Washington, DC, The Land of the Well Educated Rent Seeker

I know Washington, DC. I’ve spent the better part of my working life in and around the city. I know the culture.

The one thing that unites all of Washington is traffic. This is universally true. One can bring up traffic anywhere in the metropolis and people will happily regale you with how long it took to get from one place to another.

New York traffic is a breeze compared to Washington.

The other thing which unites this metropolis is a focus on the federal government. Makes sense I suppose, DC being the capital of the world’s most powerful nation.

This is the only place in the world where one can hear recruitment ads for the CIA on the radio. I am not kidding, such ads run all the time on WTOP.

It is also the only part of the US which seems to be trucking along economically. In the city and the vast suburbs money flows. Thing is, it’s your money.

But David Leonhardt at the New York Times, in his op-ed Why is DC doing so well? doesn’t see it like that. DC is doing well because of education levels he insists, not rent seeking by government and government contractors.

Nonsense.

Though he starts off well,

“In Washington’s case, the rent-seeking takes the form of capturing even a small portion of the financial gusher flowing to and from the federal government. The lobbyists, consultants and defense contractors building some of those mansions in McLean and Potomac are doing so, in effect, with government dollars from military or Medicare or other budgets. As most of the country continues to struggle through an agonizingly slow recovery, Washington uncomfortably calls to mind the rapacious Capitol in Suzanne Collins’s “Hunger Games” series.”

He quickly dismisses his own point in the next paragraph by saying;

“Still, Washington’s good times are not all — or even mostly — about rent-seeking.”

Sorry but they are about rent seeking. Trust me I see it every single day. Defense contractors, employees at the FDA, Homeland Security with its massive new building, it is stupefying how much is being taken from the American taxpayer.

He then goes on to laud Keynesian economics. As if Keynesian economics and rent seeking didn’t go hand in hand.

And this is classic, he says;

“In the worldwide experiment on fiscal policy that’s been run during the past few years, Washington has joined China firmly in the stimulus camp.

Much of the rest of the United States, where almost two million state and local government jobs have disappeared, looks more like austerity-hobbled Europe.”

Keep going with that analogy Leonhardt. Satists love China and it’s “managed economy.” One has to wonder what the China boosters are drinking at this point. China is in deep trouble.

But again the reason why Washington is doing so well? Education levels.

It’s not educated people coming to Washington because paychecks are being handed out, it’s the educated people coming to Washington creating the wealth which then generate the paychecks. Primed by governmet spending of course.

“The more a person learns, the more a person earns,” Gov. Martin O’Malley of Maryland told me last week.” 

Well, if Maryland’s governor says that it’s true it must be! It’s not like such a stance dovetails nicely with the governors constituency or anything. You see, what we need is ever more money dumped into “education.” According to the governor if we could just get everyone to graduate with a doctorate the long dreamed of American utopia would emerge!

Of course there is some truth to a correlation between education and wealth but it is not as clear cut as the governor or Mr. Leonhardt would have us believe.  And it certainly is not why Washington continues to putter along.

Whether people in Washington want to believe it, it is rent seeking which drives the economy here. Wealth taken from the hinterlands is amassed in the capital and then disseminated to friends of government.

I live in this place. I see it everywhere I go. And from the looks of things only more of America’s wealth will be headed in this direction soon.

Click here to read Leonhardt’s piece.