SALON

Monday, Mar 25, 2013 2:00 PM UTC

Defeating useless rich people

Taming wealthy, unproductive "moochers" will require a populist campaign to stop them. Here's how we can do it

By

Topics: Labor, Progressives, Taxes, Makers vs. Takers, makers, Finance, Insurance, Real estate, ,

Defeating useless rich people Donald Trump, Mitt Romney, Lloyd Blankfein (Credit: lev radin via Shutterstock/Reuters/Steve Marcus/Jim Young/Salon)

In two previous columns, I argued that left and right alike are confused by a failure to distinguish productive businesses that sell innovative goods and services from “rentier” interests — landlords, lenders, copyright holders and others — which use their natural or artificial monopoly power to extract excessive tolls, fees and other recurrent payments from the rest of society, including productive businesses. The fees or rents extracted by these interests constitute a kind of “private taxation” which — rather than public taxation — is the greatest threat facing America’s productive economy.

Today America’s powerful rentier interests, particularly those in the FIRE (finance, insurance and real estate) sector, are mobilizing campaign contributions and paid propaganda to promote what I called the Rentier Agenda: low taxes on those whose income is derived from capital gains; the privatization of public infrastructure and the deregulation of regulated private utilities, to generate windfall profits for investors in privatized or deregulated agencies; and a macroeconomic policy that serves the interests of creditors, at the expense of slow growth and mass unemployment, rather than productive businesses and workers. Similar observations have been made by many on the left and some mavericks on the right.

To counter the domination of America’s rentier oligarchs, we need an Anti-Rentier campaign that would unite unlikely groups: owners of productive businesses as well as workers, populist conservatives and liberal reformers. An Anti-Rentier movement would distinguish businesses that make profits by providing worthwhile goods or services in innovative ways from rentier interests that passively extract exorbitant tolls and fees from the economy without adding any value.

An Anti-Rentier movement would oppose unproductive, ill-begotten wealth, not the rich in general. Wealthy individuals who get richer by investing in start-up companies or funding long-lived, creative blue-chip firms provide a valuable benefit to society, even as they risk losing their own money. Such risk-taking investors are the opposites of financial sector rentiers who seek to bribe policymakers into letting them privatize their gains while socializing their losses.

But government can and should minimize passive rent extraction and unproductive speculation or gambling. The methods for minimizing excessive rents are as various as kinds of rentier interests. 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 Anti-Rentier tax agenda would seek to raise capital gains taxes on rentiers while lowering the tax burden on American workers and the profits of productive businesses. The Anti-Rentier policy reform agenda would involve increasing public ownership or utility regulation of infrastructure. Instead of cutting Social Security and Medicare to force the elderly to buy more products from parasitic private-sector monopolies and oligopolies, the Anti-Rentier coalition would favor expanding Social Security and other public social insurance, while phasing out tax subsidies for private health insurance and private retirement products. When it comes to economic management, an Anti-Rentier movement would tolerate a modest amount of inflation, in the interest of productive business and solvent government, at the expense if necessary of the creditor elite. An Anti-Rentier movement would consider using methods used by other governments, such as postal savings banks, public investment banks, and “financial repression” (which isn’t as scary as it sounds) to raise adequate money for government while minimizing blackmail, in the form of high interest rates, imposed by domestic creditors and foreign creditors.

If these Anti-Rentier reforms were undertaken, then genuinely productive American businesses would be freed from many costs imposed on them by the “private parasites” who are far greater threat to its future than America’s public sector. Cutting off excess rents would not only shrink the rentier elite’s share of the U.S. economy, it would also alter the membership of the exclusive club of rich Americans, which would have a much greater percentage of “makers” who got rich by selling new goods and services and a much smaller proportion of “takers” from finance and real estate. The typical rich American should be an innovative industrialist or technologist, not a Wall Street financier or a guy with a parking-meter monopoly. Super-rich bankers would be as rare as super-rich public utility executives.

Americans have tamed rentier industries before. In the early twentieth century, exploitative private power companies were domesticated as regulated public utilities. The Enron scandal, associated with late-twentieth century deregulation, proved the wisdom of the utility regime. And even conservative states like Texas have always levied severance taxes on natural resource monopolies. The challenge of our time is to extend utility-style regulation or public ownership to today’s out-of-control, predatory rentiers in higher education, health care, and — most of all — finance.

Productive Americans of center, left and right, unite! You have nothing to lose but your rents.

This is the third in a three-part series. Read Part 1 and Part 2.

Michael Lind is the author of Land of Promise: An Economic History of the United States and co-founder of the New America Foundation. More Michael Lind.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • This photo. President Barack Obama has a laugh during the unveiling of the George W. Bush Presidential Center in Dallas, Tx., Thursday. Former first lady Barbara Bush, who candidly admitted this week we've had enough Bushes in the White House, is unamused.
    Reuters/Jason Reed

  • Rescue workers converge Wednesday in Savar, Bangladesh, where the collapse of a garment building killed more than 300. Factory owners had ignored police orders to vacate the work site the day before.
    AP/A.M. Ahad

  • Police gather Wednesday at the Massachusetts Institute of Technology to honor campus officer Sean Collier, who was allegedly killed in a shootout with the Boston Marathon bombing suspects last week.
    AP/Elise Amendola

  • Police tape closes the site of a car bomb that targeted the French embassy in Libya Tuesday. The explosion wounded two French guards and caused extensive damage to Tripoli's upscale al-Andalus neighborhood.
    AP/Abdul Majeed Forjani

  • Protestors rage outside the residence of Indian Prime Minister Manmohan Singh Sunday following the rape of a 5-year-old girl in New Delhi. The girl was allegedly kidnapped and tortured before being abandoned in a locked room for two days.
    AP/Manish Swarup

  • Clarksville, Mo., residents sit in a life boat Monday after a Mississippi River flooding, the 13th worst on record.
    AP/Jeff Roberson

  • Workers pause Wednesday for a memorial service at the site of the West, Tx., fertilizer plant explosion, which killed 14 people and left a crater more than 90 feet wide.
    AP/The San Antonio Express-News, Tom Reel

  • Aerial footage of the devastation following a 7.0 magnitude earthquake in China's Sichuan province last Saturday. At least 180 people were killed and as many as 11,000 injured in the quake.
    AP/Liu Yinghua

  • On Wednesday, Hazmat-suited federal authorities search a martial arts studio in Tupelo, Miss., once operated by Everett Dutschke, the newest lead in the increasingly twisty ricin case. Last week, President Barack Obama, Sen. Roger Wicker, R.-Miss., and a Mississippi judge were each sent letters laced with the deadly poison.
    AP/Rogelio V. Solis

  • The lighting of Freedom Hall at the George W. Bush Presidential Center Thursday is celebrated with (what else but) red, white and blue fireworks.
    AP/David J. Phillip

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 101 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

vote
Would we give up burgers to stop climate change? New study suggests if we reduce our intake of animal products by 25%, we can halt climate change
542 points543 points | 194 comments
vote
Facebook has been used to find ex-lovers, childhood BFFs or the one who got away. He used it to find the guy who, without his consent, made him his drug mule.
229 points230 points | 21 comments
vote
“This could be a career ender for Michele Bachmann”
139 points140 points | 54 comments
vote
Poll: 3 in 10 voters say “armed revolution might be necessary” - 29% say they believe they'll have to act "in order to protect our liberties" in the next few years
46 points47 points | 16 comments
vote
Capitalism, not feminism, killed home cooking–and fixing our broken food system is gonna take a lot more than some privileged women embracing “new domesticity”
34 points35 points | 19 comments

From Around the Web

Presented by Scribol
listener_new_rect The Listener: "The Shelter Cycle": Raised in a cult

Recommendations