People were not created equal. The absence of equality is the reason the entrepreneur lives. Each entrepreneur, through the inequalities of life, is able to serve different people in different ways. However, as mentioned before, humans were not created equal and therefore many of the entrepreneurial type are unable to serve their fellow man better than the competition. Whether it is because they are less gifted or less driven, some just can’t seem to receive profit signals of approval. So, where do those of the “lost breed” of entrepreneurs wander? The answer is rent-seeking activity.
In economics, rent seeking occurs when an individual, organization or firm seeks to make money through economic rent. Rent seeking generally implies the extraction of uncompensated value from others without making any contribution to productivity, such as by gaining control of land and other pre-existing natural resources, or by imposing burdensome regulations or other government decisions that may affect consumers or businesses. I have identified two types of rent-seekers that are derived from the “lost breed.” The first are the conspicuous rent seekers such as politicians and bureaucrats. The second are the inconspicuous rent seekers.
Conspicuous rent-seekers are politicians or bureaucrats, who are the economic opposite of profit seeking entrepreneurs. Certainly most of the “lost breed” wander into public service seeking rent from the government by helping the government collect rent. While they may have good intentions and “want the best for our country” their economic behavior implies the opposite. These men and women lobby for certain bills and legislation that have their best self interest at its core. Bribes are accepted by conspicuous rent-seekers as their actions fester the political corruption that is inherent in democracy. The conspicuous rent-seeker is very clearly an economic enemy trying desperately to hide behind the veil of “public service” for as long as possible to collect their rent. These politicians, bureaucrats and some monopolists are the obvious half of the problem.
The other half of the problem is the inconspicuous rent-seekers. These men and women are called inconspicuous because they do not use the public sector to gain their rent. Instead, they create phony goods and services to sell to the market and through fresh marketing and strategic selling, most are successful. The obvious example of an inconspicuous rent seeker are those selling solar powered clothes dryers (clothesline) or the man in New York selling a “Rolexe” watch for $50 even the pastor on TV selling “holy water.” While they are offering a good and the exchange is voluntary, the activity is still that of a rent seeking monopolist or bureaucrat. However, it is done with much more tact and elegance such as those selling the self-help books.
The best example of an inconspicuous rent-seeker is the consulting agency. I do not intend to dismiss such businesses as legal consulting or financial consultants, but I would like to expose workplace safety consultants, team building consultants, leadership consultants, and many others. These professionals pitch their product to businesses in hopes to collect their economic rent. Most efficient businesses do away with the inconspicuous rent-seekers, but many nonprofit agencies and other publically funded institutions fall victim to these men and women.
The university is no exception. The creation of new majors and new departments by inconspicuous rent-seekers has made specifically specialized degrees that have created a new generation of the “lost breed,” which eventually realize the inferior nature of their skills. The cycle is perpetual.
I do not call for regulation of the people and institutions, but I would only like to expose the inconspicuous. They have every right to market their enterprise just like every other business. However, consumers beware, these men and women are rent-seekers wishing only trick you for a dollar. Service is never the nature of the rent-seeker or profit seeker. The profit seeker, however, does not market their service oriented heart such as the rent-seekers. The necessary condition for a profit seeker is a service, but the necessary condition for a rent seeker is a lie. We need more profit seeking entrepreneurs and less rent seeking crooks. Will you answer the call?
