Monday, May 23, 2011


I never much cared for Pawlenty but I am impressed that he is telling Iowans he is against the ethanol subsidy and is apparently set to go to Florida to advocate for a fundamental overhall of social security and medicare. These are long over due and, in the case of Social Security and Medicare, absolutely vital to our continued prosperity and vitality as a country. Maybe there is hope after all. On the other had, I have to say that I found his saccarine campaign roll-out radio ad a bit embarrassing.

One of the basic problems in our democracy is that we don't realize that rent-seeking is damaging and wrong because of the amount of value it destroys in the economy, not the incomes of the people that are receiving the funds. The payoff can be a million dollars to one guy or a dollar a piece to a million guys, the damage to the economy is the same. Many of the most politically successful programs are massive rent-seeking schemes that are politically successful precisely because they give relatively small amounts of money to very large numbers of people. These people don't think of themselves as exploiting the system because their total incomes are not particularly large. But that doesn't matter. If a large number of people are taking a relatively small amount of money the deadweight loss can be just as large or larger than with the sort of payoff that we usually think of as corruption.

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