What Is Rent Seeking? It’s Not Capitalism.

Rent seeking is when people or organizations try to obtain benefits for themselves through the political arena. They typically do so by getting a subsidy for something they produce, or a special interest group, or a tariff on a good they produce, or by getting a special regulation that hampers their competitors or benefits their enterprise.

This stuff makes me so sick that sometimes I would welcome a complete economic collapse, if I didn’t know the result (global economic governance).

Jack Lew is the nominee for Treasury secretary whose own bonus as an investment banker was bailed out by the Treasury Department when it rescued Citigroup Inc. (C) in 2008. He owes much to America’s taxpayers. He should also be grateful to Citigroup for agreeing to let him rejoin the government without suffering much for it financially.

An intriguing revelation from Lew’s Senate confirmation hearing last week was that he stood to be paid handsomely by Citigroup if he left the company for a top U.S. government job, under his 2006 employment agreement with the bank. The wording of the pay provisions made it seem, at least to me, as if Citigroup might have agreed to pay Lew some sort of a bounty to seek out, and be appointed to, such a position.

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It makes sense that Lew would have been thinking ahead to his next career move when he joined Citigroup in 2006. It’s also understandable that Citigroup sought to discourage Lew from joining a competitor. Why no mention of other kinds of public service, say a city hall job or returning to teaching? Why reward him for landing only a high-level U.S. government post, but not jobs such as those, which also are of high social importance?

We don’t know the whole story, except that Lew’s agreement clearly attached unique value to the possibility that he might get a top U.S. government position someday. Should that be of concern to the public? It ought to be.

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2 Responses to What Is Rent Seeking? It’s Not Capitalism.

  1. messup says:

    Is this “rent seeking,” too? Or plain ‘ol “crony-capitalism?”
    April 15, 1994 – Policy statement on “Discrimination in Lending” by HUD. Identify lending discrimination in violation of Equal Credit Opportunity Act or Fair Housing Act. This was signed by 10 top banking and real estate regulators, i.e., Henry Cisneros, Aida Alvarez, Attorney General Janet Reno, Comptroller of the Currency Eugene Ludwig and Federal Reserve Chairman Alan Greenspan.
    Citibank – Throughout the 1990’s was hit with 11 civil rights housing law-suits and an additional 5 in New York and 5 in Chicago.
    Chase Manhattan & Chemical Bank – in 1995 Citibank, then a corporate customer to investment banks, in 1995 lost its No. 1 rating to the merger of Chase & Chemical.
    “Anti-redlining” successes – Banks were now forced to cooperate with regulators. “Anti-Redlining” bans increased by 39% between 1993 and 1998…whIle other normal mortgage lending grew by only 17%. Obama was part and parcel of this increased activity.
    Fair-Housing Group – Obama’s cozy relationships with these organizations was facilitated by his working at Miner, Barnhill & Gallard law firm.
    Local Initiatives Support Corporation (LISC) – Organized in 1996, the Futures Forum, which united Chicago’s “key stakeholders” where Obama was asked to speak.
    Toni Foulkes – A Chicago Alderman who knows Obama’s run for: 1) State Office in 1998, 2) US Senate seat in 2004 and 3)White House in 2008. He was also National Board member of ACORN.
    Tony Rezko – A city developer, later convicted in 2008 on corruption charges. Familiar with Valerie Jarrett.
    Valerie Jarrett – In Charge of Chicago City’s – Urban Planning Division.
    Penny Pritzker – A bundler for all of Obama’s campaigns. Hyatt Hotel heiress. On Council of Foreign Relations and Obama’s Economic Recovery Advisory board. Owner of Chicago’s bankrupt Superior Bank ( because of Obama’s subprime lending “anti-redlining” activism), leaving some 1,000 depositors penniless. Penny looted family trusts. People she knows: Rahm Emmanuel (Chicago Mayor), Warren Buffett (oracle of Omaha), Goldman-Sachs, Valerie Jarretts, Andy Spahn (Hollywood elites bundler), Andy Stern (former ACORN organizer), Laura D’Andrea Tyson (former Bill Clinton economist), Mary & Martin Nesbitt (business partners in “The Parking Spot”), David Plouffe(senior white House Advisor), Henry Tamarin (labor organizer for Hyatt Hotels), Richard Trumka (president AFL-CIO), Nate Tamarin (Henry’s son, White House liason to labor).
    Countrywide & Ameriquest– Mortgage companies profiting from “Subprime” market offering primary mortgages and refinancing loans having high interest rates and extra up-front fees. NINJA loans – No Income, No Job, Approved.
    Fannie Mae – Sold subprime mortgages that were demanded by Democratic Appointees who ran this tax-payer backed organization. Also donated to Obama’s campaigns between 1989 and 2004 the sum of $125,349 as well as to Connecticut Sen. Chris Dodd.
    Citigroup – Between 1998 and 2007 doubled its stock market value to $900 billion. Citigroup executives, in turn, shared these earnings with their government “crony capitalist” partners.
    Center For Responsive Politics – collected from Citigroup, for Obama’s 2007/08 campaign, the sum of $735,771.
    Andrew Pitton – Worked at LISC Chicago for 13 years. Was picked as one of Bookman’s LISC executives to distribute $6 billion in loans and aid to housing organizations and community groups.
    Jesse Jackson – His “Wall Street Project,” based in Chicago, in 1998 received some money. Present at their meeting were: President Clinton, Alan Greenspan, Arthur Levitt – Secretary of Exchange Commission Chairman, and Treasury Secretary Robert Rubin.
    Robert Rubin – In 1999 left Clinton’s administration to join boards of both LISC and Citigroup as “ Director and Senior Counselor.” Rubin, while at Citibank, extracted from shareholders $126 million. Later, in 2007, Rubin ran the bank while it was losing 90% of its shareholders wealth.
    Renee Brooks – A certified Public Accountant and one of two named plaintiffs along with Selma Buycks-Roberson in the case against Citibank.
    Just remember…not a one of these banks, their executives and “lowerlings” were investigated, or indicted on any of this and more “flim-flammery.” DOJ? There’s more, this is a small “tip-of-the-iceberg!”Pray.Amen. True “Haves” and “Have Nots.”

  2. sortahwitte says:

    It sounds like ‘stinky pelosi’ and her ‘husband’ the guy who was a buyer and seller in the pacific area. She attached riders and such to a trade agreement to where he had no competition. So, stinky and no nuts benefitted from crime. They will be indicted any day now.

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