Posts tagged ‘rent seeking’

Public Choice and Rent Seeking

Yet the reality of voters’ rational ignorance is one of the chief reasons why public-choice scholars argue that political choices are often less prudent and less sensible than are choices made by people in private markets – and why special-interest groups have a much greater chance of co-opting political processes than they have of co-opting market processes.

Put differently, the reality of public choice is among the main reasons given by public-choice scholars for why political outcomes will often be less desirable than they are imagined to be by those who are enthusiastic about democratic politics. Even democratic political processes that are inclusive and non-corrupt feature inordinate amounts of free-riding and other ‘market-failure’ flaws that render such processes much less likely to work to promote the general welfare than the champions of politics suppose. Politics neither performs miracles nor is itself blessed by miracles.

So Jonathan Gruber simply admits that the very process that people on the left romanticize and celebrate – democratic politics – isn’t what it’s cracked up to be. Of course, libertarians and public-choice scholars say the same. The difference between the Jonathan Grubers of the world and the Russ Robertses and Bryan Caplans of the world is that the former believe that politics is still commendable as long as good, smart people (such as Gruber) are performing deceptions necessary to trick voters into supporting policies that good, smart people somehow divine are best for the masses, while the latter believe that the very need to deceive rationally ignorant (indeed, rationally irrational) voters is itself a major flaw in politics – a flaw that makes politics far less reliable and admirable than competitive, private markets.

GruberGate, by Don Boudreaux

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Dunbar Number, Reason Video Awards, George Washington, Rent Seeking, Fascism

The answer isn’t 42. It is 150.


Meet Puddles: The Giant Sad Clown with the Golden Voice
Walking Tall With Atlanta’s Big Mike Geier
Mike Geier
Dames Aflame!
King-sized Mike Geier continues to follow his ever-growing, ever-eclectic muse
Interview at Teatro ZinZanni

Working with the anthropologist Russell Hill, [ evolutionary psychologist Robin] Dunbar pieced together the average English household’s network of yuletide cheer. The researchers were able to report, for example, that about a quarter of cards went to relatives, nearly two-thirds to friends, and 8 percent to colleagues. The primary finding of the study, however, was a single number: the total population of the households each set of cards went out to. That number was 153.5, or roughly 150.

This was exactly the number that Dunbar expected. Over the past two decades, he and other like-minded researchers have discovered groupings of 150 nearly everywhere they looked. Anthropologists studying the world’s remaining hunter-gatherer societies have found that clans tend to have 150 members. Throughout Western military history, the size of the company—the smallest autonomous military unit—has hovered around 150. The self-governing communes of the Hutterites, an Anabaptist sect similar to the Amish and the Mennonites, always split when they grow larger than 150. So do the offices of W.L. Gore & Associates, the materials firm famous for innovative products such as Gore-Tex and for its radically nonhierarchical management structure. When a branch exceeds 150 employees, the company breaks it in two and builds a new office.

The Dunbar Number, From the Guru of Social Networks

It is also the answer to “How Many People ‘Should’ You Invite To Your Wedding?

It is impossible for Americans to accept the extent to which the Colonial period—including our most sacred political events—was suffused with alcohol. Protestant churches had wine with communion, the standard beverage at meals was beer or cider, and alcohol was served even at political gatherings. Alcohol was consumed at meetings of the Virginian and other state legislatures and, most of all, at the Constitutional Convention.

Indeed, we still have available the list of beverages served at a 1787 farewell party in Philadelphia for George Washington just days before the framers signed off on the Constitution. According to the bill preserved from the evening, the 55 attendees drank 54 bottles of Madeira, 60 bottles of claret, eight of whiskey, 22 of porter, eight of hard cider, 12 of beer, and seven bowls of alcoholic punch.

George Washington: Boozehound. Prodigious alcohol consumption by Washington and his fellow founding fathers has been whitewashed from American history.

More after the jump.

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Special Message

“A new invention, I think.”

(Wonder if it is for rent? That would make the owner a DC rent seeker….)

Ozymandias

Unfortunately, it seems that the future Aldous Huxley predicted in 1932, in Brave New World, is arriving early. Mockery, truculence, and minimalist living are best, then enjoy the decline. However, we do need a Revolving Door Tax (RDT), learn what Members of Congress pay in taxes, and prosecute politicians and staff and their “family and friends” who profit from insider trading.

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Spending Other People’s Money is Intoxicating!

There is nothing so intoxicating as the ability to speculate with other people’s money.

Full of Hot Air

Spending Other People’s Money – it’s the statist way!

Yes We Scan

Yes We Scan

Ozymandias.

Forward!

Unfortunately, it seems that the future Aldous Huxley predicted in 1932, in Brave New World, is arriving early. Mockery, truculence, and minimalist living are best, then enjoy the decline. However, we do need a Revolving Door Tax (RDT), learn what Members of Congress pay in taxes, and prosecute politicians and staff and their “family and friends” who profit from insider trading.

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What crony capitalism? Rent seeking at the C-Level

“Increasingly CEOs are seeing the need to get engaged because the government more often than not is a business partner that can affect their bottom line positively, or negatively,” said Nick Calio, a Washington veteran who now heads the trade group Airlines for America.
. . .
CEOs have also been welcomed with open arms by political leaders looking to take on major issues like immigration reform, tax policy and the deficit and debt [Ed., and campaign contributions, all for the public good of course].

The Obama administration has brought business leaders into the White House repeatedly in his second term on issues like cyber security, immigration and the economy [Ed., and campaign contributions, all for the public good of course].

Earlier this month Obama met privately with energy CEOs in preparation for hurricane season. Attendees included: Tony Alexander of FirstEnergy, Chris Crane of Exelon, Lew Hay of NextEra Energy and Joe Rigby of Pepco.

He also huddled in April with Wall Street execs in an effort to sell them on his fiscal policy plans. That group included Lloyd Blankfein of Goldman Sachs, JPMorgan’s Dimon, Brian Moynihan of Bank of America, John Stumpf of Wells Fargo, among others.

[As the federal government gets bigger and bigger, enabled by Congress] “I think there’s more to lose now than there has been in the past,” said Ivan Adler, a headhunter with the McCormick Group. “So losing a big legislative fight has more of an impact on the bottom line than it did in the past, and therefore there’s a higher cost for failure.”

CEOs storm Washington

Goldman Sachs, Facebook, GE, JPMorgan, Bank of America, Wells Fargo, Exelon, NextEra Energy, Pepco, FirstEnergy, GM, Airlines for America, T. Boone Pickens, Warren Buffet – special interests and crony capitalists all, and all TBTF.

Buck McKeon’s family is getting into the defense lobbying game.

A firm run by the California Republican’s brother and nephews has landed five lobbying clients, according to newly filed disclosure forms. Each one lists “defense” as an issue area.

As chairman of the House Armed Services Committee, McKeon has major influence over the Pentagon’s annual spending plan — not to mention a last name recognizable to almost anyone in the defense industry. So, the congressman says he’s trying to avoid even the perception of any conflict of interest.

Buck McKeon kin join defense lobbing game

“avoid even the perception of any conflict of interest” – Too late.

For a good roundup about rent seeking, see “What happens when you try to give away money?

We have the best political class, crony capitalists, and plutocrats our money can buy.

Ozymandias

Unfortunately, it seems that the future Aldous Huxley predicted in 1932, in Brave New World, is arriving early. Mockery, truculence, and minimalist living are best, then enjoy the decline. However, we do need a Revolving Door Tax (RDT), learn what Members of Congress pay in taxes, and prosecute politicians and staff and their “family and friends” who profit from insider trading.

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Government Ethics and the Revolving Door (cont’d), Crony Capitalism at Work


“Citigroup replaces JP Morgan as White House Chief of Staff”

The revolving door is in large measure how the ruling class, the Leviathan, the Cult of the Philosopher Kings, has turned the Republic into a crony capitalist haven of mutually reinforcing money and power. And the price of admission is often a degree from an Ivy League school.

Michael Paese used to be chief of staff to House Financial Services Committee Chairman Barney Frank, until Paese became a lobbyist. When former Tom Daschle intimate Mark Patterson left Goldman Sachs’ lobby shop to become Tim Geithner’s chief of staff at Treasury, Paese took the helm at Goldman’s lobby shop.
Continue reading ‘Government Ethics and the Revolving Door (cont’d), Crony Capitalism at Work’ »

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Government Ethics and the Revolving Door: Tax It = Revolving Door Tax (RDT)

When Obama ran for president in 2008, he promised to “close the revolving door” and clean up both ends of Pennsylvania Avenue, but that hasn’t happened. Which isn’t to say that it shouldn’t happen now. But I don’t think the usual ethics-rules approach is enough.

The problem with ethics rules for this sort of thing is that they tend to be ignored, or distorted. So I say, let’s involve the most effective behavior-control machinery in America: the Internal Revenue Code.
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Rent Seeking

You can’t give money away.

“Rent seeking” is one of the most important insights in the last fifty years of economics and, unfortunately, one of the most inappropriately labeled. Gordon Tullock originated the idea in 1967, and Anne Krueger introduced the label in 1974. The idea is simple but powerful. People are said to seek rents when they try to obtain benefits for themselves through the political arena. They typically do so by getting a subsidy for a good they produce or for being in a particular class of people, by getting a tariff on a good they produce, or by getting a special regulation that hampers their competitors. Elderly people, for example, often seek higher Social Security payments; steel producers often seek restrictions on imports of steel; and licensed electricians and doctors often lobby to keep regulations in place that restrict competition from unlicensed electricians or doctors.

Rent seeking

Examples of rent-seeking behavior would include all of the various ways by which individuals or groups lobby government for taxing, spending and regulatory policies that confer financial benefits or other special advantages upon them at the expense of the taxpayers or of consumers or of other groups or individuals with which the beneficiaries may be in economic competition.


Rent-seeking behavior

[M]y 1967 paper (Tullock 1967) was not received well by an economics profession that largely perceived government to be an omniscient and impartial enforcer of the public good. It was rejected both by The American Economic Review and by The Southern Economic Journal ostensibly on the ground that it made no contribution to knowledge. Eventually I had it published in a relatively obscure, new journal, The Western Economic Journal, where it remained largely unread for the better part of a decade. This self-same paper is now one of the most widely cited papers in economics – an ultimate triumph of science over ideology.

The Fundamentals of Rent-Seeking

Tullock, G. (1967). ‘The Welfare Costs of Tariffs, Monopolies and Theft‘ Western Economic Journal, 5, pp. 224-232. (9-page PDF)

If a case of soap is pilfered from a U.S. military base here or pinched from a NATO shipping container, it will probably, sooner or later, end up for sale in the Bush Market, a sort of thieves’ outlet mall in central Kabul.

Named after George W. Bush, the U.S. president who launched the war in Afghanistan, the bazaar has flourished for more than eight years, thanks to the long presence of foreign troops that provided war booty aplenty. But in the Obama era, with its steady withdrawal of U.S. forces, the good times are ending in the sprawling hive of vendors who hawk mountains of Pop-tarts and enough Head & Shoulders shampoo to combat the dandruff of untold army divisions.

In a way, the market serves as a microeconomic barometer of the concerns of Afghans across class lines when 2014 ends — and with it, the U.S.-led coalition’s combat mission. President Obama’s announcement in his State of the Union address Tuesday of the accelerated pullout of 34,000 troops in the coming year has only heightened many merchants’ worries about what happens after Western forces finally step on their air hose of cash and material support.

Kabul vendors of stolen U.S. goods fret about future

Ozymandias

Mockery, truculence, and minimalist living are best, then enjoy the decline. We also need a Revolving Door Tax (RDT).

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