Question

Understand the concept of economic rent.

Short answer

The economic sector is becoming increasingly financialized by engaging explicitly in share buy-backs asa method to maximize shareholder payments .

Step-by-step solution

Given Information

‘Economic rent’ will be broadly defined as income derived from ownership or control over a limited asset or resource. Such income is attained with none expenditure or effort on behalf of the resource holder or in more than their cost.

Explanation

• The financial sector increasingly allocates resources towards unproductive activities, charging fees and interest within the process. Land rents are exploding, leading to a housing affordability crisis in many advanced economy cities.
• The economic sector is becoming increasingly financialized by engaging explicitly in share buy-backs as a method to maximize shareholder payments, i.e. financial rents, rather than focusing on long-term productive investment.
• In all the other ways, sublet company types seem to become increasingly dominant in capitalist production.