Income inequality has been a big theme in U.S. politics and economics recently. We discussed a mathematical anomaly about the 0.01 percent earlier in the month. A number of folks have offered up defenses of the wealthiest Americans, but they seem — like this rote piece from former Council of Economic Advisers Chairman Greg Mankiw — half-hearted and wimpy.
What got me thinking about this recently was an intriguing article by University of Houston professor Craig Pirrong. In “The Rent Seeker, Posing as Visionary,” Pirrong criticized the long line of government-support programs that Elon Musk’s many companies seem to be involved in.
Rent-seeking has morphed over time: “Rentier” is derived from the French term to describe those who lived off the income from rents, typically for real estate. But that is morphing into income from government-enforced monopolies, such as patents, copyrights or government projects. The manipulation of regulations by lobbyists — particularly by those of the financial industry — has also given rise to claims of rent-seeking.