Risk and Raising the Rent

Back in the day when tea was an indispensable consumer commodity, the crown decided it would increase the rent. It not only raised the tax on tea, but decreed that all economic activity had to go through the crown from the colonies. That meant, while the price of an indispensable commodity would go up, the income to buy it would go down as well. (Sound familiar?)

The crown was effectively (technically) increasing the economic rent (the cost of participating in economic activity). It was an accumulated extension of the risk that the American colonists were unwilling to bear, and so We the People had a Tea Party.

The economic risk was so high compared to the expected reward (to be accumulated into the sovereign authority of the crown) that the political risk to the colonists was extensively low while the risk to the crown was proportionately high. (Sound familiar?)

The crown, of course, perceived its power and authority to be so extensive (so consolidated), the Tea partiers posed no real risk because the crown distributed the risk at will (by fiat rather than market mechanics). The crown was not only the legal sovereign, but it demonstrates its sovereignty in a too-big-to-fail proportion--raising the rent on its subjects, literally subjecting them to the risk of default (like being subjected to the credit score).

The crown miscalculated the extent of the risk, which was fully gamma. Even if the crown decided to reduce the rent, at that point, just that it had the power to manipulate the rent and force markets at will was enough to warrant a revolution and secure Sovereignty of The People. The revolution was unavoidable.

(The rent was just too damn high!)