Rent Seeking

Economist Joseph Stiglitz in a recent interview attributes many of our economic problems to rent-seeking.

"The people at the top are not the people who made the most contributions to our society. Some of them are. But a very large proportion (is) simply people I describe as rent-seekers -- people who have been successful in getting a larger share of the pie rather than increasing the size of the pie.  ...[W]e don't understand the extent to which our economy has really become a rent-seeking economy."

This runs counter to a view I often see in conservative commentary - the people with a lot of money are the "winners," who should be exalted and people who actually work for a living (and especially those who lose their jobs in an economic downturn) are "losers" and "freeloaders."

I think the biggest freeloaders are those who siphon off money from the productive work of others.

Stiglitz' take:

"Much of what goes on in the financial sector is this kind of rent-seeking.

"The most dramatic example was the predatory lending and the abusive credit card practices, which took money from people on the bottom and the middle often in a very deceptive way, sometimes in a fraudulent way, and moved it to the top.... 

"And what is interesting to realize is that our tax structure not only is unfair, but actually distorts our economy. It lowers growth and increases inequality. If you tax speculation at less than half the rate you tax people who work for a living, what you do is you encourage speculation. You weaken the economy. Speculative activities are activities associated with high levels of inequality. And that way you increase inequality. We tax in a sense a lot of the rent-seeking activities at a lower rate because they get under the rubric of the capital gains tax. ... "

Stiglitz' aim is an economy that works better. For everyone.