A Russian Defends Rent-Seeking

December 24, 2007

A Russian Defends Rent-Seeking

This passage from Anna Karenina reminds me of Tyler Cowen's "Rent-Seeking Can Promote the Provision of Public Goods" (1994. Economics and Politics 6(2), co-authored with Ami Glazer and Henry McMillan):

...Oblonsky began telling them of a delightful shooting party at Malthus's where he had stayed the previous summer. Malthus was a well-known capitalist, who had made his money by speculation in railway shares. Stepan Arkadyevich described what snipe moors this Malthus had taken on lease in the Tver province, and how they were preserved, and of the carriages and dogcarts in which the shooting party had been driven, and the luncheon pavilion that had been rigged up at the marsh.

`I don't understand you,' said Levin, sitting up in the hay; `how is it such people don't disgust you? I can understand a lunch with Lafitte is all very pleasant, but don't you dislike just that very sumptuousness? All these people, just like our tax farmers in the old days, get their money in a way that gains them the contempt of everyone. They don't care for their contempt, and then they use their dishonest gains to buy off the contempt they have deserved.'

`Perfectly true!' chimed in Vassenka Veslovsky. `Perfectly! Oblonsky, of course, goes out of bonhomie, but other people say: ``Well, Oblonsky stays with them.''

`Not a bit of it.' Levin could hear that Oblonsky was smiling as he spoke. `I simply don't consider him more dishonest than any other wealthy merchant or nobleman. They've all made their money alike - by their work and their intelligence.'

`Oh, by what work? Do you call it work to get hold of concessions and speculate with them?'

`Of course it's work. Work in this sense, that if it were not for him and others like him, there would have been no railways.'

Me: Your argument rests on pure coincidence. Rent-seeking could just as easily promote the provision of public bads.

Tyler: Well, unless you're an anarchist, there is a range over which my thesis is true.