Academic journal article Journal of Social Research & Policy

Rent-Seeking as Social Policy: A UK Case Study

Academic journal article Journal of Social Research & Policy

Rent-Seeking as Social Policy: A UK Case Study

Article excerpt

Abstract

Rent-seeking has been an important concept in economics since the 1950s but has not been sufficiently mined in the field of social policy. This paper aims to address this by employing a UK case study to illustrate the relevance of rent-seeking in this context. In doing so it attempts to set out a means of identifying where rents are sought, by whom and the levers they use to extract them. In the UK rent-seeking and welfare is often implicitly linked to 'welfare scrounging'. Here we show that this is not necessarily the case and that rent-seeking has much greater explanatory power in relation to social policy processes and transfers. By also introducing a contextual dimension we demonstrate that market and bureaucratic forms of rent-seeking can operate simultaneously. More work remains to be done to fully articulate these processes, however this constitutes one starting point for this work to develop.

Keywords: Social Policy; Justice; Market Rent-Seeking; Political Rent-Seeking; Bureaucratic Rent-Seeking; UK Policing.

Introduction

For some time now there has been recognition of an inverse care law relating to the allocation of welfare resources (Hart, 1971), that those in greatest need often receive the least in terms of services and resources. This can operate through the greater awareness of processes and resources by the 'middle classes', through the systems of welfare, but also through taxation policy. We would argue that there is another dimension to this issue, which is that private institutions are also consuming public resources to a large extent in ways that are opaque and unexpected.

While there were concerns about the privatisation agenda of New Labour, there have also been much more specific themes in public debate. For example, the sponsorship of police patrol cars by private sector organisations has led to anxiety about the impact this might have on policing. Will sponsors be treated preferentially? Even where they do not have these incentives, it can be argued that property receives more police attention than the community more widely (Barton & James, 2003).

This paper overlaps with these matters but we extend the analysis to include the ways in which private organisations already consume more than their fair share of public resources. In order to do so we employ an economic concept, rent-seeking, that has been available since the 1950s, but which has not really been sufficiently mined in the social policy literature. On the borderline between economics and social policy authors like van Parije (1995) have used rent-seeking to show its applicability in individual cases but little has been made of its organisational relevance.

We start out by discussing the principal concept of rent-seeking, explaining its usage in the current paper, oudining its history and its various applications before explaining its adaptation here. Finally we evaluate its relevance by first talking about the ways in which rent-seeking by private organisations occurs, and second by producing a UK case study of policing drawn from previous work by one of the authors.

Rent-seeking: context, concept and history

Although there were discussions in economic circles as early as the 1950s that skirted around the idea of rent-seeking, the actual term was not coined until the mid-1970s. Its first formal appearance came in an article entitled 'The Political Economy of the Rent-Seeking Society' by Anne Kruger, published in 1974 in the American Economic Review. However, the individual scholar generally credited with the initial generation of the concept was the public choice economist Gordon Tullock in a series of important publications during the 1960s and 70s (Rowley, 2005).

Consistent with the foundations of such debates, the basis for our discussion is distributive justice, that ideal of justice which concerns itself with the fair and just distribution of social rewards, benefits and goods (Miller, 1999). …

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