"The distinction that matters is not public versus private, but market versus non-market." I'll push back. The distinction that matters is neither; the distinction that matters is voluntary exchange interaction versus compelled interaction.
"Public choice economists have often been fixated on inefficiencies in government, overlooking the significant rent seeking that occurs in the private sector. Rent seekers, unconcerned with the source of the gains, pursue opportunities across the entire economy, not just through government channels." Can you give some examples of rent seeking that does not involve government operatives?
"Public choice should become simultaneously more optimistic about the potential of government, while growing more realistic about the realities of markets." We Austrian economists do not suffer delusions about market realities in the first place. Can you give some examples of successful and laudable government actions that might stir optimism for more of the same?
1. From an efficiency standpoint, it doesn't matter if action is compelled or not. It might be efficient to enslave people. That's not to say there aren't other reasons why that might be a bad idea, but economists tend to focus on efficiency.
2. If I kiss up to my boss to get a promotion at the expense of my rival, that activity is wasteful rent seeking if there's no productive activity associated with it. I would argue even a considerable amount of advertising is like rent seeking in the sense that it involves wasteful competition for transfers. For example, if I buy a soda from Pepsi vs Coke, there's basically no difference in my utility. So all the effort expended to win my business is social waste. There are really so many examples it almost makes my head hurt.
3. I use the example of sovereign wealth funds in the piece. They are massively successful, as evidence by their returns.
I'm not referring to you, but I definitely know some quasi-Austrian economists who seem to believe even most non-market activity within business is efficient. I find this view baffling and totally contradicted by all my lived experience, but there are people who believe it.
A few other examples of private sector rent seeking like activity occur to me:
Any competition involving status. Because status is zero sum (for me to move up the rankings, someone else must move down) any resources invested in achieving higher status constitutes waste. There may be other benefits from the competition, but the competition for status itself is akin to rent exhaustion.
Various forms of signaling. Bryan Caplan has argued that much of education functions as a signal of ability rather than a means of acquiring skills. This leads to an arms race of degrees and credentials that creates excess investment. Even if there are benefits to such signals, we could accomplish the same ends if everyone agreed to invest fewer resources in the competition (or similarly, we taxed such signaling). The excess investment is waste.
Female beauty. Women invest resources to perfect their appearance to attract men. Past a certain point, these investments follow the same logic as signaling. They are costly, competitive, and often zero-sum.
These competitions all have dynamics like rent seeking.
By one definition, rent seeking is an economic term that refers to efforts by individuals, firms, or interest groups to gain income or wealth through manipulation of the political or legal environment rather than through productive economic activity.
By another definition, rent seeking is the pursuit of increased wealth without any contribution to productivity or value creation. It typically involves lobbying for regulations, subsidies, tariffs, or other government actions that confer financial benefits—such as monopoly rights or restricted market access—at the expense of others.
What is your definition? I'm finding your notion of rent seeking in voluntary interactions difficult to grasp.
My definition of rent seeking is costs undertaken (or effort exerted to use your language), usually in a competitive setting, in pursuit of a transfer.
I think both of your definitions are examples that fit into my definition, which also encompasses the examples I provided from the private sector.
Since I think I already know your definition of cost, you evidently mean by rent seeking this: dollars spent in a competitive setting, in pursuit of a transfer of dollars. I don't see at all how we have the same definition of rent seeking.
The definitions I provided are not mine; they are standard definitions from others who seem to like the term "rent." I do not use the term "rent seeking," because think it obscures rather than illuminates.
I personally tend to think in terms of people pursuing their own perceived net benefit, either through persuasion or coercion. I find persuasion laudable and coercion both offensive and immoral.
I don't use the terms private sector and public sector either, because they are fictions that explain exactly nothing.
The problem with "rent seeking," as I see it, is not that people pursue extra-normal returns. Those can be found in lots of places, because markets aren't very efficient. The problem is the competitive process that exhausts resources for no net social benefit.
But I agree with you, most people just equate rent seeking with "lobbying" or something to that effect.
Morality is not a scientific concept. Cost is. There are no doubt numerous "net beneficial" actions that are immoral according to various ethical frameworks. A key problem with economics--maybe the main problem--is economists won't leave their ethical baggage at the door when they engage in economic analysis. They sneak ethics into the analysis because they don't want to confront tradeoffs because the implications are unpleasant. But the tradeoffs aren't immoral. They are just a product of scarcity.
"The distinction that matters is not public versus private, but market versus non-market." I'll push back. The distinction that matters is neither; the distinction that matters is voluntary exchange interaction versus compelled interaction.
"Public choice economists have often been fixated on inefficiencies in government, overlooking the significant rent seeking that occurs in the private sector. Rent seekers, unconcerned with the source of the gains, pursue opportunities across the entire economy, not just through government channels." Can you give some examples of rent seeking that does not involve government operatives?
"Public choice should become simultaneously more optimistic about the potential of government, while growing more realistic about the realities of markets." We Austrian economists do not suffer delusions about market realities in the first place. Can you give some examples of successful and laudable government actions that might stir optimism for more of the same?
1. From an efficiency standpoint, it doesn't matter if action is compelled or not. It might be efficient to enslave people. That's not to say there aren't other reasons why that might be a bad idea, but economists tend to focus on efficiency.
2. If I kiss up to my boss to get a promotion at the expense of my rival, that activity is wasteful rent seeking if there's no productive activity associated with it. I would argue even a considerable amount of advertising is like rent seeking in the sense that it involves wasteful competition for transfers. For example, if I buy a soda from Pepsi vs Coke, there's basically no difference in my utility. So all the effort expended to win my business is social waste. There are really so many examples it almost makes my head hurt.
3. I use the example of sovereign wealth funds in the piece. They are massively successful, as evidence by their returns.
I'm not referring to you, but I definitely know some quasi-Austrian economists who seem to believe even most non-market activity within business is efficient. I find this view baffling and totally contradicted by all my lived experience, but there are people who believe it.
A few other examples of private sector rent seeking like activity occur to me:
Any competition involving status. Because status is zero sum (for me to move up the rankings, someone else must move down) any resources invested in achieving higher status constitutes waste. There may be other benefits from the competition, but the competition for status itself is akin to rent exhaustion.
Various forms of signaling. Bryan Caplan has argued that much of education functions as a signal of ability rather than a means of acquiring skills. This leads to an arms race of degrees and credentials that creates excess investment. Even if there are benefits to such signals, we could accomplish the same ends if everyone agreed to invest fewer resources in the competition (or similarly, we taxed such signaling). The excess investment is waste.
Female beauty. Women invest resources to perfect their appearance to attract men. Past a certain point, these investments follow the same logic as signaling. They are costly, competitive, and often zero-sum.
These competitions all have dynamics like rent seeking.
By one definition, rent seeking is an economic term that refers to efforts by individuals, firms, or interest groups to gain income or wealth through manipulation of the political or legal environment rather than through productive economic activity.
By another definition, rent seeking is the pursuit of increased wealth without any contribution to productivity or value creation. It typically involves lobbying for regulations, subsidies, tariffs, or other government actions that confer financial benefits—such as monopoly rights or restricted market access—at the expense of others.
What is your definition? I'm finding your notion of rent seeking in voluntary interactions difficult to grasp.
My definition of rent seeking is costs undertaken (or effort exerted to use your language), usually in a competitive setting, in pursuit of a transfer.
I think both of your definitions are examples that fit into my definition, which also encompasses the examples I provided from the private sector.
Since I think I already know your definition of cost, you evidently mean by rent seeking this: dollars spent in a competitive setting, in pursuit of a transfer of dollars. I don't see at all how we have the same definition of rent seeking.
The definitions I provided are not mine; they are standard definitions from others who seem to like the term "rent." I do not use the term "rent seeking," because think it obscures rather than illuminates.
I personally tend to think in terms of people pursuing their own perceived net benefit, either through persuasion or coercion. I find persuasion laudable and coercion both offensive and immoral.
I don't use the terms private sector and public sector either, because they are fictions that explain exactly nothing.
The problem with "rent seeking," as I see it, is not that people pursue extra-normal returns. Those can be found in lots of places, because markets aren't very efficient. The problem is the competitive process that exhausts resources for no net social benefit.
But I agree with you, most people just equate rent seeking with "lobbying" or something to that effect.
Morality is not a scientific concept. Cost is. There are no doubt numerous "net beneficial" actions that are immoral according to various ethical frameworks. A key problem with economics--maybe the main problem--is economists won't leave their ethical baggage at the door when they engage in economic analysis. They sneak ethics into the analysis because they don't want to confront tradeoffs because the implications are unpleasant. But the tradeoffs aren't immoral. They are just a product of scarcity.