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Wednesday, September 28, 2005

A Haven For Rent-Seeking Behavior

Is this rent seeking behavior, or do lobbyists help to direct government spending towards a more efficient allocation of resources by providing useful information?:

Lobbies Line Up For Relief Riches, by Jeffrey H. Birnbaum, Washington Post: With Congress dangling as much as $200 billion in hurricane related aid, lobbyists for oil companies, airlines, manufacturers and others are clamoring to get their share. ... Lawmakers are receptive to many of these requests, congressional aides said. For example, House Energy and Commerce Committee Chairman Joe Barton (R-Tex.) is moving legislation this week, much of it recommended by lobbyists, that would waive regulations to help oil companies build new refineries. ... The oil lobbyists, like so many others, are using the storms as an excuse to win long-sought legislation, even when their plans relate only tangentially to the hurricanes. Earlier this week groups as diverse as the American Institute of Architects and the American Petroleum Institute were freshening their requests for tax breaks and other favors. ... The troubled airline industry has been particularly active on the hurricane front. ... Insurers have been using Katrina as an argument for ... an extension of the Terrorism Reinsurance Act (TRIA), which provides for the government to pay a portion of the damage caused by a foreign terrorist attack over certain thresholds. ... Farmers, even those outside the disaster zone, are begging for hurricane cash. "It is important to remember that the economic impact of Hurricane Katrina is harming much more of U.S. agriculture than producers in those three states," ... The nation's for-profit hospitals are trying to persuade Congress to carve an exception into a ... law specifying that only nonprofit institutions qualify for grants from the Federal Emergency Management Agency to rebuild critical facilities after a natural calamity. ...

Who will legislators rely on for industry knowledge with so many different types of expenditures to be made so quickly?

Wikipedia: ...Collusion between firms and the government agencies tasked to regulate them can be a haven for rent-seeking behavior, especially when the government agency must rely on the firms for knowledge about the market...

I say it's rent-seeking.  And it seems to pay pretty well.

    Posted by on Wednesday, September 28, 2005 at 02:30 AM in Economics, Market Failure, Policy, Politics | Permalink  TrackBack (0)  Comments (1)

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