Rent-Seeking Behavior
By Leon Felkins
Written 12/20/96
Revised 2/27/97
Whenever you have a situation in which a person or group is in power over a community, some in the community will seek to obtain special favors at the expense of all others in the community. We are all familiar with this situation from our school days where some students would seek special favors -- like a high grade -- at the expense of the other students. Such behavior in the political/economic world is called rent-seeking. It is a very serious problem to our society, costing taxpayers billions of dollars. For example, Archer Daniel Midland (ADM), "Supermarket to the world" has been accused of rent-seeking (also called "corporate welfare" and "political parasitism") to the tune of billions of dollars. And they do this without much prejudice or party favoritism: both the liberals and the conservatives accept huge donations from the company. Of course, we all hear their advertisements of Public Television and certain television talk shows.
Since there are several good essays on rent-seeking available on the internet, I will not discuss it further but instead provide a definition and a few links.
Rent-Seeking Definition
- rent-seeking behavior
-
The expenditure of resources in order to bring about an uncompensated transfer of goods or services from another person or persons to one's
self as the result of a "favorable" decision on some public policy. The term seems to have been coined (or at least popularized in contemporary
political economy) by the economist Gordon Tullock. Examples of rent-seeking behavior would include all of the various ways by which
individuals or groups lobby government for taxing, spending and regulatory policies that confer financial benefits or other special advantages
upon them at the expense of the taxpayers or of consumers or of other groups or individuals with which the beneficiaries may be in economic
competition.
Links to sites Discussing Rent-seeking
- Kelley Ross's comprehensive essay, "Rent-Seeking, Public Choice, and The Prisoner's Dilemma"
- Patrick Gunning's on-line book, UNDERSTANDING DEMOCRACY, An Introduction to Public Choice has a complete chapter devoted to Rent-Seeking. This is the most thorough treatment on this subject that I have found anywhere.
- Tom DiLorenzo's essay, Ron Brown's Corporate Welfare Scam exposes the disgusting situation in which the government gets in bed with industry to bilk the public out of billions of dollars. The Bosnian situation is a good example of this very common scam. The citizens are sold a bill of goods that we are in Bosnia because of the horific war that was going on. Not really. We are there so that certain rent-seeking companies can make a pile of money -- which in turn results in the "public servants" making a pile of money.
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