Just What the Economy Needs, A “Tsunami” of New Regulations, Good “Rent Seeking” Opportunities Though for Washington


Large scale Rent seeking and good economies are not often bedfellows

I was once in a meeting with about 100 lobbyists and activists when one of the more market oriented people in the group of Republicans and Democrats voiced his issue with the constant “rent seeking” of certain activist groups and politicians. It was couched in a friendly way, and this person knew their audience. It was a “bridge building” meeting and one where everyone was being respectful. These were people who could have cocktails with each other without going after each other’s throats.

However, one of the less market oriented participants quickly retorted that the questioner had better settle in, because the rent seeking was just getting started.

Rent seeking is the process by which certain interests derive “rents” from  economic activity by acting as toll keepers on regulation. Certain regs might not go through, or they might not apply to a certain company if a “rent” is paid to a particular union for instance, or given to a certain influential politician in the form of campaign contributions.

Well, cue up the checkbooks because there is about to be an explosion of regulatory efforts emanating from the White House and rubber stamped by the Senate.

Business lobbyists, as they deal with the crush will do everything they can to stave off certain regulations or to manipulate them for the interests of their clients. With all the big government around there is big money to be made in Lobbyland. Though many businesses would no doubt rather just avoid the nastiness of heavy handed regulation all together, (but not always – by a long shot) when presented with a highly regulated environment many businesses will resort to gaming the system. Business wants to survive and for many businesses this means making a deal with someone they probably should not.

(From The Hill)

“When you consider all the new rules now pouring through the regulatory pipeline, and those still to come, it is staggering,” U.S. Chamber of Commerce President Tom Donohue said this month during a speech on the state of American business.

While there is precedent for presidents adopting aggressive regulatory agendas in their second terms, some fear that Obama could go further than any has before in wielding his executive authority over the country.

“There are certainly concerns about what is coming down the pipe now that the election is over,” said Rep. Darrell Issa (R-Calif.), chairman of the House Committee on Oversight and Government Reform.

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