Why companies want you to rent, not buy, from them
Large companies increasingly want you to rent their products. They call it a 'subscription', a lease, a service, or a tenancy agreement.
These rentals are everywhere. The most obvious ones are TV channels, your mobile phone and magazine subscriptions.
But what about gym membership? Or renting your ebooks from Kindle? A subscription to a games company? How about PlayStation Plus, which has 47 million subscribers worldwide?
Microsoft will charge you an annual fee, in perpetuity, for access to its office software, whose development costs are small. The same applies to Adobe and many others.
And why drive an old car when you could pay £250 a month, in perpetuity, to lease one? The advantage? You can have a shiny new one every three years. Just make sure you don't dent it, or drive too many miles in it, or you'll get charged extra.
If you're a freelancer, you can pay money to get more visibility of platform sites like Upwork. Once the platform owner has built the site, they don't have to do anything in return, except take your money.
And private landlords make money off their tenants over and above the cost of mortgage (if they have one). The costs of house maintenance, which are included in the rent, help the owner to keep the house in good order, long after the tenant has left.
All of this is a cunning plan called 'rent seeking'. Build a product or service, and charge customers to keep using it.
And if you can persuade people to upload their content, and change others to read it, you've got it made. Scribd charges people €9 a month to read others' documents. YouTube encourages users to do the same. Load your site with adverts, and you'll make even more money.
In other parts of the world, it takes an even more malicious form – peonage, also known as debt slavery, where an employer compels a worker to pay off a debt with work. A 'peon' is a labourer who has little control over their employment or economic condition.
Then there's share cropping, where the landlord lets you cultivate their land in exchange for a share of the crop. This encourages you to improve the fields, and produce a big harvest, but then you're psychologically tied to the land you're and unlikely to leave it. And you're at the mercy of the land owner who could demand a higher share, or evict you.
Businesses like G4S, Mitie and Sodexo manage government programmes, such as health and social care, without putting their capital at risk. The same can apply to corporations that run government railways or bus services. They get guaranteed payments for providing the service; so they don’t have to innovate or improve the service.
In the past, 'rent seeking' applied to companies that sought to protect their profits by persuading the government to raise import tariffs. It's a form of protectionism, though in some circumstances it can justified, for example if an importer is selling goods below the cost of production.
Right-wing libertarians like to remove import protections. This usually benefits multinational corporations at the expense of small, local suppliers. Is it any wonder that big businesses close their factories in the West, make their products in low-wage countries, and then sell their products to consumers in the West?
So, whether you're a 'gig' worker driving a delivery van, a tenant farmer in Bangladesh, or someone who's paying off your monthly iPhone cost, welcome to the world of rent seeking. It's everywhere. You're just another peon, another brick in the wall.
