Page 96 of Madmen offers a practical definition of that commonly misused term:
The investment of valuable resources into activities that are counterproductive is what economists call “rent seeking.” Theft is a particularly vivid example. So is much of politics.
This morning Tyler Cowen, via Mark Thorson, points to a vivid example in a Guardian news article, “The Vending Machine Robot that Can Steal Free Sodas.”
An enterprising young French man, however, has solved the problems of anyone who has encountered a malfunctioning vending machine by inventing a robot that can go inside one and ‘steal’ any item.
In a video posted to YouTube, user ioduremetallique controls the robot, which appears like a claw, with a hand-held game-pad.
Of course, anyone with half the sense to read a Guardian article knows, to paraphrase Milton Friedman, that there is no such thing as a free soda.
Gordon Tullock would add that once a person has the power to snatch a soda he might easily be enticed to do so even in the absence of “a malfunctioning vending machine.” See Tullock’s famous paper in which he pioneers the concept of rent seeking.
Like crony capitalists who angle for some political gain that transfers wealth to them from consumers, taxpayers, and competitors, the young French man’s investment in becoming an effective thief is counterproductive. It destroys wealth, and it’s therefore a crystal clear embodiment of the social costs of rent seeking.