In my recent post on the WSJ’s review of Mokyr’s book about the industrial revolution, I said that I’d never come across the definition of ‘rent-seeking’ as “the use of political power to redistribute … wealth”. Of course, right now I’m seeing that definition everywhere. Josef Joffe, in his review of (the late) Tony Judt’s Ill Fares the Land, says:
… the more the state distributes and regulates, the more it tempts its citizens to outflank the market and manipulate public power for private gain.
And there it is again, more or less. Government: a force for bad.
Let’s consider some minimal state which is constituted only of its own citizens (as citizens) and which has authority to enforce only that which has been agreed on by citizens. Now let’s consider two statements:
(1) The citizens have grouped together to enact legislation to achieve what each of them considers to be a mutually advantageous settlement.
(2) The citizens have ‘outflanked the market and manipulated public power for private gain’.
You don’t have to widen the scopes of the constituent terms much to get to a point where these two statements are as good as indistinguishable. That is, to say one is to say the other. (I’d argue (1) is more precise, but not to the extent that it matters.)
Joffe says that the consequence of ‘outflanking’ is that even a good-intentioned government will go wrong. He adds:
The founding fathers grasped this hard truth, and hence they hemmed in government. Even the most moderate of social democrats tend to ignore this insight, and so does Tony Judt.
The problem is that beyond the platitude that power corrupts, no insight is available. Instead, Joffe’s rhetoric suggests, implicitly, that there might be some perfect end state where ‘the playing field is level’ and government … well, we’ll just not need to worry about that particular runaway monster any more. We’ll have ‘reined it in’ once and for all; it can no longer “weaken society” or “render … trust moot”. This is a hope, not an insight. And unless you are a bit more precise about what you mean by your terms – and Joffe isn’t – you’ll find that your call for an end to ‘manipulation of public power for private gain’ is a call for an end to government. Most people recognise, I think, that the inequality of power entailed by government (by definition, the government is always more powerful than any of its citizens, however grouped) is both motivated and justified by the existence of naturally arising inequalities. The spread of these is broad enough to include cases I think even Joffe would have to acknowledge, if pushed. Government is our response; the beast from the depths is the fact that circumstance and personal attributes vary, and hence some are already disadvantaged. There are and will be special interests from here on out. To acknowledge such an interest is not to automatically produce a state-corrupting ‘client’: good government is possible.
Update: It’s OK, everyone, I think I’ve discovered the source of the trouble:
The [author’s] extended methodological digression on the function of orthodox economic theory in application to the private economy is designed to provide some assistance in discussing the analogous role of theory as extended to the public economy, to the demand for and the supply of public as opposed to private goods. At base, the economist must begin from the same set of conditional hypotheses. He deals with the same individuals as decision-making units in both public and private choice, and, initially at least, he should proceed on the assumption that their fundamental laws of behavior are the same under the two sets of institutions.
– Buchanan, J., The Demand and Supply of Public Goods, 1968. (My emphasis.)
That sounds very scientific and cautious and all, but if you stop to think about it I think you’ll agree that it’s not.
