Friday, June 5, 2015

Dinosaur Wars: When Competition Goes Extinct

-Learn Liberty
How is a competition to find dinosaur bones like lobbying the government?

Back in the 19th century, Edward Cope and Othniel Marsh competed to find dinosaur bones. What started as a healthy competition that drove them to better themselves eventually drove the two scientists to actively work against each other, even to the point of destroying dinosaur bones so that their competitor couldn’t get to them.

This type of competition, taking away opportunities from your competitors or seeking special privileges, is called “rent seeking” by economists. It’s when special interests try to get special treatment for themselves, or harder rules for their competitors, by lobbying the government. Some recent examples include government bailouts for companies like GM and CitiGroup, or direct subsidies for big agribusiness.

Professor Matt Mitchell of the Mercatus Center explains how this rent seeking behavior destroys wealth, much like how unhealthy competition and dynamite destroyed priceless dinosaur bones.