Tonight over dinner Robert explained the term “rent seeking”. He told Mira that if she is at a cocktail party and wants to sound smart, she can say something like: “Well, that’s largely a rent seeking activity.”
“Rent seeking” is always used as a way to negatively describe a person’s or a group’s activities. The problem is that one person’s rent seeking is another person’s idea of progress.
In public choice theory, rent-seeking is spending wealth on political lobbying to increase one’s share of existing wealth without creating wealth. The effects of rent-seeking are reduced economic efficiency through poor allocation of resources, reduced wealth creation, lost government revenue, increased income inequality, and national decline.
Current studies of rent-seeking focus on the manipulation of regulatory agencies to gain monopolistic advantages in the market while imposing disadvantages on competitors. The term itself derives, however, from the far older practice of gaining a portion of production through ownership or control of land.