The Distinction Between Rent-Seeking and Extraction
Rent-seeking is not the right name for this economic phenomenon. When one rents something, one provides the useful value of an asset while retaining the risk associated with owning it.
Extraction is the more accurate term.
Extraction occurs when an outsider who provides no corresponding value, benefits from a system or its derivatives while shifting the risks, costs, downside, or burden of value provision onto others.
Music/Movie/Media industry execs, monetary supply controllers, commodity/education cartels, market gatekeepers, medical plan/insurance brokers, etc - draw down 80% of the margin, yet provide, at most, 5% of the provision of value and bearing-of-risk. These indeed are the inflating industries for the past 40 years.
The Contrast in Cash:
If you hold $400,000 in currency or productive assets, that capital might generate $2,500 a month in income. But the capital is yours to lose. You bear the financial risk, and you provide the underlying value from which the income is derived.
If, by contrast, you receive $2,500 a month for life in 'status payments' while providing neither value nor assuming the incumbent risk, you occupy a privileged economic position. You are the very “rich” you may criticize: receiving a continuing stream of benefits without bearing the corresponding risk or provision of value.
Virtue is not an asset at risk, nor any provision of value:
If you extract/tax/tithe money from risk holders and value providers by claiming to virtuously represent those receiving such benefits, you are an extraction crony. Charities or agencies which drain donations by 80% before giving them out to their supposed beneficiaries, are just such a class of royalty.
Likewise, if you derive income or advantage from risk holders and value providers by controlling access to money, trade, legislative, education, or market supply - rather than by creating corresponding value - you are an extraction crony.
Unless the recipient is this play is truly disabled in some form, all this is also known as "Royalty." In socialism, not everyone is equal - there is always a Royal or Mafia class (often hidden). Their burden ensures that the payments doled out to all, become materially worthless because very few are providing the corresponding value. Everyone suffers.
What used to cost $12 based upon its work content and direct provision of value/risk, now costs $100, in order to pay off the imbedded Extraction Chain. In an economic setting with no borders, this Extraction Chain will burgeon out of control.
The cumulative effect is a transfer and dilution of value: claims on wealth expand without a corresponding expansion in the underlying value available to satisfy those claims. When that process occurs through monetary expansion, the resulting dilution manifests as inflation.
@EthicalSkeptic
