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When Politicians Encourage Rent Seeking

by Matt Mitchell on August 14, 2012

in Crony Capitalism, Government-Granted Privilege

In the second appendix to the Pathology of Privilege, I list a number of questions for further research. One question is:

Do governments pass out privileges because firms have developed ties with political decision makers? Or do firms get close with political decision makers because they are passing out favors?

My colleague Adam Thierer recently uncovered a remarkable example of politicians encouraging firms to get close with decision makers so that they might hand out favors:

I was flipping through the latest copy of “The RCA Voice” which is the quarterly newsletter of what used to be called the Rural Cellular Association, but now just goes by RCA. RCA represents rural wireless carriers who, among other things, would like increased government subsidies for–you guessed it–rural wireless services. Their latest newsletter includes an interview with Rep. Don Young (R-AK) who was applauded by RCA for launching the Congressional Universal Service Fund Caucus, whose members basically want to steer even more money into the USF system (and their congressional districts). Here’s the relevant part of the Q&A with Rep. Young:

RCA VOICE: “How important is it for carriers serving rural areas to be engaged with their members of Congress on USF issues?”

REP. DON YOUNG (R-AK): “The more carriers engage with both their Representatives and Senators, the better. While the early bird may get the worm, the bird that doesn’t even try definitely won’t get any worms. The same applies to Congress.”

In Adam’s words,you gotta admire chutzpah like that! It pretty much perfectly sums up why universal service has always been a textbook case study of public choice dynamics in action.”

 

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