- Elgar original reference
Edited by William F. Shughart II and Laura Razzolini
Chapter 18: Rent seeking and rent extraction
18 Rent seeking and rent extraction Fred S. McChesney The Army can’t make you do something. But it sure as hell can make you wish you had. (Saying of US Army drill-sergeants, Second World War; Ambrose 1997, p. 331) 1 Introduction Use of the single label ‘public choice’ risks suggesting that there is only one prism for viewing the role of government in the otherwise private ordering of affairs. And indeed, as a subset of public choice, the economic theory of regulation began by adopting such a monocular perspective. Particularly in the University of Chicago public choice tradition (for example, Stigler 1971; Peltzman 1976), politicians were viewed as working to shift wealth from consumers to producers. That approach was enormously inﬂuential in analysing conventional economic regulation (the regulation of railroads, public utilities and other sectors of the economy, for instance).1 A synoptic view may once have sufﬁced. But the economic model of public choice from which the theory of regulation derives is hardly limited to describing politicians’ transfers of wealth from consumers to producers. The wider public choice model, deriving from the different tradition of the Virginia school (see, most notably, Buchanan and Tullock 1962) begins with a much broader focus on the interplay between public (political) and private actors and activities. The differences from the narrower Chicago tradition might be described as both ‘vertical’ and ‘horizontal’. Vertically, the Virginia approach emphasizes that one cannot fully analyse any particular set of political (legislative, bureaucratic) activities without understanding...
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