Rent-seeking means that instead of creating economic value to exchange for your wants and needs you dupe the rest of society into transferring money to your bank account. It would be a kind of bureaucratic robbery, and it is essentially a form of free-riding.
One example would be for you, instead of being a fscking good designer, to find a way to pass a law whereby only people that went to design-school can be designers. There goes competition. For that matter you could say it is only people that went to the same design school you did, or only people who wear the same haircut as you do.
Now it seems ludicrous to demand someone to spend 4 years in college to use photoshop (and that is someone who did go to design school talking). But does it sound ludicrous to demand a Doctor to go to Medical Schools? Where lies the difference?
And for sure you can list me a couple differences — American Medical Association’s propaganda has been effective. That is why i like Van Gogh’s example.
As of today, you can’t escape the fact that Van Gogh is one of the greatest artists the human species ever spawned. But during his lifetime, no one agreed with this. His paintings were almost impossible to sell. Basically Van Gogh was free-riding in his brother’s bank account.
Altough Van Gogh was creative, he was not creative in the economic sense. Those two senses are subtly different and it is this difference i want to direct your attention to — for i believe it has important policy consequences.
It is very hard to assess artistic creativity. You could have come across the next Van Gogh yesterday and never know it. That is why it is relatively easy to pass yourself for an artist even if you are not creative. Economic creativity, it seems, is much easier to measure, it can even be measured at all. But i would suggest this ease is very illusory.
Some financial services are seen to be useful to society, but in the wake of the financial system having basically duped the rest of society, some of those services are being called “rent-seeking”. But i ask: Where lies the difference? At first sight it might look like there is a stark difference, but a closer look would show it’s as difficult an issue as with Medical Schools and Design Schools.
The accusation of “rent-seeking” basically turns the issue into a moral one. The difference between rent-seeking and economic-creativity is that one is “good for society”, but discussing what is “good” is a muddy activity. The rent-seekers are the knaves. It’s to blame on them. And that is exactly the kind of thinking the idea of “incentive” was supposed to avoid!
To assert the current worldly economic woes are due to the incentives promoting rent-seeking is more an assumption than an assessment, more a previous belief than dealing with the issue at hand as it presents itself.
I do not want to go any deeper than that into a criticism of market-think, at least not now, but in the stead of a conclusion i could venture that preventing free-riding can never really solve any structural problem, it can at best fix small leaks. There is every reason to believe the current crisis is much deeper than that. But maybe there are also reasons to believe the USA society is beyond the point of no return into losing the difference between creativity and economic-creativity.
A society that swaps subsidizing creativity for high-risk investment has lost an important part of it’s soul.