Reporters from GB to Down Under Slam Rent Seeking
|March 10, 2014||Posted by Staff under Editorials|
These three 2014 excerpts are of: (1) The View from Cullingworth, Mar 2, by Simon Cooke (the village’s Conservative Councillor); (2) The Age, Mar 3, by Ross Gittins (Sydney Morning Herald’s Economics Editor; and (3) Macrobusiness, Mar 3, by Houses and Holes in Australian Economy.
Rent-seeking at Work
New York held an auction for individual yellow-cab medallions that give drivers the right to operate a taxi and pick up street hails. Winning bidders paid as much as $965,000 for the latest batch of medallions. You pay nearly a million dollars for the right to drive a cab in New York. This suggests that not only are there not enough taxis but that, as a result, the price of a taxi fare is higher.
We’re Now a Nation of Rent-seekers
What gets me is how blatantly self-seeking our lobby groups have become.
These days far more people make their living lobbying for interest groups than did so in the 1980s.
Too many politicians, private office advisers and bureaucrats retire as gamekeepers to become poachers. The fact that ex-Coalition lobbyists do better under Coalition governments, while ex-Labor people do better under Labor governments is a sign that this is not an innocent, arms-length, information-gathering exercise.
The big miners, the financial services sector, the hotels and the registered clubs have the most money to invest (and I do mean invest) in rent-seeking.
Giving in to rent-seekers doesn’t make you any friends, it just makes things worse. Yielding to my pressure for a concession never satisfies me, it just shows me you’re an easy touch and prompts me to think of something else I want. Meanwhile, giving me a lolly just makes my rivals envious and prompts them to demand theirs. Bad inevitably leads to worse.
The Rent-seeking of Ross Gittins
I very much agree with Mr Gittins about the problem he describes. Trouble is, I see him as one of the worst rent-seekers of all.
If rent-seeking prevents the most efficient flow of capital for productive purposes, and thus the rise of national wealth and with it the common good, then why does Mr Gittins spend so much of his time defending an economic model in which [financial] “services” and mining are seen as the natural evolution of the economy?
As more and more capital is sucked into the unproductive venture of mortgages, productivity starts to fall. That is where the Australian economy is today, with our banks pouring far larger proportions of the nation’s capital into mortgages than at time since records were kept. A considerable slice of Australia’s declining multi-factor productivity has resulted directly from escalating land prices.
“Holding gains and losses accrue to the owners of assets and liabilities purely as a result of holding the assets or liabilities over time, without transforming them in any way”. In economic terms, they are pure rents.
As Fairfax Media [Gittins employer] dies its slow death, it is being eaten by its own real estate businesses, which now constitute almost half the firm’s value.
Ed. Notes: The third critic makes a good point. Rent-seeking is not only the newer versions performed by taxicab owners and big businesses. Those extractions pale beside the classic seeking — and winning — of rents spent for land.
To halt the classic rent-winners, it’s not a matter of government quitting subsidizing insiders and leniently enforcing rights. It’s a matter of government being proactive and using its power of charging fees or levying taxes, or even of instituting dues, to redirect our spending for land from sellers and lenders into the public treasury then out again as dividends to everyone. That’d stymy the classic rent-seekers, whittle them down to size, making it much easier to halt the neo-rent-seekers and repeal corporate welfare and regulatory favoritism.
It’d also help greatly if people could see government as steward rather than as Santa Claus.