In 1967, Gordon Tullock published a paper entitled “The Social Cost of Taxes, Personal Income, and Theft” which explained the mechanics of that Anne O. Krueger would call later “i want to hire society.” Looking for a place to live may seem silly, but if you understand why robbery makes the world worse, on the net, then you understand why the rental community is such a drain.
We learned a lesson recently when I checked my documents and saw one of my wife’s saying that I need to cancel a credit card because her wallet was stolen. He had gone kayaking with his friend and when they returned to their car, the window had been broken and their wallets had been stolen. It’s easy to cancel credit cards, but the money they were carrying is, apparently, lost.
From a broad economic perspective, i to transfer it doesn’t really matter. Instead of us spending $100, someone else does. Stolen money is a cost to us, but not a cost to “society”. It just changes hands.
Tullock and Krueger explain that rent seeking is inefficient because people use real resources to try to make a to transfer rather than a transactions. Others use real resources to try to prevent referrals. Thieves could use their time and tools to produce things, and if they produced something they could sell for more than it cost, they would make a large amount. They could build a birdhouse or sweep out someone’s garage or an infinite number of things.
Instead, they use their time and tools just to redistribute things. The cost to society is what they would have created while they were busy and anything they destroyed in the process (the window of the van, in this case, and the time we had to spend canceling credit cards and we would have to use transactional monitoring).
Lobbying—and distributional politics in general—is like breaking into a car and stealing a wallet robbing a record store. Instead of creating something new, lobbyists and special interests spend their money trying to take over something that already exists. The world is worse than they could have been.
If you look at the Federal Register, you can see example after example of special privileges given to visible and sympathetic interest groups. People celebrate when they win because after all, who doesn’t like free money? It’s not free, of course, despite claims that more spending will boost the economy. As Frederic Bastiat reminds us, the money has to come from somewhere. Importantly, too, the time and money spent urging Congress to protect the right could have been used to act instead of take-as-thieves who could use their time and skills for something else.
Art Carden is a Professor of Economics & Medical Properties Trust Fellow at Samford University, and by his own admission is as Koched as they come: he has a Charles G. Koch award in his office, does a lot of work for and is connected to an array of Koch-related organizations, and applied for and received funding from the Charles Koch Foundation to host campus events.
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