We sit, but money ...does not come: rentier as a class is dying out in the modern world

Political analyst Dmitry Nekrasov continues to publish in his blog a series of posts about wealth inequality in the modern world. This time he turned to the rentier problem:

“One of the bogeymen for fighters against inequality is the class of rentiers - wealthy loafers who live their lives in fashionable resorts. This picture looks especially contrasting against the background of honest workaholic, barely making ends meet.

From the point of view of the objective economic costs of society, this problem is extremely insignificant - it boils down only to the fact that an insignificant percentage of the population (rentier) is not involved in the production of real goods. However, it causes irritation as a blatant example of social injustice, and therefore over the past 150 years many books have been written about the harm of idle idlers, and this image has firmly entered popular culture and consciousness.

In 1899 Veblen Thorstein wrote the book "The Leisure Class Theory" substantiating the parasitic essence and economic uselessness of rentiers (the rich and the idle in general). And although economic reality has radically changed over the past 120 years, the theses of this book still coincide with the ideas about the life of a significant majority of the population.

A modern conversation about rentiers must begin with the question of who we actually understand by this concept and how to separate the rentier from the Soviet term parasite? Let me remind you that in the USSR, any healthy unemployed person of working age was called a parasite and could receive a real prison sentence for his idleness.

If we start with a simple definition of unemployed healthy people of working age, we see that the largest group of such people in developed countries will be housewives. In particular, in the United States, 14.3% of all women between the ages of 25 and 54 do not work or look for work because they are busy with household responsibilities. It is clear that raising children is a big job, but not all housewives have children. The majority of non-working housewives do not work in exactly the same situation in which other women with the same number of children of the same age work, and in the USSR most of such housewives could be judged for parasitism.

The second largest category of unemployed able-bodied people will be the unemployed, receiving benefits from the state. It is clear that most of the unemployed sincerely strive to find a job, however, especially in Western Europe, there is a fairly large category of people of working age who consciously live on social benefits and do not make real efforts to find a job somewhere. The number of such people is measured in units of percent of the working-age population. Interestingly, many on the left are actively advocating for the introduction of an unconditional basic income, which will obviously increase the number of such people living on government rent.

The group of the so-called. structural unemployed who are not always registered as unemployed and do not necessarily receive social benefits. Quite common examples of this kind are middle-aged people who have worked in the past in middle-high management positions or as highly qualified specialists. For various reasons, today they cannot find a job of the same level, and they do not want to work with the loss of the hierarchy or qualifications. Earlier savings, work of spouses, waiting for retirement or current social benefits allow them not to work where they have to, and they may not be destined to find work of the previous level of pay and qualifications. Should they be considered rentiers or parasites?

It is clear that the advocates of universal equality who denounce the rentiers mean not at all unemployed or housewives, so let's go through the income hierarchy a little higher.

A lawyer or accountant, with a salary above the average in the economy, 40 years old, decides that he wants to change his lifestyle. He rents his apartment in New York or Paris and moves somewhere in Bali or Goa to surf there for pleasure or just do nothing. This social strategy is usually called downshifting. Such a person is not rich, the income from renting an apartment and savings would not be enough for him to live a decent life in a developed country, but with the prices Goa will allow him to live without special need for his own pleasure. The legislation of the USSR would have called such a downshifter a parasite and sentenced to imprisonment. Still: a person of working age, instead of socially useful work, indulges in the temptations of Western culture.

Let's go further: the average entrepreneur at 50, after decades of risky business and irregular work, sold the company he had created for several million dollars, bought a house in the village and started a family (there was simply no time before). I decided to devote the golden autumn of my life to raising children. Miners or pilots, in accordance with the law, retire earlier than other professions, because work is harmful. Being an entrepreneur is hardly healthier.

It is clear that in addition to Soviet legislation, such an entrepreneur would be condemned by many modern leftists. However, this is also not a real wound, after all, he earned himself and left for the village. Real rentiers, they have not hit a finger since childhood, their main type of activity is on Ferrari in the casino.

The problem is that the statistics of developed countries, by no means of measurement, in principle, can find in the modern economy any noticeable stratum of "real rentiers". Let's start with the fact that the average age of inheritance for example in France is 50 years. This makes it very difficult to comply with the condition “not to work from childhood”. Both wealthy parents and society in general expect wealthy heirs to study and build independent careers.

The strategy of not working from childhood is socially condemned and simply not fashionable. The young offspring of wealthy families do sometimes drive Ferrari to the casino, but they do this while studying at prestigious universities, and then go to work (in developed countries, mostly not in the business of their parents) and build careers. It is obvious that the social capital of the parents contributes to these careers, but until the inheritance is 50 years old, on average, the heirs have to work independently for a long time.

Based on research on inequality by the leftist economist Piketty, we can see that among the richest 10% of the population, and among the richest 1% of the population of developed countries, labor incomes greatly exceed their income from capital. To find people whose capital income on average would exceed labor income, we have to move to the zone of the richest 0.1%, i.e. to every thousandth. And in order to find people whose capital income would exceed the sum of labor and mixed income (When a person is self-employed or runs a small business of his own, it is very difficult for him to separate labor income from capital income. Lawyers, notaries, singers or average businessmen receive mixed income) move into the range from 0.05 to 0.01% of the richest (i.e., from one in five thousand to one in ten thousand). Only this vanishingly insignificant group is dominated by rich people for whom capital income is the main one. But their overwhelming majority works.

If we go down in the income groups of developed countries, then we find 1-2% of unemployed, living on property income, but their income is at the level of the middle class. They can hardly be called rich, besides most of them previously worked. For the most part, these are the aforementioned downshifters or structural unemployed.

Only 15% of all millionaires living in the United States inherited their fortunes, the rest earned themselves. Moreover, the vast majority of these 15% of hereditary millionaires have worked their entire lives. According to the leftist Pikety, the income level of the owners of the 1% of the largest inheritances today is approximately equal to the income of the owners of the 1% of the highest salaries, while during the 19th and early 20th centuries, the incomes of the 1% of the richest heirs exceeded the income of the owners of 1% of the highest salaries in , 5-3 times.

Thus, we can safely say (if we are talking about developed countries, and not about the monarchies of the Persian Gulf) that those classical rentiers, with which leftist thinkers fought for so long, are practically absent in the modern economy. The fight against rentier today is akin to the creation of a society for the extermination of mammoths, which was a little late, because the mammoths were exterminated a long time ago. Under the most incredible assumptions, the number of rentiers who correspond to the textbook ideas (i.e., both rich and practically unemployed) can be measured in hundredths of a percent of the population of developed countries, while the number of social dependents who consciously live on state benefits is measured by several percent of the population. The main reason for the existence of modern state rentiers is left-wing social policy.

As Vladislav Inozemtsev correctly noted, the "leisure class" today is not the rich, but the poor.

And it was not by chance that I started a conversation about rentiers with housewives, downshifters and Soviet legislation on parasitism. First, a just desire that there are no dependents in a society can take rather tough, highly undesirable forms for most. The freedom to determine the relationship between the volume of your work and the volume of consumption yourself is one of the most important freedoms of the modern world.

Secondly, it is necessary to think about whether the potential (mostly unrealizable in practice) ability of every hundredth to live in idleness at the level of the middle class and every ten thousandth to live luxuriously in the same idleness, is an unnecessary price to pay for the absolute majority of the population to have sufficient incentives to work and create more than is needed for current consumption? We pay with the rarest, isolated cases of modern rentiers from capital for effective incentives in the economy, and for what do we pay with much more frequent cases of rentiers from social benefits?

There is one more question: were the very rentiers mammoths that we exterminated long ago were so harmful? After all, the rentier society really existed in Europe in the 19th century, and in many places even before that. A society in which up to 1% of the population not only did not work, leading a luxurious lifestyle, but also considered work something reprehensible, unworthy of the upper classes.

This society had unconditional disadvantages and not a single person in their right mind would suggest returning to that state today. However, there was one very big plus: a stratum of idle educated people who did not depend not only on government power and the need to work, but also on the need to gain popularity among the broad masses of the population. Most of these rentiers, of course, got drunk and went to balls, but purely statistically, there were those who could not mess around, went into politics or wrote. I went into politics not to indulge the voters, but to carry my own ideas. He wrote without being guided by whether the mass reader would buy his book in large circulation. I wrote what I really thought.

It is the various forms of rentier / aristocracy that have historically provided society with independent thinkers and politicians who profess what they preach. Rentiers / aristocrats are not just people who do not depend on anyone financially. This is a culture in which it is not considered shameful to live on an inherited state and idly philosophize or implement your ideas all your life simply because “I see it this way”. The modern cult of success (in which it is important to achieve success on your own to achieve the respect of others) does not encourage such behavior, and modern success is, among other things, circulations and likes.

Under these conditions, independent thinkers / politicians are becoming increasingly rare. They are replaced by thinkers and politicians who depend on the demand of readers or the demand of voters, and therefore inevitably indulge the base tastes and incompetent opinions of the majority.

Politicians who came from the aristocracy / rentier first believed in something themselves, and then convinced the masses of these ideas, which greatly distinguishes them from most modern politicians who first conduct sociological polls about what ideas are now popular with the voter, and then choose meanings on the basis of which to effectively build an election campaign.

Churchill became Churchill because he had the courage for several years, contrary to popular opinion, risking his career and hearing his speeches whistling in parliament, to say that Hitler must be stopped even at the cost of military intervention. Churchill could make tactical concessions to public opinion, but only for the sake of strategically realizing his vision of where to lead the country. The idea that reforms should be carried out on the basis of sociology carried out among miners would have seemed to Churchill absurd if not criminal.

The situation is similar among the so-called. public intellectuals (English: public intellectuals) instead of spreading knowledge and educating the moral qualities of the majority (as it was in the era of the Enlightenment), modern thinkers, in pursuit of the reader and likes, indulge his tastes and opinions.

Attempts to fill this gap with all sorts of independent research centers, scholarships and grants cannot be fully successful, because even funding that is not politically motivated is still mediated by issues of the reputation of the institutions themselves and think tanks (eng: think tanks). Research or speculation that is strongly at odds with the mainstream poses the risk of loss of reputation for both institutions and research, and with it further funding. And accordingly, the researchers themselves in their work and mental activity cannot but look back at such risks. In general, any grants will not provide the level of social well-being that aristocrats / rentiers had in the past as a given.

A rentier or an aristocrat in this sense was much freer both in thinking and in statements, it was easier for him to resist both fashion and like-mindedness. Whether it paid off from the point of view of public welfare the cost of living a luxurious life for 1% of idlers is a moot point. But that which provided some useful qualities of the social system, which are now lost, is undoubtedly..."