Friday, March 6, 2009

Rent-Seeking - Captain Renault Division

This post relates to the following Keystone Economic Principles:

4. Economic systems influence choices.
5. Incentives produce “predictable” responses.

I'm thinking this a good time to start a new category for certain stories, and I'll it dedicate to Claude Rain's character in Casablanca, Captain Renault. Really, is it news to find out that rent-seeking takes place in regulated markets? Incentives produce predictable responses; and economic systems (and institutions) are about setting up the incentives.

Captain Renault: I'm shocked, shocked to find that gambling is going on in here!
[a croupier hands Renault a pile of money]
Croupier: Your winnings, sir.
Captain Renault: [sotto voce] Oh, thank you very much.

Today's nominee is this story from The Wall Street Journal.

I know I've missed a lot of other candidates recently. I'll try to do better.

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