Rentier Capitalism: Great for Stocks, Lousy for Growth
As fans of Michael Hudson and/or students of economic history know, one of the strongly-held policy views of classic economists was that constraining rentier activities was essential to promoting growth. They understood that rentier-ism could often produce more profits than investment in productive activities. For instance, they favored usury ceilings because lenders would otherwise lend to the most desperate borrowers who still could eventually be compelled to satisfy most of their obligations, which in their day would be gamblers from aristocratic families. They would pay very high interest rates to satisfy gaming debts, far more than commercial borrowers could afford. Usury ceilings would result in lenders not being able to charge enough to compensate for the risk of lending to compulsive punters, and so the most attractive debtors would be industrialists and other businessmen.