RENT SEEKING
In public choice theory as well as in economics, rent-seeking means seeking to increase one’s share of existing wealth without creating new wealth.
Simple Version: “Corruption from outside the government inside of inside the government.”
NOUN
- the fact or practice of manipulating public policy or economic conditions as a strategy for increasing profits.
“cronyism and rent-seeking have become an integral part of the way our biggest companies do business”
ADJECTIVE
- engaging in or involving the manipulation of public policy or economic conditions as a strategy for increasing profits.
“rent-seeking lobbyists”
Rent-seeking results in reduced economic efficiency through misallocation of resources, reduced wealth-creation, lost government revenue, heightened income inequality, and potential national decline.
In its original sense, rent seeking is the act of gaining partial ownership of land in order to gain control of a part of its production.
In government it is the act of gaining privileges, redistribution or partial monopolies.
In its broadest sense it is the act of obtaining some sort if claim on the productivity of others rather than producing something ones self, or through voluntary exchange.
We all seek rents. We all seek opportunity for benefitting from either the actions of our organizations, the actions of others, or the grant of state state monopolies. Women seek mates as monetary rents and men to ease the burden of childrearing. We all seek rents. We could argue that rent seeking is the primary incentive for cooperation. Because so few of us are productive enough through direct exchange of our efforts.
The only rent thats totally moral is interest. Interest is free of involuntary transfer.
Interest, in the sense that we rent money to others, contrary to our superstitions, is moral.
Now, It is possible to seek rents via interest. Either through usury or through leveraging the state’s fiat money.
One can collect interest on production. On can collect interest on consumption. Neither of these things is necessary. Both are voluntary. Neither produce negative externalities. They create whole sequences of positive externalities.
But collecting interest on externalities is immoral if it creates externalities that produce involuntary transfers.
Rothbards ghetto ethics actually encourage involuntary transfers. Under the false presumption that the market will solve the problem through competition. But Since all things being equal, profit from externalities is greater than the same loan without externalities, just the opposite is true. The market will encourage externalities.
Also, ghetto ethics assume that judges will not hold people accountable for those externalities and require restitution of them. But they have and will. Because it is consistent with the ethics of property to do so.