Thesis Number: #8 (Page 5 of 9)

Rent-seeking & the Lobbyists

Lobbyists are paid to ensure that democratic debate continues to be distracted by words that protect the rent-seekers. In Washington DC, the art of confusing politicians to extract privileges from them is funded by hundreds of millions of dollars. Nobel economist Joseph Stiglitz, when he worked there for both President Clinton and the World Bank, says that there were five lobbyists for every congressman who were pushing to preserve the privileges of the coal industry. Best-selling author John Grisham (2013: 31) summarised the process nicely in one of his novels:

A rich vein of uranium ore runs through central and southern Virginia. Because the mining of uranium is an environmental nightmare, the state passed a law forbidding it. Naturally, the landowners, leaseholders, and mining companies that control the deposits have long wanted to start digging, and they spent millions lobbying lawmakers to lift the ban….In 2003, a Canadian company […] filed lawsuit in the Southern District of Virginia attacking the ban as unconstitutional. It was a frontal assault with no holds barred, heavily financed, and led by some of the most expensive legal talent money could buy.

Grisham’s work of fiction realistically summarises how rent-seekers continue to distort legal and fiscal systems by bullying elected politicians. Losers are not just other species. People are also victims of rent-seeking. One legacy of the skewed fiscal system is 16,000 acres of under-used and vacant land in the five boroughs that make up New York City, with 400 acres of vacant land in Manhattan where homelessness has reached scandalous proportions. By failing to oblige owners to defray the full costs of the public services they access at their properties, development sprawls into outlying green fields, and along a coastline that is increasingly vulnerable to hurricanes.