Re:The Rent Seeking Economy
by snowwrestler on Monday April 15, 2013 @10:52AM
(#5551763)
People said the same things about MySpace and their lunch was eaten by Facebook.
I use Facebook because most of my friends and family are on Facebook--true. But there was a time when I did not use Facebook, but still kept in touch with friends and family. I transitioned to Facebook because it worked better than the previous technologies I used (snail mail, phone, email, MySpace, etc.).
There was nothing magically unique about that transition; it could happen again if someone makes something better than Facebook.
I actually don't think Facebook is a great example of rent-seeking because Facebook makes so little rent...Zuckerberg is rich on paper because of how he played the investment market, not the rent he charges on his product. Facebook's profits are very small.
Microsoft or Apple are probably better examples, but even those fail the typical definition of "rent-seeking", which is economic activity that is captured by regulatory exclusion. Neither Microsoft nor Apple achieved their position because the government mandated that everyone must use Windows or iTunes. They achieved their position by out-competing the alternatives.
It's true that once they were on top, they were harder to defeat. But that does not make them rent-seekers. And historically this sort of advantage tends to be pretty temporary. History is full of dominant companies that are no longer around. I remember a time when Microsoft was the feared 800 lb gorilla that no one could beat...people don't think that anymore.
I use Facebook because most of my friends and family are on Facebook--true. But there was a time when I did not use Facebook, but still kept in touch with friends and family. I transitioned to Facebook because it worked better than the previous technologies I used (snail mail, phone, email, MySpace, etc.).
There was nothing magically unique about that transition; it could happen again if someone makes something better than Facebook.
I actually don't think Facebook is a great example of rent-seeking because Facebook makes so little rent...Zuckerberg is rich on paper because of how he played the investment market, not the rent he charges on his product. Facebook's profits are very small.
Microsoft or Apple are probably better examples, but even those fail the typical definition of "rent-seeking", which is economic activity that is captured by regulatory exclusion. Neither Microsoft nor Apple achieved their position because the government mandated that everyone must use Windows or iTunes. They achieved their position by out-competing the alternatives.
It's true that once they were on top, they were harder to defeat. But that does not make them rent-seekers. And historically this sort of advantage tends to be pretty temporary. History is full of dominant companies that are no longer around. I remember a time when Microsoft was the feared 800 lb gorilla that no one could beat...people don't think that anymore.