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.
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.