Rent-Seeking in Slightly Different Words
By Pierre Lemieux
We—we, economists and supporters of individual liberty—owe it to Mr. Trump to have reminded us how a powerful state and crony capitalism are dangerous. In fact, state power and cronyism are the two faces of the same Janus. A powerful state has a lot to give and much power to take, so that “capitalists” come to it for privileges (for example, subsidies or tariffs) or to avoid restrictions.
People are sick. You know, Zuckerberg … used to come to the White House to kiss my ass.
(The rare politician who is also a Latinist will no doubt recall what Livius, in Ab Urbe Condita (2, 32), said of the way Menenius Agrippa addressed the revolted Plebeians: “prisco illo dicendi et horrido modo,” that is, “in the quaint and uncouth style of that age.” See also my blurb on that story in a recent Independent Review article. But let’s move on.)
The last sentence quoted from Trump above is an approximate characterization of rent-seeking, which is, more exactly, the hunt for government privileges. In this case, however, the two-way bargain between the privilege giver and the crony-capitalist hopeful was not consummated, presumably because the expected price for the favor was not enough. On Fox News, Trump seemed to explain as much:
And then you see what they do about me and about Republicans, and it’s just sort of crazy.
The goal should be that governments have little power to grant privileges and that, therefore, rent-seekers have little incentive to chase benefits through politics (as opposed to gaining benefits through free market interactions).