Rent-Seeking Behaviour
One of our favourite imported goods store, Silver Palate, is closing down after 6 years in operation. This has been a favourite neighbourhood store for the expatriates living here for its fair prices (compared to many other imported goods stores), and a chat with the clerk revealed that the landlord wanted to raise rents triple. Similarly, book stores are closing one by one in Singapore – Borders, Harris and Page One, one by one. All quoted the same issue, that the landlords are increasing rents as much as double the previous rate. Students of Economics know that Adam Smith noted three means of income: profit, wage and rent. Much arguments have been made about the wealth-creating ability (or lack of) of rent. Arguments against rent note that rent takes away from the creation of wealth by creating unproductive overheads (unlike utilities or wages,which are productive) for the profit seekers. Rent-seeking behaviour also takes away from the creation of wealth by directing efforts toward...