Dissipation of Economic Rents: when money is wasted chasing money


#21

Or you could just abandon the trophy rat race and get a doe tag and bag one on your own land.


#22

Exactly.

Before long, economics predicts that the money-chasers would be spending about $1m/day on bill-catching strategies, wiping out all the value that was fluttering down from the sky.

This only makes sense if you assume nobody matters except the rent-seekers. What about the guy who makes the money-catcher drones? From his point of view, there’s a ton of value being created. How about the supplier of drone motors? And the resort he goes to with all that drone money?

If this is an analogy for the 0.01%, it’s a poor analogy. The problem with the very wealthy is there are too few of them, so they can’t “trickle-down” the money. Anybody can go catch bills at the airport, so it’s going to get crowded, but the Walton family will never get crowded. And the money ends up offshore - or buying government.


#23

Usually what happens is debt is not sold, per se. Instead blocks of charged off debts or more accurately the information of those debts is provided to a debt collector under various contractual terms that generally boil down to a percentage based on what each party thinks is recoverable.

For instance BoA might take a stack of charged off (or not) credit card accounts “worth” (but not valued) at 100 million and give exclusive collection rights to Debt Collectors Inc. The debt collector can then take whatever action it deems necessary or fruitful (restricted by the CCPA, particularly the FDCPA) to collect that money. Whatever it collects, the debt company is obligated to give BoA say… 2% on really old/difficult debt, more on more recent or promising debt.

Hungry collection companies send letters, hound and harass by phone, make threats of legal action they would never and often can’t take etc etc abuse abuse.

Some just send a letter or not even that, since often these contracts stipulate that the debt collector gets paid even if the debtor pays the creditor directly.

And most, the lion’s share, of “debt” in collections is bullshit, charged off such that there is no benefit to the debtor for paying it, or just fees and interest off a principal long ago paid back, or predatory loan/credit issuance, etc etc etc.

Some people will stand and say you must pay it, because it’s a debt and morally blah blah blah, but that is ignoring the systemic abuse present, and ignoring that paying it supports the abusive system. Fact is, if your debt reaches third party collections, you lose if you pay. (Unless your subjective moral barometer is set to blinds-wearing sucker, in which case you win warm fuzzies and precisely nothing else)

Don’t pay debt collectors unless they alert you to something you honestly overlooked and benefitted from, where the fees and interest and penalties do not exceed the principal, and don’t pay charged-off debts, that’s just feeding the hand you should be biting, because it wants to stab you.

Paying old debts does not make you more credit-worthy, except to predatory institutions that hope you fail and can help you do so.


#24

Oh so right.

And let me remind our many pinch-nosed, high-busted net nannies: consumer debts are quite often not paid off by the ‘offending’ party. They are - at first - paid by family members or friends who receive distraught phone calls late in the evening. Commonly a deadbeat’s debts to RandomMegaPseudoBank.com are covered by family and friends… at least until the third or fourth go- 'round.

RandomMegaPseudoBank’s business model is commonly based on this antiquated social response.

As an unfortunately necessary aside: do not go on about how close kin or friends should not respond this way. That sort of BS only reveals your deficiencies. Foremost the intellectual ones. But, then also the ethical and moral ones.

Friends and kin will step in without much consideration. Deal with it. Recognize that they – the solvent ones – will eventually fuck you hard for proclaiming them fools for doing the right thing by their own beloved, close-kin fools.

Laws against this sort of shit exist to protect people like me… more than to protect the idiots I drop dimes on behalf of.


#25

I always thought that the most revolutionary thing we could do to reform our economy in one fell swoop would be to make all debts non-transferable.


#26

Only consumer debt, i.e. credit cards. Tax debt and student loans stay on there forever.


#27

YES! And copyright, and patents, and trademarks, and…


#28

If it’s consumer debt, you may have rights under the Fair Debt Collection Practices Act that may be worth exploring.


#29

So, what exactly is a “pinch-nosed, high-busted net nanny”? Those words in that combination are a real puzzle for me.


#30

I’m a big fan of a federal surcharge for stock transaction requests (e.g., a fee that you incur even if you later cancel a stock order). You could do a penny to start, and then set it to rise annually with inflation. Any institution managing a pension / 401k would not incur these fees for those funds.

Sure, market inefficiency would increase (by how much is highly debated and probably grossly overestimated), but technology and access have shrunk those inefficiencies over the decades even without algorithmic trading and “quote stuffing”. A wider and less responsive bid-ask spread doesn’t mean (or matter) much to people who aren’t frequent traders. Remember, it wasn’t more than thirty years ago that a personal investor could get a trade executed in less than a hour (and often a lot longer).

The big boys will still be able to get their cut (they always manage a way), but it would hopefully discourage the slipshod efforts of small trading firms and random “disruptors” attempting to run experiments on the world markets. If you have to pony up a lot of cash upfront, someone has to do a cost-benefit analysis, and rather than there always being a chance of some slim margin of profit, there would be a lot more situations where it’s just not profitable.


#31

Isn’t there a cost to the people who decide not to queue any longer, and don’t get to go to the concert? These people pay for the tax with their boredom.

TANSTAAFL


#32

There is boredom. And there is bittorrent.


#33

Those too! Allow the creators to license them however they want, but IP stays the property of the person who created it until it enters the public domain or they die (whereupon it also enters the PD).


#34

Some trophy hunters still consider mature does to be trophies. And harvesting deer from your own land obviously provides additional value in the form of accomplishment, self-reliance, and self-satisfaction. But even John Eberhart will admit that owning land is basically a non-starter for the average hunter. Which is again an illustrative analogy to the dissipation of economic rents.


#35

And even more to the point, it’s a regressive tax: most people who stand in line are doing so because the market value of their time isn’t worth as much. People with more money than time pay a re-ticketer like StubHub to get the tickets they want without having to stand in line for them. Or they buy the Broadway seats they want direct from the theatre, instead of standing in line on the day to get the few half-price tickets available (which may or may not be to a show they wanted to see, and may or may not be good seats). An example I used in another thread is well known here in Chicago: standing in line (thankfully in the past few years they’ve finally added an online system, but that still requires having access to a computer at 5:00am) to get your kid into the free/nearly free Chicago Park District after-school and summer programs instead of paying through the nose for any other options available for working parents.

These people should not be paying higher taxes. They’re already paying the highest tax: giving up their time.


#36

You’re about halfway to the finish line…
I still get sporadic calls on my work cell phone from debt collectors for the person who had the number prior to me – I’ve had the number for 12 years now.


#37

But doesn’t the Bible mention that debts should be forgiven after 7 years? And since this is a ‘Christian’ nation, shouldn’t that be happening?


#38


closed #39

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