In 1967, Gordon Tullock wrote:The Welfare Costs of Tariffs, Monopolies, and Theft” teeth, Ann O. Kruger later ” Apartment hunting A “rent-seeking society” may seem a bit abstract, but if we understand why robbery makes the world a worse place overall, we can also understand why a rent-seeking society is so draining.
We learned this first-hand recently when we checked our text messages and saw that my wife had emailed us to cancel her credit card because her wallet had been stolen. She had gone kayaking with a friend and when she returned to the car, the window had been smashed and her wallet had been stolen. Canceling the credit card is easy, but of course any cash they had on them is gone.
From an economic perspective, transfer It doesn’t actually matter. Instead of us spending the $100, someone else does. The stolen money is a cost to us, but it’s not a cost to “society.” It just changes hands.
Tulloch and Kruger explained that rent-seeking is inefficient because it involves people consuming real resources to obtain benefits. transfer not transactionSome people expend real resources trying to prevent the transfer. The thief could have used his time and tools to make something, and if he could make something that could be sold for more than it cost, he would have created value. He could have built a birdhouse, or cleaned out someone’s garage, or made virtually an infinite number of things.
Instead, they simply used their time and tools to redistribute goods, and the cost to society is what they destroyed in the process (in this case the van windows, plus the time it took to cancel the credit cards and monitor the transactions) in addition to what they could have produced while they were busy stealing.
Lobbying, and distributive politics more generally, is like breaking into your car and stealing your wallet. rob a record storeInstead of building something new, lobbyists and special interests spend their money trying to take away what already exists, and the world is worse off for every thing they could have done instead.
If you look at Federal Registerwe see example after example where special privileges are given to visible and sympathetic interest groups. People celebrate victories because, after all, who doesn’t like free money? Of course, it’s not free, even though it’s proclaimed that the additional spending will stimulate the economy. As Frédéric Bastiat reminds us,Money has to come from somewhere, and, crucially, the time and money spent lobbying Congress to secure privileges could have been used to make, not steal, just as thieves could have used their time and talents elsewhere.
Art Carden is a professor of economics and a health care trust fellow at Samford University. He is, by his own admission, a huge Koch enthusiast. He has a Charles G. Koch-named award in his office, does a lot of work with and partners in a variety of Koch-related organizations, and has applied for and received funding from the Charles Koch Foundation to host events on campus.
