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Tuesday, August 10, 2010

Rent-Seeking Right Out in the Open

Matthew Yglesias has a discussion of how some restaurants in Maryland banded together to try and convince the local liquor board not to issue a license to a new competitor. If you've ever wondered what the term "rent-seeking" means, be sure to check it out.

Yglesias is not surprised by the rent-seeking itself, but by the fact that there is no attempt to conceal it:
Fortunately, the Montgomery County Department of Liquor Control found this unpersuasive and granted the license. But the fact that restaurants might even think “we don’t want to let competitors take our customers” was a potentially persuasive argument is telling.
All I can say is welcome to the Age of the Bailout.

When your philosophy of governance boils down to "we should pay higher taxes so that the government can do more of the things we traditionally have done for ourselves," you really shouldn't be surprised that it has come to this. We've spent the last two years in non-stop government handout mode, and we are not talking about your proverbial helicopter drop of cash that falls equally on everyone.

This period has seen a steady stream of interest groups from Wall Street's biggest banks to Detroit's unionized auto workers, making the trip to Washington in order to petition the government for money and protection. If it's good enough for Bank of America and the UAW, does Yglesias really think that the Silver Springs Red Lobster is going to feel any shame in asking their local government to shield them from competition?

For the record, I don't think we can lay all of this at Obama's doorstep. The current era of grovelling before the federal government really went into high gear when Henry Paulson got down on one knee and begged Pelosi for the votes to do a bailout in the first place.

All I can say is that if you are surprised that business often tries to use the government to protect itself from competition, don't be. If you knew this went on, but are surprised businesses no longer feel the need to conceal it, get used to it. And if you are the type of person that advocates for greater government involvement in what has traditionally been the private sector, please don't be surprised when that sector finally takes your advice to heart.

2 comments:

John Foust said...

Happens all the time at the local level, in small towns all across the country.

Jeremy R. Shown said...

Agreed. So why is he so surprised?