Friday, December 2, 2011
Sound Familiar in Greensboro and Guilford County? "Rent-seeking"
"In economics, rent-seeking is an attempt to obtain economic rent
by manipulating the social or political environment
in which economic activities occur,
rather than by creating new wealth.
...the expenditure of resources attempting to enrich oneself
by increasing one's share of a fixed amount of wealth
rather than trying to create wealth.
...the extraction of uncompensated value from others
without making any contribution to productivity.
...a more common example of rent-seeking
is political lobbying to receive a government transfer payment
Since resources are expended but no new wealth is created,
the net effect of rent-seeking
is to reduce the sum of social wealth...
Many current studies of rent-seeking
focus on efforts to capture various monopoly privileges
stemming from government regulation
of free enterprise competition.
For example, spending money on political lobbying
in order to be given a share of wealth
that has already been created.
...the limiting of access to lucrative occupations,
as by medieval guilds or modern state certifications and licensures.
...rent-seeking includes the use
of the power of the state or government
to distribute wealth between different groups of individuals.
The term itself derives, however, from the far older practice
of appropriating a portion of production
by gaining ownership or control of land.
Rent...is obtained when a third party deprives one party of access
to otherwise accessible transaction opportunities,
making nominally "consensual" transactions
a rent-collection opportunity for the third party.
...The concept of rent-seeking
has been applied to corruption by bureaucrats
who solicit and extract ‘bribe’ or ‘rent’
for applying their legal but discretionary authority
for awarding legitimate or illegitimate benefits to clients.
...Rent-seeking can also be quite costly to economic growth.
...public rent-seeking hurts the economy the most
because innovation is what drives economic growth."
Posted by Abner Doon at 12:02 PM