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I find it interesting that the article (referring to the original article [1], not the economist's which is mostly just some sort of political piece) considered
by TangoTrotFox 8y ago
I find it interesting that the article (referring to the original article [1], not the economist's which is mostly just some sort of political piece) considered unproductive rent seeking mostly in forms of corrupt relationships between government and industry. Quoting that article,
"Baumol was worried, however, by a very different sort of entrepreneur: the “unproductive” ones, who exploit special relationships with the government to construct regulatory moats, secure public spending for their own benefit, or bend specific rules to their will, in the process stifling competition to create advantage for their firms. Economists call this rent-seeking behavior."
However, should rent seeking behavior in traditional business to consumer (or business to business) relationships be excluded? Take for instance the explosion in software being sold as a service even when such things make very little practical sense. The 'cloud' certainly has some uses, but companies are trying to shoehorn it into absolutely everything and no small part of the motivation there is to justify charging an going rent for usage of software that's not fundamentally changing.
The same is, in a way, even increasingly true of entertainment. Ever larger number of games are designed around attempts to coerce players into engaging in ongoing purchases after buying the game, often to no end as in the case of buying consumable items or currency of various sorts. In the end it seems identical as the idea is to artificially increase revenue through the seeking of rent instead of the creation of new products.
[1] - https://hbr.org/2017/06/is-america-encouraging-the-wrong-kind-of-entrepreneurship https://hbr.org/2017/06/is-america-encouraging-the-wrong-kin...
- rossdavidh 8y agoI suppose the idea would be that if you are selling a good or service that isn't actually worth much, then the companies that don't buy will have an advantage over those who do, and eventually it should be self-correcting, if only because people tend to imitate the winners. This wouldn't make all B2B entrepeneurship sensible, but it would not have a tendency to get worse over time. Whereas, in theory, rent-seeking via government has no such reason it would not get ever-worse, as attempts by one company to influence government result in competing companies doing the same at first as a defensive measure, and then while they're in the lobbying game why not try to get something for themselves as well.