Excuse me, what does rent-seeking in real estate mean?

Rent-seeking in the field of housing construction Since 1998 implemented the reform of urban housing system, China has gradually formed a multi-level housing supply system, that is, high-income people buy commercial housing at market prices, low-income people buy affordable housing at low prices, and the lowest-income people rent low-rent housing provided by the government or units. For affordable housing, the state has given preferential policies such as giving priority to land allocation, exempting land transfer fees, giving priority to development loans, and reducing some administrative fees. , naturally induce developers and competent departments to compete for rent and implement "commercial housing" in the name of "affordable housing". For the competent departments and responsible persons who have the power to review the qualifications of developers and allocate affordable housing, once they realize the market value of their power, "rent-seeking" will breed. The "number release" storm and the phenomenon of "affordable luxury houses" in Beijing are good proofs. Research on Rent-seeking and Rent-seeking Theory I. Overview of Western Rent-seeking Theory Rent-seeking theory was founded by the public choice school of western economics in the 1970s. Tullock (1967), one of the main representatives of public choice school, first put forward the idea of rent-seeking. However, it was Anne Kruger who published "The Political Economy of Rent-seeking Society" in 1974 American Economic Review. Later, bhagwati (J. Bhagwati), Buchanan (J-Buchanan), Brecher (R. Brecher), Srinivasan (T. N. Srinivasan), Tollison (R. Tollison) and others successively conducted in-depth research on this theory, and Buchanan also won 1986 for his theoretical contributions. Second, the application of rent-seeking theory in China The western rent-seeking theory was founded in the 1970s, when China was in the transition period from the traditional planned economy system to the market economy system. The loopholes and frictions between the old and new systems, the lack of power supervision and checks and balances, and the expansion of selfish desires of some people in power have made unhealthy practices and corruption such as building relationships, entering through the back door, giving red envelopes, giving kickbacks, and trading power and money become more serious social phenomena. Unfortunately, the founder failed to set his sights on China. Out of a high sense of responsibility for the future reform, a group of economists headed by Professor Wu Jinglian first introduced the western rent-seeking theory to domestic economists in the magazine 1988 Comparison of Economic and Social Systems, and then analyzed the corruption in China's real economic life with the help of rent-seeking theory. Subsequently, rent-seeking theory has been widely used in the study of corruption and transitional economy in China, but its application has declined since then, and it has not been further developed in real estate and other fields. Three. General Explanation of Important Concepts in Rent-seeking Theory "Rent-seeking" and "DUP": Modern rent-seeking theory basically inherits bhagwati's definition and classifies rent-seeking activities in human society (DUP) as "seeking direct unproductive profits". "Direct" here means "direct production by means of power rather than production process", while "unproductive" means "related activities only produce monetary benefits, but do not produce products and services included in the normal utility function, nor do they produce inputs for producing these products and services. It can not expand the scale of social production, or even reduce the scale of production due to monopoly, and compete for existing production profits. " From the above concepts, we can see that the root of "1" and "rent" lies in the improper government intervention and control of the market. 2. Rent-seeking inhibits fair competition in the market, resulting in low production efficiency and waste of resources. 3. The whole rent-seeking activity includes two aspects: the establishment of rent by the power subject: that is, in the process of administrative intervention and management of economic activities, the power subject prevents the supply from increasing, artificially causing the supply elasticity of some production factors to be insufficient, thus forming the environment and conditions for the power subject to obtain unproductive profits, which is often a process from power to money. Personal rent-seeking: an activity in which individuals obtain privileges and safeguard vested interests through legal or illegal means. This is often an increasing process from money to power to money. 4. The "rent" here is different from the "rent" in general economic principles. The former refers to the excess profits generated by human intervention in the scarcity of some resources through power, while the latter refers to the differential income that exceeds the opportunity cost due to the natural scarcity of resources such as land, oil and rare mineral deposits. These resources are generated due to limited quantity and inflexible supply. The manifestation of rent-seeking phenomenon in China real estate industry; Rent-seeking in China before 1990' s mainly originated from the commodity circulation field of price dual-track system. After 1990s, with the deepening of economic system reform, rent-seeking activities gradually shifted from commodity circulation to production factors, and real estate became the hardest hit area. This is because, on the one hand, the price of tangible goods is further liberalized and the spread is narrowed. On the other hand, the capital and land markets have further developed, and the corresponding policies and regulations have not been promulgated in time. Improper administrative allocation of resources has caused huge rents in capital, land and other factor markets, and induced corresponding rent-seeking activities. In addition, the real estate industry has a natural dependence on land and capital elements, which also provides "fertile soil" for the breeding and spread of rent-seeking phenomenon. First, the characteristics of real estate rent-seeking: large scale of rent, many rent-seeking subjects and diversified means. A major feature of rent-seeking in the real estate industry is the large scale of rent. After estimating the rent scale of China real estate industry, Hu Heli and Wan Anpei pointed out that the potential rent of land transactions in the real estate development process of 1988 and 1992 is not less than "1000 billion yuan and 20 billion yuan respectively". After that, Wanan Peizai 1998 calculated that "the rent for shareholding system reform and real estate development is not less than 80 billion yuan". In 2005, Zhong Wei also concluded that "the lost land rent in 2002-2004 alone reached 330 billion yuan". Because appraisers usually like to talk less and do more to avoid being attacked, we speculate that the actual rent will only be greater than any appraiser. The real estate industry has a long chain and involves many links, so the rent-seeking subjects in the real estate economy are also very wide. In addition to the necessary departments of governments at all levels, such as construction, planning, housing management, land management, auditing and taxation, it also includes fund providers-banks, fund users-real estate development companies, and even self-employed, contractors and households. There are also various rent-seeking means, such as legal means, such as enterprises seeking preferential treatment from the government through negotiation and lobbying, using special policies to safeguard their monopoly position, illegal means, such as bribery, abuse of power, and gray rent-seeking means between legal and illegal, such as "arbitrary charges" and collective rent-seeking. Second, the source of rent-seeking activities is the result of administrative intervention, that is to say, the use of power causes rent. According to the different functions of the power sector, the sources of rent-seeking activities in the real estate industry can be divided into three categories: unintentional rent-setting, passive rent-setting and active rent-setting by the power sector. 1. Unintentional rent setting refers to the intervention of power departments in economic life to make up for market defects, which inadvertently leads to rent generation and rent-seeking behavior. It comes from the "good subjective desire" of the power department and is a manifestation of the separation of subject and object. Due to the limitation of its own ability, the power department has formulated unscientific policies on the allocation of funds and land, which will lead to unintentional rent-setting, which will be used by other economic agents to seek their own interests, that is, rent-seeking activities. With the accumulation of knowledge and experience and the scientific management decision-making, the unintentional rent-setting behavior will gradually decrease, but as long as there is the intervention of the power department, this rent can not completely disappear. 2. Passive rent-setting refers to the fact that power departments, out of their own interests or under the influence of vested interest groups, use their powers to formulate and implement bills that can bring huge rents to these groups and objectively become profit-making tools for interest groups. At present, a good example is that some local authorities, out of short-term achievements or the pressure of local economic growth, provide excessively inclined preferential policies for real estate development, such as cheap land transfer, which objectively creates opportunities for developers to seek rent at will. 3. Active leasing refers to the fact that the Administration anticipates that leasing will bring benefits to it, so as to actively create rents through administrative intervention and increase the income of enterprises in the department and the region, and these enterprises provide part of the rents to the Administration in return. Its essence is the commercialization of public power and the corruption of power and money transactions. Because the exercise of public power deviates from public interests, this kind of rent-seeking activity often leads to the transfer of social wealth and the intensification of social contradictions. Third, the form of rent-seeking As mentioned above, real estate development has the characteristics of long chain and many departments involved, so there are various forms of rent-seeking activities. 1. Rent-seeking in the land supply field. Scarce land resources are one of the basic elements of real estate development. Real estate developers have land and wealth. Dependence on land resources will inevitably lead to the impulse of developers to operate irregularly, and China's imperfect land system also provides opportunities for rent-seeking, thus making land the hardest hit area for real estate rent-seeking. According to statistics, in 2003, * * * investigated and dealt with168,000 cases of illegal land use, including cases that were underreported over the years, and 738 people were given disciplinary sanctions and investigated for criminal responsibility 134 people. In many cases of land rent-seeking, there are mainly the following rent-seeking methods: (1) The supply and demand sides use the "black box" operation of transferring land by agreement, and the land is sold at a price significantly lower than the market, and the land-using enterprise pays the transferor a fee less than or equal to the rent it seeks privately. Some scholars have made an empirical analysis of the land transfer price in China, and found that the ratio of 1992 to the land auction transfer price, bidding transfer price and agreement transfer price in China is1:0.61:0.14, which shows that the rent under the agreement transfer mode is relatively large. The potential huge rent makes the agreement the first choice for land transfer over the years. According to statistics, by the end of 2002, the land sold by bidding, auction and auction in China only accounted for 15% of the total land sold, and most of the rest were sold by agreement. (2) Controlling bid-raising and rent-seeking under the way of land transfer by tender, that is, the developer who is a rent-seeker reaches a private agreement with other competitors with the acquiescence of government departments, so that other competitors actually withdraw from the competition by paying cash, thus obtaining the land use right at a lower bid price. This rent-seeking method is extremely hidden and not easy to be detected; (3) The occupier of the administrative allocated land arbitrarily changes the use of the land for listing and trading, and obtains huge rents; (4) Local governments illegally expropriate rural cultivated land at low prices, turn it into real estate development land and sell it at high prices to obtain huge rents. 2. Rent-seeking in the field of housing construction Since the implementation of 1998 urban housing system reform, China has gradually formed a multi-level housing supply system, that is, high-income people buy commercial housing at market prices, low-income people buy affordable housing at low prices, and the lowest-income people rent low-rent housing provided by the government or units. For affordable housing, the state has given preferential policies such as giving priority to land allocation, exempting land transfer fees, giving priority to development loans, and reducing some administrative fees. , naturally induce developers and competent departments to compete for rent and implement "commercial housing" in the name of "affordable housing". For the competent departments and responsible persons who have the power to review the qualifications of developers and allocate affordable housing, once they realize the market value of their power, "rent-seeking" will breed. The "number release" storm and the phenomenon of "affordable luxury houses" in Beijing are good proofs. 3. Rent-seeking real estate in the capital field is a capital-intensive industry, and real estate development cannot be separated from financial support. China's real estate enterprises have less self-owned funds and narrow financing channels, and their dependence on bank funds is particularly serious. According to statistics, about 50% of China's real estate development funds came from banks in 2004. The enterprise's thirst for funds, coupled with the soft budget constraints of state-owned banks, makes rent-seeking activities spread in the field of bank credit. Taking the Report on the Implementation of Monetary Policy in 2002 issued by the central bank at the end of February 2003 as an example, the People's Bank of China inspected the real estate loans issued by some city commercial banks from July 5438+0, 2006 to September 30, 2002, and found that illegal loans and illegal amounts accounted for 24.9% of the total inspection. If this inspection result is representative, it means that nearly a quarter of the real estate loans are illegal loans. And illegal lending, of course, is to obtain huge "kickbacks", participate in sharing, and even indirectly set up real estate development companies, taking the money of the state and the people to "borrow chickens and lay eggs" and seek personal gain. 4. Rent-seeking in tax-related fields In 2004, there was no real estate enterprise among the top 500 taxpayers in China, which was in sharp contrast to its image as one of the top ten profiteering industries in China. At the same time, it is reported that in a recent survey of seven provinces and cities in State Taxation Administration of The People's Republic of China, it was found that the real estate industry accounted for 90% of all kinds of tax-related issues. In 2003, the inspection sub-bureau of Nanjing Local Taxation Bureau conducted a special tax inspection on 88 real estate enterprises that paid a large amount of tax in 2002, and found that 87 households had tax evasion problems, and the tax amount was as high as 503 1.66 million yuan. The phenomenon of tax evasion is so serious that it is inseparable from the rent-seeking activities of real estate developers and officials. 5. The problem of "unreasonable charges" in the real estate industry. At present, the land price and taxes in China account for about 50% of the house price. Compared with the international average of 20%, the proportion of land tax is obviously too high. According to the survey, there are more than 60 ~ 180 taxes and fees involved in real estate development and operation in cities across the country, of which only about 12 is tax (fee, 1996). After 1995 in Shanghai, unreasonable charges were cleared up, and there were still more than 100 real estate charges. After 1996 and 1997 abolished unreasonable charges, there are still nearly 60 real estate charges, and some projects that have been explicitly cancelled are still being implemented in secret or in disguise (Deng Honggan, 2000). There are 87 real estate administrative fees in the secondary and tertiary real estate markets in Henan Province (Li Zhe, 2003). According to the survey, it is estimated that the fees charged by the real estate industry in 1998 will be about12 billion yuan ~15 billion yuan. The problem of "unreasonable charges" in real estate is essentially a collective rent-seeking behavior of relevant departments, but it is a more advanced form of rent-seeking that uses legal means to cover up the unreasonable rent-seeking facts. It not only increases the cost of buying houses for residents, but also makes the real estate industry overwhelmed and hinders the healthy development of the real estate industry. The negative consequences of rent-seeking are as follows: firstly, it wastes resources, reduces operating efficiency and harms the welfare of the whole society. Although rent-seeking activity is a "positive game" for individual rent-seekers, that is, the benefits outweigh the costs, from the perspective of the whole society, rent-seeking activity is a "negative game", that is, it does more harm than good to the whole society, leading to the decline of the whole social welfare level. The reason is that rent-seeking is an unproductive profit-seeking activity that does not create social wealth. On the contrary, in the case of government intervention, in order to obtain personal interests, on the one hand, people spend manpower, material resources and financial resources on government public relations in order to win various preferential policies of the government, thus increasing transaction costs and consuming a lot of scarce resources; On the other hand, stimulated by the high profits of rent-seeking, enterprises compete for rent, ignoring the importance of reducing costs, improving quality and enhancing competitiveness, resulting in low operating efficiency. In the short term, developers will inevitably pass on the rent-seeking costs and redundant costs caused by low operating efficiency to consumers, which will lead to rising house prices. However, house prices that seriously deviate from consumers' ability to pay will inevitably harm consumers' vital interests and deprive consumers of their surplus. In the long run, rent-seeking leads to an increase in development costs and rising house prices, thus creating a bubble. Once the bubble bursts, it will inevitably lead to economic decline and further reduce the welfare level of the whole society. Second, distorting the function of resource allocation In the market economy system, the market plays an important role in the effective allocation of resources. In order to maintain the benefits of rent-seeking, developers hope that the government will maintain control over land and other resources, or lead and influence the allocation of resources through some kind of "invisible market". The monopoly of the government on the market and the monopoly of enterprises with the support of the government exclude the possibility of fair competition, which makes the competition mechanism, supply and demand mechanism and price mechanism unable to operate well, which leads to the failure of the market's resource allocation function and brings potential losses to consumers and the whole macro-economy. Third, it has changed the pattern of wealth distribution and endangered social stability. Rent-seeking is not to create wealth, but to use power to compete for and transfer existing wealth. Generally speaking, it is not to make the cake of social wealth bigger, but to occupy as much share of the existing cake as possible. Rent-seeking in the real estate industry makes a lot of public wealth easily transferred to a few people, thus creating a large number of wealthy real estate developers and officials in a short time. Take Wang Huaizhong, the former vice governor of Anhui Province as an example, because he directly intervened in a large number of land leasing and transferring affairs during his tenure in Fuyang, from 1.994 to 2000, Fuyang obviously lost state-owned land assets as high as 1 100 million yuan, and this huge sum is the largest.