Where are the rent seekers?

• Published in: Constitutional political economy Vol. 27; no. 2; pp. 124 - 141
• Main Authors: Hillman, Arye L., Ursprung, Heinrich W.
• Format: Journal Article
• Language: English
• Published: New York Springer US 01.06.2016; Springer Nature B.V
• Subjects: Accountability; Constitutional Law; Constitutions; Costs; Economic theory; Economic Theory/Quantitative Economics/Mathematical Methods; Economists; Efficiency; Incentives; Income distribution; Income redistribution; Interest groups; Original Paper; Political behavior; Political economy; Political institutions; Political Science; Political Science and International Relations; Political Science and International Studies; Public policy; Rent-seeking; Rents; Social costs; Social groups; Studies; Success; Tullock, Gordon; Welfare state; United States > US; Germany; Chicago Illinois; A1; P; Income distribution; Contest models; Interest groups; Gary Becker; Rent seeking; Rent creation; Gordon Tullock
• ISSN: 1043-4062; 1572-9966
• DOI: 10.1007/s10602-016-9211-0

In a remarkably simple and yet one of the most original and insightful observations of 20th century economics, Gordon Tullock pointed out that there are efficiency losses when public policies and political behavior create contestable rents. Tullock also observed that social losses from contesting rents appeared smaller than might be expected, so raising the question ‘where are the rent seekers?’ Tullock proposed that political accountability and ‘free-riding’ incentives in interest groups limit social losses from rent seeking. We affirm Tullock’s explanations, which apply differently under different political institutions. We compare Tullock with Gary Becker, who focused on deadweight losses from redistribution and concluded, in contrast to Tullock, that political redistribution is efficient. The comparison with Becker highlights the significance of the recognition of Tullock’s concept of rent seeking. By excluding rent-seeking losses from the social costs of redistribution, Becker could arrive at a conclusion more favorable than Tullock to an ideology that sees merit in extensive redistribution. Tullock’s model, although more encompassing of actual social costs of redistribution, would have been less welcome in the social democratic welfare state.