“Broadly speaking, there are only two ways a human being can make an income: he can either make an income by contributing to society, or he can extract an income from society. A person can contribute to society by providing valuable goods and services. When a person contributes a valuable service and gets paid for it, he collects a wage; and when he gets paid for providing a valuable product, he collects what economists call a capital yield or capital return. When a mechanic gets paid for repairing a car, he collects a wage. But when a company receives money for leasing out a car, a capital good, the company receives a capital return. Each entity contributed a useful good or service. The only other way people can make an income is by receiving what economists call economic rent. They do this not by adding wealth to society, but by extracting an income from society without providing any real wealth in return. When a person owns a natural resource such as land and charges other people for their use of it, he receives economic rent because the money he gets does not pay for any man-made goods or services.” ~ Martin Adams
Posted on: Mon, 20 Jan 2014 02:10:00 +0000