Abstract
The concept of economic rent is among the oldest in political economy. This reflects the fact that economies have always included parties whose income appears more parasitic than productive. The concept of rent-seeking refers to the efforts of parties seeking to secure such income by way of gaining influence over economic regulation or otherwise gaining favors from government. In spite of its intuitiveness, however, it has proven difficult to precisely distinguish rent from other categories of income. This chapter seeks to acquaint readers with this problem. The privatization of incarceration is then supplied as an important case study in current rent-seeking behavior.
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Notes
- 1.
The mud farmers, though perhaps a real case, appear in William Faulkner’s novel, The Reivers. For indicating its relevance, we are indebted to Fred McChesney Money for Nothing (Cambridge, MA: Harvard University Press, 1997), 3.
- 2.
When slavery was outlawed in the United States a loophole remained which allows it as a punishment for crimes—the 13th amendment captures this. Mass incarceration has allowed a huge, cut-price labor force to emerge. Some large corporations have dismissed their workforce and engaged prison labor eg. AT&T dismissed its unionized workforce in the 1990s and moved call center operations to prisons (see Anonymous. “50 Companies Supporting Modern American Slavery” Caged Bird, March 29, 2017. https://www.cagedbirdmagazine.com/single-post/2017/03/28/50-Companies-Supporting-Modern-American-Slavery
- 3.
These examples are reported in Anonymous. “50 Companies Supporting Modern American Slavery” Caged Bird, March 29, 2017. https://www.cagedbirdmagazine.com/single-post/2017/03/28/50-Companies-Supporting-Modern-American-Slavery
- 4.
For a full discussion see Michelle Alexander, The New Jim Crow (New York: The New Press, 2010).
- 5.
One of us has discussed the morality of inherited wealth elsewhere—see Daniel Halliday, The Inheritance of Wealth (New York: Oxford University Press, 2018). Other examples of incomes that may raise ethical questions and typically attract some policy response, but which do not fit neatly into the categories of wages or profits, include income from speculation or gambling, and of course income from straightforwardly immoral activity, such as fraud and theft.
- 6.
Here we have in mind Thomas Piketty Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014), who examines (among other things) the increasing importance of passive income under conditions in which annual returns to capital to exceed the growth rate of the economy.
- 7.
Here we follow the taxonomy given by Robin Cowan & Mario Rizzo “Fundamental Issues in the Justification of Profits”, ed. Robin Cowan & Mario Rizzo (Chicago, IL: University of Chicago Press, 1995), 3–6.
- 8.
Friedrich Hayek, “The Use of Knowledge in a Society”, American Economic Review 35(4) (1945).
- 9.
David Ricardo, The Principles of Political Economy and Taxation (New York, NY: Prometheus Books, 1996), Ch.2.
- 10.
See, for example, Fred McChesney Money for Nothing (Cambridge, MA: Harvard University Press, 1997), 10 and, in a more philosophical context, Julian Lamont “Incentive Income, Deserved Income, and Economic Rents” Journal of Political Philosophy 5(1) (1997), 28.
- 11.
Here we have in mind the writings of Thomas Paine and Henry George, who saw great injustice in the unequal distribution of land, and later John Stuart Mill. For discussion, see Barbara Fried, The Progressive Assault on Laissez Faire (Cambridge, MA: Harvard University Press, 1998).
- 12.
How far this goes is very much up for debate. The incentive effects of restricting inheritance are elusive—see Barbara Fried “Who Gets Utility From Bequests?” Stanford Law Review 51(4) (1999).
- 13.
For some brief statements by founding authors, see Gordon Tullock “The Welfare Costs of Tariffs, Monopoly, and Theft” Economic Inquiry 5(3) (1967) and James Buchanan “Rent Seeking and Profit Seeking” in The Logical Foundations of Constitutional Liberty (Indianapolis, IN: Liberty Fund, 1980). Fred McChesney Money for Nothing (Cambridge, MA: Harvard University Press, 1997) is a more recent book-length application of public choice theory to the problem of economic rents.
- 14.
Robert Reich Saving Capitalism (New York, NY: Knopf, 2015), Ch. 5.
- 15.
American Civil Liberties Union [ACLU] Warehoused and Forgotten: Immigrants Trapped In Our Shadow Private Prison System, American Civil Liberties Union, New York, June 2014. https://www.aclu.org/sites/default/files/assets/060614-aclu-car-reportonline.pdf
- 16.
Christopher Petrella & Josh Begley “The Color of Corporate Corrections: The Overrepresentation of People of Color in the For-Profit Corrections Industry” Radical Criminology, 2 (2013). http://journal.radicalcriminology.org/index.php/rc/article/view/27/html
- 17.
For example, see Christopher Petrella “The Color of Corporate Corrections, Part II: Contractual Exemptions and the Overrepresentation of People of Color in Private Prisons” Radical Criminology 3 (2014): http://journal.radicalcriminology.org/index.php/rc/article/view/44/html
- 18.
The Public Interest [ITPI] Cutting Corners: How Government Contractors Harm the Public in Pursuit of Profit, April 2016, Washington, DC, p9. https://www.inthepublicinterest.org/wp-content/uploads/ITPI_CuttingCorners_April2016.pdf
- 19.
Clint Smith, “Why the U.S. is right to move away from private prisons,” The New Yorker, August 24, 2016: http://www.newyorker.com/news/news-desk/why-the-u-s-is-right-to-move-away-from-private-prisons
- 20.
American Civil Liberties Union [ACLU] Warehoused and Forgotten: Immigrants Trapped In Our Shadow Private Prison System, American Civil Liberties Union, New York, June 2014, 18–19. https://www.aclu.org/sites/default/files/assets/060614-aclu-car-reportonline.pdf
- 21.
For the Department of Justice memo see “Memorandum for the Acting Director Federal Bureau of Prisons” https://www.justice.gov/opa/file/886311/download. For the full review see: https://oig.justice.gov/reports/2016/e1606.pdf
- 22.
Alexander Kaufman (2016) Sorry, but the private prison industry isn’t going anywhere, The Huffington Post, August 19, 2016: http://www.huffingtonpost.com.au/entry/private-prison-industry-doj_us_57b5e788e4b095b2f54309b1
- 23.
Oliver Laughland & Jon Swaine “US private prison program rebooted by Trump administration” The Guardian February 23, 2017: https://www.theguardian.com/us-news/2017/feb/23/trump-revives-private-prison-program-doj-obama-administration-end
- 24.
Alexander Kaufman, “Sorry, but the private prison industry isn’t going anywhere,” Huffington Post, August 19, 2016: https://www.washingtonpost.com/politics/with-business-booming-under-trump-private-prison-giant-gathers-at-presidents-resort/2017/10/25/b281d32c-adee-11e7-a908-a3470754bbb9_story.html?utm_term=.5b1e0a1bae37
- 25.
UNHCR, Global Trends: Forced Displacement in 2015, UNHCR, Switzerland, 2016: http://www.unhcr.org/figures-at-a-glance.html
- 26.
Nina Bernstein “Companies Use Immigration Crackdown to Turn a Profit.” The New York Times, September 28, 2011. http://www.nytimes.com/2011/09/29/world/asia/getting-tough-on-immigrants-to-turn-a-profit.html?rref=collection%252Fbyline%252Fnina-bernstein
- 27.
The first private prisons in America were immigration detention centers run by Corrections Corporation of America (1983) and GEO Group (1987). These firms then expanded rapidly into state and federal prison operations, but have in recent years invested heavily in immigration detention.
- 28.
Peter Martin, “The Appalling Mathematics of Offshore Detention”, The Age, August 31, 2017. http://www.smh.com.au/comment/the-appalling-mathematics-of-offshore-detention-20170830-gy6ztl.html
- 29.
Adam Gartrell, “Manus Island $2 billion And Counting - $1 Million for Each Detainee” Sydney Morning Herald, August 21, 2016: http://www.smh.com.au/federal-politics/political-news/manus-island-bill-2-billion-and-counting--1-million-for-each-detainee-20160820-gqx8do.html
- 30.
Blankenburg, Stephanie & Kozul-Wright, Richard. “The Rentiers Are Here.” Project Syndicate, September 25, 2017. https://www.project-syndicate.org/commentary/rise-of-global-rentier-capitalism-by-stephanie-blankenburg-2-and-richard-kozul-wright-2017-09
- 31.
In the United States, much of this loss occurs through the sheer costs of having created so much criminal law. For discussion of this particular issue, see Douglas Husak, Overcriminalization (New York, NY: Oxford University Press, 2008).
- 32.
For a recent appraisal of US labor markets that attends to employer domination, see Elizabeth Anderson, Private Government (Princeton, NJ: Princeton University Press, 2017).
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Halliday, D., O’Flynn, J. (2018). Economic Rent, Rent-Seeking Behavior, and the Case of Privatized Incarceration. In: Boonin, D. (eds) The Palgrave Handbook of Philosophy and Public Policy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-93907-0_35
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