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Rent Seeking : Some Conceptual Problems and Implications

By E.C. Pasour, Jr.


"There is increasing use of the concept of rent seeking to describe resource-wasting activities of individuals and groups seeking wealth transfers. A wide range of activities are presumably of this type including agricultural price supports, occupational licensing, labor unions, import and export quotas, and education subsidies[...]

There is an implicit assumption in the literature that rent-seeking behavior can be objectively identified and that waste due to rent seeking can, at least in principle, be measured (Posner, 1975; Tullock, 1967). The problem of identifying rent-seeking activity under real world conditions is shown in this article to be similar to that of determining monopoly waste and other market inefficiencies.[...]

Rent-seeking waste is a matter of opinion depending on one's view of the appropriate role of the state, which must ultimately be determined on the basis of ethics rather than economic theory. If emphasis is placed on the freedom of individual choice, there are genuine opportunities for improvements in the political system and strong reasons to reduce the current level of redistributive activity.[...]

Thus, limiting the role of the state is essential in minimizing the effects of rent seeking activity. There is mounting evidence that a revision of the constitutional contract will be necessary to reduce the role of the state. Regardless of the approach taken in reducing the scope of government, however, a necessary first step is increased awareness of the economic and ethical implications of redistributive activities by individuals and groups."

(emphasis mine)