Rent Seeking just another form of Corruption

I have received many e-mails and read the posts on articles I have written regarding my charges of corruption in Idaho Politics. Corruption doesn’t have to be illegal, but the longer it is allowed to occur, the less transparency there is in government, and the more likely it is to become illegal. Conservatives need to frame their campaigns around faith, family, and freedom, and we need to make the case that corruption in government either legal or illegal is hurting our families. The best way to understand corruption in Idaho government is to place it in the economic context of “rent seeking”.

As I was writing this article a caller on the Kevin Miller show discussed the problem in exactly those terms. Rent seeking is when an entity or individual seeks to increase their own individual wealth without creating any benefit to society by the manipulation of financial resources. Adam Smith identified rent seeking when he talked about the value of labor and recognized—different than Marx, that value is reflected in a marketplace. Innovation, the division of labor, and most of all demand (with choices), creates value. Rent seeking doesn’t increase productivity—many times it decreases productivity by suppressing innovation. It creates financial gain by the manipulation of financial resources. The added cost of “rent seeking” is paid for by those paying a price for the goods and services they need to live—food, shelter, clothing, health care and education. All have their value decreased because rent seekers seek increased profits resulting in economic frictions that always result in the inefficient allocation of scarce resources. That is why health care and a college education cost so much.

Corrupt politicians utilize their bureaucratic power to engage in rent seeking. In 1967 economist Gordon Tullock expanded on the “rent theory” of Adam Smith and his (Tullock’s) contemporary Anne Krueger who was the World Bank Chief Economist from 1982-1986—not a conservative she. Tullock hypothesize and has subsequently proven with hundreds of examples that there was a big difference in the cost of rent seeking (the bribe—legal or illegal) and the gains made from the practice. This theory has become known in economic circles as The Tullock Paradox. “The rent seekers” generally obtain large financial gains, at enormously small costs.

Think of the large hospital systems that invest tens of thousands of dollars in political campaigns in exchange for billions of dollars of profits much coming from government transfer payments or subsidies paid to insurance companies with whom they negotiate rates secretly. The former CEO at St. Luke’s made $18million his last two years of work at that facility. The Idaho Medical Association (IMA), The Idaho Hospital Association (IHA), The Idaho Association of Commerce and Industry (IACI), various teachers’ organizations (can we call them unions?), and the ubiquitous and omnipresent “BAR”, all colluded in the “rent seeking” game. Individual business and families are increasingly becoming less important and are being marginalized by “rent seeking”

Examples of rent seeking include and are facilitated by:

1. Lobbyists
2. Government subsidies
3. Grants
4. Tariffs
5. Liquor licenses and taxi medallions
6. Activation fees for hospitals
7. Insurance Premium Support programs
8. Student Loan Forgiveness

The Governor’s race should be all about families, faith, and freedom. All have been negatively impacted by RENTS. Corruption is rent seeking, and it will bring our State and communities to their knees. Look at what is happening in our large cities and blue states and even in our own State Capital.

I would like to see a list of politicians—including judges, who are having their expenses paid for by lobbyists at the Governor’s Cup. Transparency? Many of our political leaders have been so involved and embedded in this process for so long that they don’t even see it for what it is. Collusion—Cronyism—Corruption—Corporatism. The “Four Horseman” of Idaho politics.

The reason we don’t see Medicaid audits in the Department of Health and Welfare (DHW) or independent outside signed partner’s audits of organizations (profit and not for Profit) that receive over $100 million of government transfer payments is because of RENT SEEKING.