Archive for September 24th, 2015

September 24, 2015

Rent-seeking

georgism

capture

Rent-seeking is attempting to take advantage of a pre-existing resource without improving it. According to Nobel Laureate economist Robert Shiller the classic example is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee (or rent of the section of the river for a few minutes) to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is helping nobody in any way, directly or indirectly, except himself. All he is doing is finding a way to make money from something that used to be free.

An example of rent-seeking in a modern economy is spending money on political lobbying for government benefits or subsidies in order to be given a share of wealth that has already been created, or to impose regulations on competitors, in order to increase market share.

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