Rent and Rent-Seeking
By Arnold Kling
Edward Lotterman talks about Ricardian rent and rent-seeking.
The U.S. government subsidizes cotton production to the tune of some $3 billion per year. Virtually all the subsidy flows to fewer than 30,000 cotton farmers. At some $100,000 per producer, cotton is the most heavily subsidized of the major U.S. agricultural commodities.
…As Ricardo would have predicted, most of the subsidies flowed into higher prices for that farmland especially suited for growing cotton. After paying the high prevailing rental or purchase price for good land, a new cotton farmer would enjoy only moderate income even with the subsidy.
For Discussion. Can you think of examples of industries that once were subsidized that now are thriving subsidy-free?