pageok
pageok
pageok
Rent-Seeking:

Don Boudreaux illustrates the costs of rent-seeking using the Blago affair as his "teachable moment."

Plastic:
While I agree with the conclusion (that government subsidies and rents are harmful) I don't think the arguement offered here is very strong.

Sure, the time and money spent on lobbying could be spent on farming and other more productive costs. Or it could be spent on sabotaging competitors or other less productive endeavors. Opportunity costs, especially when comparing greedy, self-serving tasks to productive, helpful ones can easily be overstated.
12.22.2008 3:33pm
PLR:
His concluding sentence:
The antidotes for this poison are integrity and constitutionally limited government. The need for them has never been greater.
The first of these was addressed on November 4. The second of these is a dubious antidote.

Under our system, any shrinkage of the federal government will result in a concomitant expansion of 50 state governments. And I believe that modern history would suggest that corruption is more common at the state level than at the federal level, and for that matter more common at the local level than at the state level.

Empirical evidence in either direction would be welcome.
12.22.2008 4:02pm
SupremacyClaus (mail) (www):
Rent Seeking rather than the moribund Coase Theorem is the Grand Unifying Theory of Appellate Decisions and of All Insane and Stupid Lawyer Doctrines.

The Rent Seeking Theory has predictive power. Ask, which decision in a Supreme Court case will increase lawyer power and enrichment? You will guess the decision correctly 80% of the time, a pretty good fraction in any social science. Political views of the Justices are totally irrelevant. (The sentencing guidelines dropped crime 40%. So Scalia led the series of cases to take them down. Lower crime decreased lawyer employment and salaries. This Theory predicts the conservative Supreme Court will support homosexual marriage, a bizarre, insane idea, to increase employment in Family Law. It predicts, if few homosexuals get married and divorced, the lawyer will get civil standing and marriage standing for mammals. The animal will get a protection from abuse order, alimony, and inheritances to be administered by ...? Correct. A lawyer. The key is the rent, not any ideology.)

The remaining 20% error rate is either neutral in employment or meant to avoid public outrage and backlash against the criminal cult enterprise that is the lawyer profession, now totally in charge of the three branches of government.
12.22.2008 4:27pm
gasman (mail):
PLR.
I'll take local corruption. There at least I have some reasonable possibility of doing something about it.
If corruption is lessened by the scale of government then our present example of a world government, the UN, should be a shining example of pure living.
Lots of small governments, however corrupt, still allow people to more easily vote with their feet, or identify and address the problem head on. I can camp out in front of my mayors yard; less so the president's.
12.22.2008 4:29pm
Assistant Village Idiot (mail) (www):
An interesting thought, PLR. Empirical data are going to be hard to come by, because of the quantities involved. There are many more state and local officials than federal. (Or are there?)

Federal officials are dealing with orders of magnitude more money, so a deal that is 10% corrupt will cost society more than a deal that is 90% corrupt on a local level. I think the accountabilities for local vs. federal officials are different and not easily comparable. Your framing is worth keeping in mind throughout the discussion, however. Thanks.
12.22.2008 4:32pm
gran habano:
Just using total committed spending, hard to believe the sum of state and local spending could ever tab up to the Feds' $70T committed for Medicare, the $30T for SS, the current $10T national debt, plus the $8-10T recent bailout debt incurred.
12.22.2008 4:42pm
PLR:
Federal officials are dealing with orders of magnitude more money, so a deal that is 10% corrupt will cost society more than a deal that is 90% corrupt on a local level. I think the accountabilities for local vs. federal officials are different and not easily comparable.

Agreed. If I want to enlist a government worker in my nefarious scheme, it's easy for me to find my local worker, much more difficult to find my state worker (depending on how big my state is), and almost impossible to get to the dude in Washington D.C. The thing that will help get me to that dude is a wheelbarrowful of cash. The smaller fish at the state and federal level may require less bait, or lower rents if you like, but one would think that such fish tend to multiply in an environment conducive to their existence.

Anecdotally the theory seems to hold for Illinois governors, anyway.
12.22.2008 4:45pm
BGates:
The first of these was addressed on November 4
When it was decisively rejected by the electorate.
12.22.2008 4:47pm
Fub:
PLR wrote at 12.22.2008 4:02pm:
Under our system, any shrinkage of the federal government will result in a concomitant expansion of 50 state governments.
...

Empirical evidence in either direction would be welcome.
Federal government power became constitutionally limited after a period when it was not so limited by passage of the 21st Amendment. It ended federal prohibition by ending the federal government's power to prohibit commerce in alcoholic beverages.

How many state governments expanded to fill that power vacuum by going dry?
12.22.2008 4:56pm
pmorem (mail):
Why go into politics?

"because that's where the money is."
12.22.2008 4:58pm
A Law Dawg:
How many state governments expanded to fill that power vacuum by going dry?


None. Of course, that would limit their power. Now they have the power to determine who is dry and who isn't, and to tax those who drink and those who sell drinks.
12.22.2008 5:00pm
Harvey Mosley (mail):
Simple soluion: require all contributions to be completely anonymous(sp?), paid into an escrow account, and paid out quarterly to the intended recipient. Hard to have a quid when you don't know who is responsible for the pro quo.
12.22.2008 7:30pm
Harvey Mosley (mail):
Oops, hit post too soon. This isn't an original idea of mine, but I think it is a good one. I don't remember where I read it, so I can't give proper credit.
12.22.2008 7:31pm
Duncan (mail):
Duncan's law of rent seeking:

Seek rent
?
Profit

Since this is almost always the case, only less capable organisms (by which I mean organisms not well adapted to their environment) fail to seek (and get) rents.

My conclusion is that rent-seeking is a very successful strategy for biological organisms complex enough to engage in it (as a rule that means congressmen and other similar hominids.)
12.22.2008 8:01pm
Lior:
Assistant Village Idiot: your back-of-the-envelope calculation should include the fact that there will now be room for 50 times the number of corrupt deals (each for lower stakes).

Nevertheless, localization reduces rent-seeking by increasing lobbying costs. Getting $1 from every US resident is $300M/year. You'd spend tens of millions bribing ("lobbying") Congress for it, right? Getting the same money state-by-state would require lobbying in many governments in parallel. That's more expensive. Local governments being more accessible makes it easier for the fleeced populate to fight back (the $1 you'd spend to fight off the rent-seekers will go further at a lower the level of government).
12.22.2008 8:47pm
traveler496:
SupremacyClaus:
"The Rent Seeking Theory has predictive power. Ask, which decision in a Supreme Court case will increase lawyer power and enrichment? You will guess the decision correctly 80% of the time, a pretty good fraction in any social science." [SupremacyClaus goes on to say that the theory predicts that SCOTUS will support homosexual marriage to increase employment in Family Law, and if few homosexuals marry &divorce, civil &marriage standing for mammals.]

This research article, to which I don't have access, appears sympathetic to SupremacyClaus's basic contention (though not the part about mammals:-)

Is anyone aware of statistical research on the hypothesis in the first paragraph below?

Quoting from the article abstract:
"...Many legal outcomes can be explained, and future cases predicted, by asking a very simple question: is there a plausible result in this case that will significantly affect the interests of the legal profession (positively or negatively)? If so, the case will be decided in the way that offers the best result for the legal profession.

The article presents theoretical support from the new institutionalism, cognitive psychology and economic theory. The Article then gathers and analyzes supporting cases from areas as diverse as constitutional law, torts, professional responsibility, employment law, evidence, and criminal procedure.

The questions considered include: why are lawyers the only American profession to be truly and completely self-regulated? Why is it that the attorney-client privilege is the oldest and most jealously protected professional privilege? Why is it that the Supreme Court has repeatedly struck down bans on commercial speech, except for bans on in-person lawyer solicitations and some types of lawyer advertising? Why is it that the Miranda right to consult with an attorney is more protected than the right to remain silent? Why is legal malpractice so much harder to prove than medical malpractice? The Article finishes with some of the ramifications of the lawyer-judge hypothesis, including brief consideration of whether our judiciary should be staffed by lawyer-judges at all."
12.22.2008 10:10pm
traveler496:
Harvey Mosley:
"Simple soluion: require all contributions to be completely anonymous(sp?), paid into an escrow account, and paid out quarterly to the intended recipient. Hard to have a quid when you don't know who is responsible for the pro quo."

I'm with Harvey. I don't know why this isn't at least worth exploring, but historically the idea never seems to get much traction. Can anyone enlighten us as to non-nefarious reasons why this might be so? E.g. do the contribution-is-speech folks have a problem with not being able to prove whether and how much they contributed, and if so, why?
12.22.2008 10:27pm
Lior:
to traveler496 and Harvey:

The problem with the "escrow account" approach is that there is no way to police alternative communication channels between the donor and recipient regarding an "anonymous" donation. For example, the cancelled cheque returned by the bank can be used to prove that one gave money and the amount.
12.22.2008 11:24pm
traveler496:
Lior,
Hmm. Is that really the only problem?
12.22.2008 11:32pm
lpcowboy:
travler - I agree with Lior that it wouldn't work, and not only for the reason he gave. The congressmen with $200k in their freezers know what it is for. Even with legal lobbying, politicans can be influcned by the size and demographics of an organization who want to influence them. I doubt the auto unions bundled all their contributions.

Claus - I think the court would vote the opposite based on the same reasoning. Gays have to replicate marriage using addditional wills, contracts, etc. that may require legal work. Avoiding this work in typical situations is why courts recognize marriages in the first place.
12.23.2008 2:16am
lonetown (mail):
Is there more corruption in federal offices than states?

Depends on what the meaning of is, is.
12.23.2008 5:33am
Toby:
THe whole local/national corruptionscandal reminds me of the Shavian question

George Bernard Shaw once was at a cocktail party, where a very loud and pretentious lady (probably after a few drinks) was becoming obnoxious and dominating the conversation. Shaw asked said to her, "Let me ask you a question. If I were to give you a million pounds, would you sleep with me?" The woman stopped and thought for a moment, then said, "Well, I suppose I might." Shaw continued, "Would you sleep with me for a half a million pounds?" She laughed and said, "Oh, Mr. Shaw, you are naughty! For a half a million pounds, I suppose so." "Well," Shaw retorted, "How about for fifty pounds?" "Mr. Shaw!" said the lady, suddenly taken aback, "What do you think I am?" "Madam," said Shaw, "we've already established that. Now, we're just haggling over the price

Well, like that lady, it is harder for the local politician to get to a million pounds. A contrasting fact is that his price may be lower...
12.23.2008 9:06am
SupremacyClaus (mail) (www):
Traveler: Thank your for the reference. It is done by a scholarly professional, rather than crude street philosophy of a civilian in my comment. I will use it, and perhaps follow up with the author.

IPCowboy. The fees for the transactions you list each have 4 numbers, even for top lawyers. Those in a divorce case have numbers in them limited only by the total assets of the productive party. It has to pay the legal fees of both sides. People will litigate custody of the dog to the Supreme Court. The rejected party will never let go, and will prolong the conflict for a long time.

The lawyer will be disappointed. In other countries with gay marriage for years, very few get married after an initial surge upon legalization. Being gay does not make one stupid. The other adverse consequence is a threat to the superior salaries of gays, now a full standard deviation above the mean. The loss of salary power of gays will end up in the pockets of lawyer. Employers will not want to hire someone with the potential of a spouse with AIDS, now surviving on expensive medications for decades.

One should explain the simple meaning of rent seeking. It has an unfortunate, Medieval meaning. Its opposite is profit seeking. One adds value to a service or product, tacks on a profit, and both sides are pleased. So, you could cut your own hair. If a barber does it, it looks good, and he finishes in 10 minutes. Those advantages are worth the cost. If government takes taxes, and lays a road, provides police, and removes the snow, that is profit seeking. If a landlord collects rent in exchange for providing an apartment, that is profit seeking.

If a politician forces a hospital administrator to hire a contractor at a higher price to get a permit, that is rent seeking. The hospital gets nothing in return for the higher price of the contractor. In rent seeking, one gets nothing back. One pays at the point of a gun, and the sole benefit is to not go to jail for failure to pay. Rent seeking is theft and faith. It should be criminalized. Nor should any lawyer look down on Gov. Blog. Most of what they do, not only fails to add value, it actually destroys value in our economy.

In rent seeking, one gets nothing back. In lawyer work, value is actively destroyed, as in economic vandalism. We need a new name, not involving Medieval meaning, for that effect.
12.23.2008 11:54am
Cornellian (mail):
The Article finishes with some of the ramifications of the lawyer-judge hypothesis, including brief consideration of whether our judiciary should be staffed by lawyer-judges at all."

It never ceases to amaze me how some people ascribe an almost mystical power to a law degree, such that one is a regular person the day before you have it and a member of some sinister conspiracy the day after you have it.
12.23.2008 11:58am
traveler496:
Update: the article whose abstract I quoted above in my response to Supremacy Claus is available in full at

Do Judges Systematically Favor the Interests of the Legal Profession?
12.23.2008 12:07pm
traveler496:
A bit more on the judicial bias angle. This quote is from the 8/27/07 NYT article With the Bench Cozied Up to the Bar, the Lawyers Can't Lose:

"Dennis G. Jacobs, the chief judge of the federal appeals court in New York, is a candid man, and in a speech last year he admitted that he and his colleagues had "a serious and secret bias." Perhaps unthinkingly but quite consistently, he said, judges can be counted on to rule in favor of anything that protects and empowers lawyers."

Jacobs expands on this the following Fordham Law Review article referenced from the NYT article: "The Secret Life of Judges."

For anyone interested, a quick Google query turns up a wealth of additional refs, much blog discussion, etc. I haven't run across any empirical studies yet but I've just scratched the surface.
12.23.2008 1:07pm
SupremacyClaus (mail) (www):
Cornell: Not a member of a conspiracy. All those who have passed 1L have undergone cult indoctrination. It is so good, none knows it has taken place, not even people with IQ's of 300, made into mental cripples by it, fitting my so called lawyer term of art, the "dumbass."

These are modern people upon arrival. Upon passing 1L, as people did in 1250 AD, they believe minds can be read, the future forecast, the truth detected by the gut feeling of 12 strangers, and standards of conduct can be set by fictional characters with the personality of Mickey Mouse. Lastly, their central word, "reasonable"? Unlike 10th grade World History students or freshman Western Civ 101 students, they do not know it means, in accordance with the New Testament.

Rent Seeking fully explains this massive incompetence, lawlessness, and cover up. Not a conspiracy, a stealthy cult indoctrination. If you say, that is impossible to do to me, recall that the folks that killed themselves to meet a passing comet, they were intelligent and weel educated.
12.23.2008 1:41pm
traveler496:
Cornellian:
"It never ceases to amaze me how some people ascribe an almost mystical power to a law degree, such that one is a regular person the day before you have it and a member of some sinister conspiracy the day after you have it."

The articles I referenced, at any rate, don't discuss sinister transformations on the time scale of hours. Actually the mechanisms discussed are pretty mundane and predictable. Why don't you check them out? They're each a mouse quick away.
12.23.2008 2:57pm
David Schwartz (mail):
Simple soluion: require all contributions to be completely anonymous(sp?), paid into an escrow account, and paid out quarterly to the intended recipient. Hard to have a quid when you don't know who is responsible for the pro quo.
And do you make it illegal to claim that you made payments into such an account? Is it really okay to say, "it's legal to do what you want to do, it's just not legal for you to talk about it"?
12.23.2008 6:24pm
traveler496:
No, it would be legal to claim that you made payments into such an account (whether or not you actually did).
12.23.2008 8:30pm

Post as: [Register] [Log In]

Account:
Password:
Remember info?

If you have a comment about spelling, typos, or format errors, please e-mail the poster directly rather than posting a comment.

Comment Policy: We reserve the right to edit or delete comments, and in extreme cases to ban commenters, at our discretion. Comments must be relevant and civil (and, especially, free of name-calling). We think of comment threads like dinner parties at our homes. If you make the party unpleasant for us or for others, we'd rather you went elsewhere. We're happy to see a wide range of viewpoints, but we want all of them to be expressed as politely as possible.

We realize that such a comment policy can never be evenly enforced, because we can't possibly monitor every comment equally well. Hundreds of comments are posted every day here, and we don't read them all. Those we read, we read with different degrees of attention, and in different moods. We try to be fair, but we make no promises.

And remember, it's a big Internet. If you think we were mistaken in removing your post (or, in extreme cases, in removing you) -- or if you prefer a more free-for-all approach -- there are surely plenty of ways you can still get your views out.