Rent Seeking
In a productive economy, people earn money by producing goods or services. Rent-seeking, by contrast, is when individuals or companies extract income by manipulating the system — often through politics, monopolies, or legal advantages — rather than by creating value.
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Examples of Rent-Seeking:
- Monopolies charging high prices simply because there is no competition.
- Lobbying for government subsidies or special tax breaks.
- Real estate speculators who make profits from rising land prices due to zoning or infrastructure decisions, not because they improved the property.
- Patent trolling — buying patents just to sue others rather than innovating.
As used by Thomas Piketty:
Piketty criticizes rent-seeking behavior, especially among the wealthy elite who:
- inherit wealth,
- influence tax policy, or
- earn money from capital without doing productive work.
He argues that unchecked rent-seeking contributes to rising inequality and undermines democracy.
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