Yes — The Rent Really Is Too Damn High!

New York gubernatorial candidate Jimmy McMillan is fond of saying “The rent’s TOO DAMN HIGH.”

Why, yes. Yes it is. A major share of the hours we work every week go to pay rents on artificial scarcity, as a result of the state’s enforcement of artificial property rights. And the kind of rent McMillan talks about — rent on land — is a classic example of the phenomenon.

Franz Oppenheimer, in “The State,” argued almost a century ago that economic exploitation was possible only when the possibilities for self-employment were closed off. He referred, in particular, to the closing off of possibilities for subsistence on vacant land. The economic exploitation of labor, Oppenheimer argued, could only occur when the land had been completely appropriated and employers no longer had to compete against the possibility of self-employment. When access to the means of subsistence and production was cut off, workers had to accept employment on whatever terms the employer offered.

But, Oppenheimer continued, vacant land had never been fully appropriated by peaceful, economic means (i.e., homesteaded by people occupying unowned land and altering it with their labor). Rather, it had been appropriated by political means: In the Old World and much of the colonial world, feudal and quasi-feudal ruling classes had been granted absentee title to collect rent from the rightful owners of the land — the people whose ancestors had been working it from time out of mind. Elsewhere in the Old World and colonial world, the rightful peasant owners were evicted and their land taken over by statist landlords. And in sparsely populated areas of the New World, the state preempted ownership of vacant land, barred access to ordinary homesteaders, and then granted title to favored land barons and speculators. The result is that we see enormous tracts of vacant and unimproved land held out of use by state-privileged landlords, so that land is made artificially scarce and expensive for those who desire an opportunity to support themselves.

What McMillan misses is that land is just one application of a much broader principle. Capitalism — as opposed to free markets — is indeed about “private property rights,” as its apologists argue. But it’s not about legitimate private property — the right to possess the fruits of one’s own labor and things acquired by peaceful trade with others.

Rather, “private property rights” under capitalism are about ownership of the right to control access to natural opportunities.

The Marxist Maurice Dobb once gave the example of government granting to its favored clients a monopoly right to erect toll gates across the roads, and to enrich themselves by pocketing the tolls. Standard marginalist economics, Dobb argued, would treat opening the gates as a “productive activity,” and claim that the tolls contributed to production by the amount they added to price. Forbearing to interfere with production would be a productive activity, and the tribute collected for this forbearance would be the reward for productive services.

This is what Thorstein Veblen called “capitalized disservicability”: the assignment of an economic value to the magnanimous act of allowing production to occur without interference. Among the less academically inclined, I believe it’s called “protection money.”

Such artificial property rights include many things other than land. Every state grant of power to control the conditions under which other people may undertake productive activity is a source of illegitimate rent. Both tariffs and “intellectual property,” for example, are forms of protectionism in that they restrict the right to produce a given good for a particular market area to a privileged class of firms.

In every case, the person who would apply his labor, energy and skills to the earth and its natural resources is forced to pay tribute for the right to produce and work to feed a useless parasite in addition to himself. And in every case, the privileged classes of landlords, usurers and other extortionists seek to close off opportunities for self-employment because such opportunities make it too hard to get people to work for them on profitable terms.

Much or most of the price of most of the goods you buy consists of embedded rents on artificial property rights. Much of the product of your labor goes as rent to your employer, because the artificial dearth of natural opportunities to produce creates a buyer’s market for labor in which workers compete for jobs instead of jobs competing for workers.

The rent is, indeed, too damn high.