July 9, 2008
The Road To Hell Is Paved With Rent-Seeking
To a free-market economist, greed (as commonly defined) is not a bad thing. There's nothing wrong with wanting to earn as much money as possible. Free markets work well when everyone is trying to do exactly that. Only when some market player tries to earn a lot of money by manipulating non-market forces do economists become enraged and hurl swear words. Economists being dreary sorts, the worst swear words they know are "rent-seeking."
I've been planning to write a post explaining the meaning of this very useful phrase---and why it has such a misleading name---but for now I'll just illustrate it with one of the most disgusting examples of rent-seeking I've encountered. For now, just know that the biggest and baddest non-market force is government:
Illegal political contributions helped an Australian firm land a lucrative toll road deal that grants the company unprecedented power over Northern Virginia's transportation future.
Transurban is a company that operates toll roads, and they have the contract for operating the I-495 Beltway surrounding Washington, D.C.
Transurban received from Virginia officials the right to demand payment from state taxpayers any time that improvements are made to a number of free roads near the Beltway. In effect, the contract between the Virginia Department of Transportation (VDOT) and Transurban is designed to ensure the area remains sufficiently congested so that motorists will have an incentive to pay to use the toll lanes.
For example, VDOT can make no changes, expansion or improvements to the free lanes on the Beltway until the year 2087 unless the agency first consults Transurban. VDOT agreed that if any such changes were made to the general purpose lanes without Transurban's explicit approval, they would at least be made in such a way as to guarantee the company maintained a high level of profit.
And if that still hurts Transurban's bottom line, Virginia taxpayers will have to compensate the company:
The contract specifies that payments called "compensation events" must be made in the event that the state decides to improve the connections between the Beltway's general purpose lanes and the Dulles Toll Road or any "improvements to I-66 outside the Capital Beltway Corridor" made over the course of the next eighty years.
The rent-seeking horrors go on and on. There are even provisions for Virginia taxpayers to compensate Transurban for lost tolls if people begin carpooling more.
By the way, Virginia is also the state that imposed those outrageously high fees for traffic violations, apparently at the behest of lawmakers who make money defending people for violating those same laws.
I don't want to tell Virginians how to live their lives, but I think they should seriously consider marching on the seat of government with torches and pitchforks.
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