Prof Paul Collier publishes an opinion piece in the Social Europe Journal, a leading eJournal that aims to stimulate intellectual debate and innovative thinking on issues in politics, economics, international affairs and employment and labour.
Rent-seeking is the activity of generating and allocating transfers between economic actors. It results in waste and inequality. The rise of rent-seeking, with its epicentre in the accountancy, legal and banking professions, has been seriously damaging.
In the OECD the damage is most evident in the USA, where rent-seeking has faced fewer policy impediments than in Europe. There, astoundingly, median living standards have been stagnant for three decades despite the growth of per capita GDP. Two factors account for it: the expansion of activities which are counted in GDP but do not contribute to real income, and rising inequality in the distribution of real income. Modern rent-seeking generates both of them.