> This is a hugely popular sentiment in the wake of the financial crisis, but do you actually have some examples of rent seeking activity by banks in 2014 that is emblematic of this?
The Goldman LME aluminium warehousing, where they paid people to deposit aluminium with them to inflate the length of the queue to get aluminium out, so that the queue was longer and they could charge more (literal!) rent before people eventually got their aluminium out.
> Your modern megabank takes in billions of dollars in profits per quarter and I'm just curious where the rent seeking shakes out in all of that.
I have a thesis that every megacorp turns to rent seeking, because they're too rigid to innovate. But yeah, I suspect it's a small proportion of the profit of the financial industry as a whole. A lot of people want to buy and sell stuff, so there's a lot of money to be made in even a slim margin there.
The Goldman LME aluminium warehousing, where they paid people to deposit aluminium with them to inflate the length of the queue to get aluminium out, so that the queue was longer and they could charge more (literal!) rent before people eventually got their aluminium out.
> Your modern megabank takes in billions of dollars in profits per quarter and I'm just curious where the rent seeking shakes out in all of that.
I have a thesis that every megacorp turns to rent seeking, because they're too rigid to innovate. But yeah, I suspect it's a small proportion of the profit of the financial industry as a whole. A lot of people want to buy and sell stuff, so there's a lot of money to be made in even a slim margin there.