Abstract
This chapter will begin my substantive efforts to explain the small size of the rent-seeking industry. In it I will make some modifications in the theory which are intended to make it fit the world better. The change will not appear gigantic and indeed I do not think it is, but it is a movement toward greater realism. Furthermore, it does not in any way reduce the waste that has normally been blamed on rent seeking. In my “Rents and Rent Seeking,”1 I greatly expanded this waste, and this chapter leaves that expansion intact. In essence, the quantity of waste is left unchanged, but the form of that waste is altered.
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Notes
The Political Economy of Rent-Seeking,Charles K. Rowley, Robert D. Tollison, and Gordon Tullock (eds.)(Boston: Kluwer Academic Publishers, 1988), pp. 51–62.
The congressman has been convicted in another much larger scam. In this case, the amount he allegedly was paid was several million dollars but the cost to the federal government was many times that much.
New Deals, The Chrysler Revival and the American System,Robert B. Reich and John D. Donahue (New York: Penguin Books, 1986), pp. 204–205.
One Billion Dollars of Influence: The Direct Marketing of Politics,R. Kenneth Godwin (Chatham House, Chatham, N.J., 1989). Provides a large body of data on the use of money in politics, basically money raised by direct mailing. For individual elections the amounts are way under a billion dollars in spite of the title.
For an amusing example of the triviality of these things, see: “Policy Making in Washington: Some Personal Observations” by James C. Miller III, Southern Economic Journal (1984), p. 395. Incidentally, Dr. Miller kindly read an earlier draft of this paper and gave strong general approval to its theme. Given his combination of economic expertise and governmental experience, I regard this as a strong endorsement.
For a detailed account of the matter, see Gary D. Libecap’s “Political Economy of Fuel Oil Cartelization by the Texas Railroad Commission 1933–1972” (August 1977), as yet unpublished.
Libecap, unpublished.
Dennis Muller, Public Choice II (draft of second edition), chapter 15, p. 13. He cites Douglas and Miller, but this is a draft and the citation is incomplete. See also: The Politics of Deregulation, Martha Derthick and Paul J. Quirk ( Washington, D.C.: Brookings, 1985 ), pp. 152–153.
A private monopoly would be just as conformable for our analysis, and perhaps in 1890 would have been a better subject. Today, however, most trade restrictions are government sponsored.
The standard Harberger triangle and the larger area just below it are not specially shaded. This is to improve the clarity of the diagram. I presume the reader can recognize them on his own.
See “Luddism as Cartel Support,” Robert D. Tollison and Gary Anderson, Journal of Institutional and Theoretical Economics,(December 1986), pp. 727–738.
Since in this case they were being paid by rival manufacturers (Tollison and Anderson, 1986), the whole cost fell on the customers through higher prices.
Illth“ a word traditionally ascribed to John Stewart Mill, although I do not know of a specific citation, is the opposite of wealth. Unfortunately, a great deal of economic activity generates illth instead of wealth.
See my “Rents and Rent-Seeking,” The Political Economy of Rent-Seeking,Charles K. Rowley, Robert D. Tollison, and Gordon Tullock (eds.)(Boston: Kluwer Academic Publishers, 1988), pp. 51–62, for a more complete explanation.
See Tollison and Anderson, 1986.
This is a subject of dispute.
In Toward a Theory of the Rent-Seeking Society,James M. Buchanan, Robert D. Tollison and Gordon Tullock (eds.)(College Station: Texas A M University Press, 1980), pp. 97112. This article set off a fairly lengthy series of comments mainly published in Public Choice. The whole exchange is contained in The Political Economy of Rent-Seeking (1988).
Western Economic Journal, Vol. 5 (Fall 167), pp. 224–232.
Recently, disguises have become harder and harder to devise. As a result, some of the present programs impress most economists as direct payments. Fortunately for farmers, most voters are not economists.
Rowley, Tollison, and Tullock (1988).
President Roosevelt lived reasonably openly with his mistress (mildly disguised as a secretary) in the White House, and President Kennedy engaged in a very vigorous sex life in the same august building. Congressmen Biaggi, if the decision of his jury is accepted (it is being appealed), diverted more money to Wedtech. Only New York papers seem interested, and even they are only mildly concerned.
New York: Harper, 1957.
See also Towards a Mathematics of Politics,Gordon Tullock (Ann Arbor, MI: University of Michigan Press, 1976), pp. 110–128.
This idea was first suggested by Gordon Tullock in “Charity of the Uncharitable,” Western Economic Journal, Vol. 9 (December 1971), pp. 379–392, but has been greatly elaborated and improved by Geoffrey Brennan and James Buchanan in “Voter Choice: Evaluating Political Alternatives,” American Behavioral Scientists, Vol. 29 (Nov./Dec. 1984), pp. 185–201. Recent but unpublished empirical work by Gary Anderson and Robert D. Tollison casts a good deal of doubt on the whole concept.
See “Public Policies, Pressure Groups, and Dead Weight Costs,” Gary S. Becker, Journal of Public Economics, Vol. 28 (1985), pp. 329–347. Samuel Peltzman’s immensely frequently cited paper is “Toward a More General Theory of Regulation,” Journal of Law and Economics (August 1976).
Becker (1985, p. 342).
Probably the basic reason that he uses agriculture for his example is simply that, since the thirties, it has been part of the oral culture at the University of Chicago to say that the agricultural program is inefficient in the sense that direct cash payments would have been better.
Becker (1985).
It also injured some of the Japanese car manufacturing companies, but it benefitted others so we shall leave that argument aside. In any event, they do not vote in American elections.
In some cases, a straightforward fight for pork is regarded by the average citizen as excusable, if not virtuous. The argument that everybody else has a dam in their district and I should have one, too, seems to be regarded as morally unobjectionable. Currently, moral fairness can take the form of everybody getting some of the loot.
Derthick and Quirk (1985).
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Tullock, G. (1989). Rents, Ignorance, and Ideology. In: The Economics of Special Privilege and Rent Seeking. Studies in Public Choice, vol 5. Springer, Dordrecht. https://doi.org/10.1007/978-94-015-7813-4_2
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DOI: https://doi.org/10.1007/978-94-015-7813-4_2
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