THE RENT-SEEKING ELECTORATE

Strange as it must seem, rent-seeking to the economist is trying to get something for nothing. I know it doesn’t make sense, but that’s the way it is, economically speaking. Why rent? In economics, rent is payment for natural resources, which are available anyway, so rents are considered excess. They are also defined as payment for a resource that is in excess of what is actually required. Rent-seeking is the action of people, businesses, or unions trying to seek excess payments from government at the expense of taxpayers or someone else. It is people trying to make tax payers give them wages for not working, cell phones, cars, food, housing, health care, and other desirable commodities for nothing more than a vote. Its purpose is to transfer income, wealth, or privilege from other individuals or society as a whole.

Individuals are rent-seekers. During the 2008 election, voters expected Obama to pay their rent, to buy them a car. Later, supporters in Detroit were seeking money from their president. When asked whose money it was, they said it was Obama’s. When asked where he got it, they said it was “his stash.” Cell phones were given away and recipients were calling them “Obama phones.” After the 2012 election, a council member from Detroit demanded a bail out since they voted for President Obama. People were demanding the rent they were seeking. Those who did not get cars or rent payments are still expecting. The unemployed can now collect unemployment compensation for three years. A long-time unemployed person being interviewed on local TV when unemployment benefits were extended from 52 weeks to 99 weeks said that his unemployment ran out “last month.” He had been “looking for work for three weeks” and there’s “nothing out there.” Why had he not been looking for work for a year and three weeks? Voters saw in the “Life Of Julia” cartoon that government would provide cradle to grave care. If they would only vote properly, they would never have to work again.

Businesses seek preferential treatment. Favored businesses (green energy companies) are provided government loans at taxpayers’ expense, while the government tries to regulate out of business those less favored (fossil fuels). Remember that a campaigning Senator Obama promised to bankrupt any new coal-fired business. By googling “coal-fired business,” I got 16,200 results, mostly about businesses shutting down.

Unions seek rents through regulation and legislation. Card check, taking away workers’ right to vote for unionism, failed in Congress but the NLRB is making other attempts through regulation. Time to prepare for a union election has been cut in half, giving employers less time to prepare. The NLRB in June, 2011 issued a complaint against Boeing for wanting to open a new aircraft plant in South Carolina, a right-to-work state. Nancy Pelosi jumped in by saying that the plant should unionize or shut down.

Rent-seeking is one of the major causes of government failure. It has given us tariffs that limit competition and increase consumer costs, construction projects that require union wages and cost moiré than the benefits obtained, undeserved subsidies by taxpayers. Our government “saved” General Motors by taking it from stockholders and giving it to the United Auto Workers. It has given us businesses such as Solyndra, and a large portion of our $16.5 trillion national debt.

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Posted by at January 7, 2013
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2 Responses to THE RENT-SEEKING ELECTORATE

  1. Dr. Bud says:

    Methinks Michael’s college business professor stereotype portrays a situation much more lucrative than my own experience.
    as an Operations guy, I did continuing studies on my labor and financial options.
    As a result, I retired early.
    Bud

  2. Michael says:

    Ninety-nine weeks at, let’s say, $350 a week ($18,000 a year)–sweet! Why work?

    Of course, if we’re dealing in anecdotal evidence and stereotypes (“renters”), consider the college business professor. A lifetime teaching 6-12 hours a week, lectures on Powerpoint after the first year, all grading done by machines, two weeks guaranteed around New Year’s, the summers off, and every seventh year full pay with no duties at, let’s say, $1,731 a week ($90,000 a year)–sweet! Why work?

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