Rent-seeking behavior is where an individual or business seeks to gain by changing the economic environment instead of through a productive activity. To make the idea more clear, here are some examples:
- A group of businesses join together to form a cartel and agree to raise prices.
- An industry pays lobbyists to get Congress to pass a bill giving subsidies to the industry.
- One country invades another to take natural resources, like oil.
- A union tries to negotiate higher wages without increases in productivity.
- Any type of theft of property.
The basic idea in all of the examples is that the action is not adding to the total welfare to society, merely providing more profit or resources to the rent seekers (many times just transferring resources from one group to another).
As a sidenote, one of his colleagues at George Mason University posted this about how Tullock always comes up with great insults. Here is my favorite:
The other day Gordon asked me to read one of his papers and Ipointed out a few typos. "Excellent," he said, "this will surely be your greatest contribution to economics."
Can you think of any other examples of rent-seeking behavior? Any ways in which you try to gain without providing any productivity?