Rent-seeking

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Rent-seeking is the act of growing one's existing wealth by manipulating public policy or economic conditions without creating new wealth. Rent-seeking activities have negative effects on the rest of society. They lead to reduced economic efficiency due to misallocation of resources, stifled competition, lower wealth creation, a loss of government revenue, increased income inequality, increased debt levels, the risk of increased corruption and cronyism, the decline in public trust in institutions, and potential socioeconomic and institutional decline. Successful capture of regulatory agencies (if any) to gain a coercive monopoly can result in advantages for rent-seekers in a market while imposing disadvantages on their uncorrupt competitors. This is one of many possible forms of rent-seeking behavior. The classic example of rent-seeking, according to Robert Shiller, is that of a property owner who installs a chain across a river that flows through their land and then hires a collector to...

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