Is rent seeking – private parties’ using government to secure special favors – a problem in America or are things better than we think? In “Virtuous Capitalism: Why there is Less Corruption in Business than You Think,” a paper released today by the Competitive Enterprise Institute, authors Fred Smith and Ryan Young argue that rent-seeking is indeed a big problem, and a drag on the economy. But while traditional theories about rent seeking are valid, public choice economists and other social scientists should use a fuller picture of humanity than they do now by including virtue in their analysis.
“We admire talented chefs for their creativity and their imaginative recipes. Sadly, we neglect the even-more creative ‘recipes’ that entrepreneurs devise to produce wealth and expand the economic frontier,” said Smith, Director of CEI’s Center for Advancing Capitalism. “Entrepreneurs deserve praise far more often than condemnation. Critics are quick to shame cronyist behavior, but too slow to commend the virtuous business leader who refuses to play the corrupt Washington game. Our focus on ‘sin’ rather than ’virtue’ has created an unfair and inaccurate picture of how business really works.”
“Our goal is not just to condemn rent seeking, but to praise what we call virtuous capitalism,” said Young, a fellow with CEI. “Negative examples of businesses engaged in rent seeking deserve the spotlight’s glare. But the majority of businesses behave ethically. They need encouragement, praise, and publicity. Virtuous capitalists deserve attention from economists and other social scientists, who focus too much on the negative.”
To schedule an interview with Fred Smith or Ryan Young of CEI, contact Mary Beth Gombita, firstname.lastname@example.org, at 202-331-2770.