Wednesday, October 05, 2016

When good intentions degenerate into rent-seeking

When good intentions degenerate into rent-seeking:
"The term "rent-seeking" needs to gain greater currency. 
The term shows how more regulation and more government micro-management stifle opportunities for ordinary citizens, and how bureaucracies accumulate more power at everyone else's expense.
Rent-seeking occurs when a political faction or particular economic interest uses its clout with government to hobble competitors, so it can raise prices without offering a better product. 
Rent-seeking is related to, but more specific than, the vague term "crony capitalism."
Rent-seeking doesn't have to be a deliberate attempt to bribe lawmakers or regulators. 
It can consist of recognizing an opportunity and seizing the advantage. 
Activists blocking the Keystone XL pipeline from Canada to Kansas provide a textbook case. Pipelines are the safest, most economical way to transport oil, gas, and many other fluids. 
Oil is a global commodity with valuable efficient uses, few of which are easily substituted. 
Because the oil business is global, demand for oil is not determined by access to any one pool.
Image result for rent seekingUnfortunately, Keystone XL became a political football, and completion was stymied by activists and pliant politicians in the Obama administration. 
Oil is still being produced in Canada and shipped to U.S. refineries, but in rail cars that are more expensive and accident-prone. 
Most of the tank cars travel on a railroad owned by Warren Buffett, who benefits while consumers and the environment endure higher costs and higher risks. 
Buffett is in effect a rent-seeker.
Two of the referendum questions on this election's Massachusetts ballot are troublesome examples of rent-seeking. 
Question 2 seeks to expand use of charter schools in the commonwealth. 
Principal opponents are teachers' unions and administrators who see charters as a threat to their traditional dominance. 
Potential beneficiaries are students and parents who might enjoy more choices within public education. 
...Rent-seeking nearly always cements entrenched power against the interests of people with fewer advantages. 
Put on your thinking caps and you'll recognize similar patterns on many issues. 
An electorate devoted to liberty, opportunity and uplift of the unfortunate should not promote rent-seeking."

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