Category: Economics, Finance, and Political Economy

REGULATORY CAPTURE (THE RESULT) Regulatory capture is a corruption of authority that occurs when a political entity, policymaker, or regulatory agency is co-opted to serve the commercial, ideological, or political interests of a minor constituency, such as a particular geographic area, industry, profession, or ideological group. When regulatory capture occurs, a special interest is prioritized over the general interests of the public, leading to a net loss for society. Government agencies suffering regulatory capture are called “captured agencies.” Regulatory capture is the result of “rent-seeking” and political failure; client politics “occurs when most or all of the benefits of a program go to some single, reasonably small interest (e.g., industry, profession, or locality) but most or all of the costs will be borne by a large number of people (for example, all taxpayers).” RENT SEEKING (THE PRIVATE SECTOR) Rent-seeking in public choice theory, as well as in economics, involves seeking to increase one’s share of existing wealth without creating new wealth. Rent-seeking results in reduced economic efficiency through misallocation of resources, reduced wealth-creation, lost government revenue, heightened income inequality, and potential national decline. Attempts at capture of regulatory agencies to gain a coercive monopoly can result in advantages for the rent seeker in a market while imposing disadvantages on their incorrupt competitors. This is one of many possible forms of rent-seeking behavior. CORRUPTION (THE POLITICAL SECTOR) Corruption is dishonesty or criminal activity undertaken by a person or organization entrusted with a position of authority, often to acquire illicit benefit, or, abuse of entrusted power for one’s private gain. Corruption may include many activities including bribery and embezzlement, though it may also involve practices that are legal in many countries. Political corruption occurs when an office-holder or other governmental employee acts in an official capacity for personal gain. Corruption is most commonplace in kleptocracies, oligarchies, narco-states and mafia states. Corruption can occur on different scales. Corruption ranges from small favors between a small number of people (petty corruption), to corruption that affects the government on a large scale (grand corruption), and corruption that is so prevalent that it is part of the everyday structure of society, including corruption as one of the symptoms of organized crime. Corruption and crime are endemic sociological occurrences which appear with regular frequency in virtually all countries on a global scale in varying degree and proportion. Individual nations each allocate domestic resources for the control and regulation of corruption and crime. Strategies to counter corruption are often summarized under the umbrella term anti-corruption.

REGULATORY CAPTURE (THE RESULT) Regulatory capture is a corruption of authority that occurs when a political entity, policymaker, or regulatory agency is co-opted to serve the commercial, ideological, or political interests of a minor constituency, such as a particular geographic area, industry, profession, or ideological group. When regulatory capture occurs, a special interest is prioritized over the general interests of the public, leading to a net loss for society. Government agencies suffering regulatory capture are called “captured agencies.” Regulatory capture is the result of “rent-seeking” and political failure; client politics “occurs when most or all of the benefits of a program go to some single, reasonably small interest (e.g., industry, profession, or locality) but most or all of the costs will be borne by a large number of people (for example, all taxpayers).” RENT SEEKING (THE PRIVATE SECTOR) Rent-seeking in public choice theory, as well as in economics, involves seeking to increase one’s share of existing wealth without creating new wealth. Rent-seeking results in reduced economic efficiency through misallocation of resources, reduced wealth-creation, lost government revenue, heightened income inequality, and potential national decline. Attempts at capture of regulatory agencies to gain a coercive monopoly can result in advantages for the rent seeker in a market while imposing disadvantages on their incorrupt competitors. This is one of many possible forms of rent-seeking behavior. CORRUPTION (THE POLITICAL SECTOR) Corruption is dishonesty or criminal activity undertaken by a person or organization entrusted with a position of authority, often to acquire illicit benefit, or, abuse of entrusted power for one’s private gain. Corruption may include many activities including bribery and embezzlement, though it may also involve practices that are legal in many countries. Political corruption occurs when an office-holder or other governmental employee acts in an official capacity for personal gain. Corruption is most commonplace in kleptocracies, oligarchies, narco-states and mafia states. Corruption can occur on different scales. Corruption ranges from small favors between a small number of people (petty corruption), to corruption that affects the government on a large scale (grand corruption), and corruption that is so prevalent that it is part of the everyday structure of society, including corruption as one of the symptoms of organized crime. Corruption and crime are endemic sociological occurrences which appear with regular frequency in virtually all countries on a global scale in varying degree and proportion. Individual nations each allocate domestic resources for the control and regulation of corruption and crime. Strategies to counter corruption are often summarized under the umbrella term anti-corruption.