Rent Seeking and government inefficiency

Rent seeking is what economists call the expenditures accrued when getting payment. (It is also one of the stupidest names for a simple theory, something economist have a bad habit of doing such things.) For example:

Why this is important is because it applies to government and social outreach in an extreme degree. The costs to give out money, such as food stamps, and the costs expended to retrieve that money, can easily exceed the benefits involved. Another Example:

Lobbying is effectively freedom of speech, but it also reduces the efficiency of the economy. With the social outreach programs, the costs to poor people can quickly out distance the money that is given out. The programs are costing “the poor” more than they are receiving. Worse the more money given, the greater amount of interest and applied resources to retrieving said money.

Are we not just making things worse with our programs?

Is that the really important question?

Obviously it’s inefficient, but the problem is bureaucrats and politicians benefit from that inefficiency.

The people can’t fix it because they’re not the bureaucrats or politicians, but rather they’re represented by the very people who are inefficient.

Likewise, they fix the system towards future inefficiency because it’s what their personality type wants and it’s how it fits into the system.

A lot of the problem also comes from bureaucrats and politicians identifying the problem themselves, but then lying about how it manifests in order to manipulate the people into sacrificing those who could purify corruption.

A classic example of this is the “team player” tactic. That is corruption happens because some individuals don’t uphold responsibility, and other individuals either have responsibility shifted onto them or end up getting neglected from the lack of responsibility.

However, politicians will say those who aren’t willing to pitch in to compensate for the irresponsible or believe they’re entitled to expect others to help them when abused despite how they weren’t willing to help others despite no abuse are selfish.

It’s a weird paradox, but it ultimately comes down to a confusion between the personal versus social.

In this thread, that is the question I am asking. Do the programs that we consistently promote as helping the “poor” cause harm with their implementation? Does searching out these rents, as they are called, waste enough resources that they are not worth it? And I mean specifically to the society as a whole, not the individual. The individual only has to be taking in more than they put out for it to be worth it to them.

While I agree with most of your points, that is not what I am attempting to think about and process. Does it cost the people we are attempting to help with these programs more, over all, than we can effectively put into the system?

A sideways example:

That is an example of how one small act can increase the costs for everyone. If by giving out this money we are inducing greater costs for those we are attempting to help, should we stop?

Answer: it all depends. Some programs fail, or are inefficient to the point where they are more wasteful than useful. Other programs work and are of great benefit to society as a whole, and the people they are designed to help in particular (indeed the the former and latter are usually related in a symbiotic way). As i see it, the problem with the OP is you take an example of one type of program (often replicated in the private sector, i will add) that is inefficient in a big way and then arrive at the conclusion that all government programs aimed at helping a particular class of people are NECESSARILY inefficient and harmful to the people they are trying to help, which doesn’t follow.

i should also point out that the social and economic benefits of programs often come in forms that are not as easily or immediately quantifiable as the bureaucratic costs associated with the program - so the sort of cost-benefit analysis you used in the OP whereby it costs 10K to give away 50K might be rather skewed.

But, then the problem becomes how do we show that programs are actually succeeding? The proof is on the proponents side, correct? Shouldn’t we demand actual proof that programs are working? You say there are programs that work, which ones?

I’ll see if I can find a real world, current example. When I was processing this it was more of a thought experiment then a real world, here is an example, else, I would have lead with that.

Yeah, there is a problem with arbitrary numbers being pulled out of the head, the first set the numbers where dramatically off, -160,000 or something, so I picked numbers that lowered it a bit. It was to explain the theory and emphasize a point, not provide specific real world examples.

Well, i suppose goals should be set going in such that if those goals are more or less reached in some set amount of time, then the program can be considered successful. What the goals are depends on the program, obviously. But, in general, i think earning revenue is not or at least need not be among the central goals of most govt social programs.

Mostly, sure. But if you’ve got people on an ideological mission to eliminate all govt social programs, then there is a certain burden of proof on them too, to show that the programs are not beneficial.

Hmm. That’s a bit of a trap, because it moves me from debating simply that social spending can be good, to debating the merits of specific extant programs. So i’m hesitant here, but for the sake of conversation, i’ll return to subsidized healthcare in Massachusetts as a good example of a successful govt program that i know something about.

Right, that’s fair. My only point is that a program’s bureaucratic costs aren’t the sole measure by which its success ought be evaluated.

I disagree with this. All a critic of a social program has to show is that the program has a cost. Proponents of the program need to show that the program is giving results worth that cost, or else the program is a failure by default.

Well then what criteria do you use to quantify a dollar well spent? From the point of view of the ideologue out to eliminate all social spending, any money at all spent on such programs will be wasted money, regardless of whatever benefits the proponent of social spending might point to . . .

 Eric can answer better than me, but I would think the first criteria is whether or not that dollar is actually accomplishing what was stated as the intention of the program. The second criteria I would think would have something to do with other, unforeseen expenses.  So if something is supposed to reduce hunger,we'd want to know if it's reducing hunger as well as the money spent would suggest, and we'd want to know if it's having some other consequence like raising the crime rate or whatever. 

Well, any money spent on a program is an expense, or a negative, that’s a fact. If you are considering buying a new T.V., and you want to list the pros and cons, the cost of the T.V. is a con. I would think everybody would be trying to reduce spending as much as they possibly can, in their personal life as well as public life- if I can have something for 20 dollars or for 10, I want it for 10.
So yeah, if somebody is against all spending on principle, there’s not much you can do because you are, in fact, spending. At that point you need to criticize that principle, and try to show that ‘eliminating all social spending’ isn’t a good idea for one reason or another. Off the top of my head, ‘expense’ doesn’t just apply to dollars, so you could argue that a refusal to spend any dollars on social spending could have some other, non-monetary cost. Or even an indirect monetary cost.

What about buying a rolex? The main reason you want it is because of what it costs. So it’s a pro that it costs a lot.

If I could get the same Rolex for less I still would. It’s a pro that it’s worth a lot, right?

What do you mean when you say “worth”?

While attempting to quantify a dollar well spent when it is not easily measured does make me giggle with joy. I don’t think that is the actual problem. With Rent Seeking the math is much more simple. Lets talk something that few would opt to get rid of, Food Stamps (or whatever name they are calling themselves this week). If the food stamps require a set amount of community service, as it does here in Colorado, then minimum wage times the required time equals the rent the person is putting into getting the food stamps. If the amount of hours that a person must do in community service equals the amount given divided by minimum wage, then effectively you are just paying the person minimum wage. Total rent $0. Which is great, until you realized how much money goes into distributing the food stamps. Which is another cost. So, instead of people just getting minimum wage at the place they would normally be putting in community service we are costing the total community more. (Personally, I also have a problem with it creating “loyalty” to the government over the family, but that is another thread.) The community gets minimum wage in services, but looses the minimum wage, plus the costs of bureaucracy. It might be better for the community if instead of taking taxes to pay for these programs, we don’t. The amount of money stays the same in the exchange, assuming that these people can make at least minimum wage, but we cut out the costs of some of the bureaucracy. If instead we limited access to food stamps to people who would normally not be required to do the community service, often because they can’t. We would still be helping, but cutting down on the cost to the community.

Yes, there are harder examples, but one of the great things about economics is it’s all about figuring out the costs of things.

I know these people exist, but they are not progressives, nor are they, for the most part Conservatives. Libertarians tend to be the group that want to get rid of everything. And for the most part, the goal to spend money effectively is far easier to accomplish. For example, few would argue that roads are not necessary, and they are a social program. Further, it is actually possible to show the effect of money spent in these places. Usually, as was an interesting aspect during the civil war, the places with the lower infrastructure have consistently lower incomes. Comparing incomes is one of the ways to do so, costs of goods is another. The harder it is to get to a place with a good the greater the cost of that good. So comparing the costs of goods in individual places can show us the costs of reduced infrastructure.

This is a good, reasonable question. But, “Frankly my dear, I don’t give a damn.” The luxury market is not important in this case, because the people that are buying in it are presumed to have enough money to buy in it. The most it shows for anyone else buying in it, is maybe they are not applying their resources effectively. They might be paying for piano lessons but starving to death, like Marx. Or giving away money given to them as wedding presents, like Marx (Who was given a case of gold coins by his wife’s mother for their marriage, but left it open and told the helpers to take what they needed at the hotel for their honeymoon… Yes, it was gone by the end of the honeymoon.). Fuck them. If they don’t use their money effectively, do you really want to be channeling more money to them?

We are looking at the costs to the community, and it’s most effective use. I figure almost every side can get in on this, the progressives and the conservatives want to help. We all should want the most help to reach the most people.

That’s not to say that the luxury market isn’t interesting, as people literally spend excess resources to show they have excess resources. It’s a very interesting study… My favorite example is those emperors that would grow their nails long, long enough all you can do is let them hang. You can wipe your own ass with those, you have to pay someone. So, super long nails are the equivalent of a rolex watch, but a little grosser…

What I’d be willing to pay if I had all the relevant info, I think.

I am not saying that earning revenue is a goal with a social program. I know they are an attempt at charity, which is always in the red, it has to be. If a charity is in the black, it’s not doing it’s job. It would be nice if we could revisit social programs every couple of years and make sure their working, but for that they would have to be more local. State or city run at the very least. It would be doubly nice if part of putting in legislation included, these are the goals people!

I disagree whole heartily with this. I think this is one of the fundamental problems with government in the US is this attitude. It’s why government is so inefficient.

Let me get back to you on that. I read something the other day killing this idea, but I cannot remember where… So, for now, I present no argument.

Up to this point, that you made, I had not pointed out bureaucratic costs. That is because, Rent Seeking is about the costs to the individual that is looking for the pay out.

(edit to delete an extra

Not to deviate, but this thread, and the question of whether money is “well spent” made me think of this news story I read the other day. … n-p,35922/

That’s not a news story.

But, I could go off on it quite a bit…

You have to rent from those that own you. Welcome to the glorious global monopoly.

Enjoy your living space rental. Make sure you pay up in timely manner otherwise your life rather quickly will become repossessed.

Wrong kind of rent.