Is New Zealand a Nation of Innovators or Trolls?
|October 31, 2013||Posted by Staff under Editorials, The Progress Report|
Describing Rent Seekers as “the landlords of the status-quo”, Steve Blank, a Silicon Valley entrepreneur and academic, says they are the businesses that have already exceeded and are now charging others for existing, rather than creating new wealth, using government and lobbyists to stifle competition and innovation.
Startup companies like Bitcoin, Square, and Airbnb challenge the status quo of big businesses by innovating and creating new market spaces.
Blank says their opposition comes not from “direct competitors, but from groups commonly referred to as ‘rent seekers.’”
These individuals or organisations attempt to wring more money out of existing markets instead of constructing new products and experiences, as their lobbyists use every trick in the book to shut down innovative startups.
Essentially, laws are passed, government officials are bribed, and companies are extorted.
An example of this is when Tesla Motors attempted to sell their electric cars in North Carolina, New York and Texas. The National Auto Dealers Association used its lobbyists to make sure Tesla could not offer up any competition to the oil guzzling giants.
Rent seeking is the opposite of profit seeking. It’s the seeking of favours, not from the ‘simple’ people, but from government. Rent seeking doesn’t create wealth, it just shuffles it around.
Worse, resources get chewed up rent seeking. People spend time and money lobbying both to seek rent – and to defend it. Rent seeking doesn’t just redistribute wealth; it destroys it.
One instance of rent seeking in New Zealand was when student lobbyists called for the compulsory student membership (CSM) to remain in opposition of voluntary student membership (VSM).
VSM was largely seen to be a better choice for students as it allowed more freedom. However, there were those who gained greatly from students being forced to join a singular association, and lobbied against the move to VSM.