital. This relationship acts as the foundation for the capitalistic dynamic which exists between capital and labor.
Rent-seeking is a method by which the savers of capital do not make it available to the users of capital for the function of creating new wealth. The political process is both manipulated and leveraged in order to facilitate this retardation of wealth creation.
Thus, both definitions of rent-seeking as described above are merged into one collective mandate of those with savers of capital who do not wish to contribute to the healthy development of additional wealth. This new and additional wealth creates jobs and maintains the relationship between capital and labor.
Here on Philosophy of Metrics we have discussed rent-seeking, and the self-limiting of rent-seeking, on many previous occasions. It is a subject which I have not spent as much time putting forward as some of the other material. The reluctance on the readers part to accept that there in fact could be a movement of self-limiting, which would originate from within the international institutions, and select individuals within what we would reference as the elite, has made any in-depth conversation on this topic challenging.
The anti-corruption movement which has been taking place internationally for a few years now is unfolding with a steady rhythm and results are still slow in coming. Many countries, most ironically considered of the emerging variation, are moving forward on various anti-corruption probes. Many arrests have been made and more information comes out on a regular basis about those in positions of power and influence who have been discovered implementing rent-seeking policies.
So it is not without surprise that we hear of the recent release of the so-called Panama Papers. From the article published by non-other than Haaretz describes the Panama Papers as follows:
“A trove of files obtained by German journalists reveals how a global industry of law firms and large banks sell financial secrecy services to politicians, crooks and drug dealers as well as billionaires, celebrities and sports stars.”
The article continues:
“These findings are being disclosed on Sunday and over the next several days with the publication of the results of an investigation conducted by the International Consortium of Investigative Journalists, the German newspaper Süddeutsche Zeitung and more than 100 other media organizations, among them Haaretz. The database of 11.5 million documents and correspondences that has come into the hands of the ICIJ reveals how a global industry of law firms and large banks sell financial secrecy services to politicians, crooks and drug dealers as well as billionaires, celebrities and sports stars.”
“The investigation began after Süddeutsche Zeitung journalists obtained millions of documents from a secret source and shared them with the ICIJ and other media partners. The media organizations involved in this collaboration have not paid for the documents. For many months journalists working in more than 25 languages cooperated in the biggest journalistic investigation of all time. They delved into the internal operations of Mossack Fonseca and traced its clients’ secret deals worldwide. They shared information with each other and chased down clues with the help of corporate documents, title deeds, financial transactions, court records and interviews with money-laundering experts and top law-enforcement officials.”
The release of this information is a huge story. Readers should be encouraged to explore the information and consider the broad-spectrum of individuals who are on that list. There are people such as Saudi Princes and the father of UK Prime Minister David Cameron, business partners of Putin, and even the crowd favorite – movie actor Jackie Chan.
The release of this information, along with the on-going anti-corruption investigations and movements which are accompanying the multilateral monetary transition, would suggest that the self-limiting of rent-seeking which has been previously discussed here on POM is in fact progressing under the radar.
With that thought in mind, I would like to take the reader back to a post from May 23, 2014, almost two years ago, where we defined the term “The Primordial Class”. The article was titled The Corrupt Primordial Class and delved a little deeper into the mindset and reasons behind both corruption and rent-seeking. The full article is reproduced below:
Socialism corrupts capitalism and then blames capitalism for the ineffectiveness of its own inefficiencies. But let’s not get lost in ideological blathering and economic system fundamentals.
All economic and sociological structures are built by the human mind and as such are designed to feed the deficiencies within the mind itself. These deficiencies are born from the survival instinct of primordial man and his battle to survive.
The class structures which we have been conditioned to accept are defined as the poor, middle class, and rich. But what is the one thing all classes have in common?
Perhaps human greed is the answer, though the correct answer could also be man’s survival instinct which is manifested as greed. This greed does not seldom exist on the surface of our everyday interactions, but is well hidden within the confines of the subconscious mind and consolidated filters of the senses.
As such, few of us consider ourselves to be greedy people. Yet, survival today, being represented by trips to the grocery store and gas station, has left a primordial emptiness within us which we attempt to fill with the waste and vagaries of the material world.
Long journeys across the plains foraging for food is no longer the physical requirement of the modern man. The mind, not focused upon on the securing of food and shelter, has left our primordial selves in a form of suspended animation.
This status has been manipulated and further engineered to deepen the coma of the higher awareness within and has reduced us to the lowest common denominator of base physical existence. A new class of humanity has emerged from the mass collective of modernity and overabundance.
I propose to define this new class distinction as – The Primordial Class – the lowest common denominator quest for survivability as actualized in the amoral structure of modern civilization.
This class can be found in all levels of civilization and in all segments of industry and arts. It is the mindset of what is mine is mine and what is yours is also mine.
It is the madness of dancing on pedestals over the void of selfness.
It is the destructive idea of peeling back the street to take what is underneath it.
It attempts to qualify and define the nature of now.
Mankind cannot go back to the days of foraging and shivering in caves at the sounds of predators. Mankind must push through the traps of modernity and explode from the prison of the senses.
Our true physical instinctual nature was best represented by Capitalism but has since been corrupted into a twisted ideological bastardization of what we are and what we seek to be.
A king and beggar play chess together.
The king can king and the beggar can beg,
But the board knows the truth of it all.
The affliction of the Primordial Class knows no boundaries or borders. Whether you be rich or poor, or wanting more, the corruption of the human heart and mind is the door through which we have entered the modern the world.
It is time to relinquish old paradigms and unfounded stereotypes and realize that corruption in the material world is not limited to the boundaries which satisfy our lack of awareness.
It is time for the Primordial Class to be subjected to the self-limiting of rent seeking. This rent seeking exists at all levels of society. Those who are rich are cursed by those who are not because they are not. The majority in civilization are the Primordial Class no matter the sociological level.
It has been relentlessly repeated here by many that for the world to change we must change ourselves first. The affliction of primordial corruption must be recognized within individually first before real change can be realized for the whole.
It is a guaranteed reality that there are those at all levels of society who are not completely lost to the Primordial Class. Perhaps a few of us have already consolidated ourselves here at Philosophy of Metrics. We invite more, for with each awareness comes the ability to free more. Tomorrow is depending on it. – JC