Ward Farnsworth writes about the difference between those who build and those who bicker.
The idea, to oversimplify only a little, is that there are two general ways to increase your wealth: by creating things people want, or by fighting over prizes that already exist — things other people have created or found. Either strategy might be more successful than the other, and perfectly rational to pursue; it depends on the circumstances. Which do you prefer as your own method of choice? Which do you spend more time doing? Why does it matter?The difference between these methods of gaining wealth — between, say, competing to build a better restaurant and competing to get to the treasure first (rent seeking) — is that the first one creates wealth, or better-offness, for the world. Customers are made happy, and restaurants gradually get better. Fighting over who gets the treasure isn’t like that. The treasure doesn’t get bigger as a result. In a sense it gets smaller because wealth is eaten up in the effort to lay hold of it.
Think of this on a larger scale and you can see that the more a society spends on rent seeking — on quarrels over who gets what — the poorer it becomes. If that’s all that anyone did, everyone would starve in due course.
As Eric at Classical Values points out, this sort of fighting over treasure is why many people hate lawyers.
This reminded me of a life changing event. After spending years running a very popular but commercially unsuccessful nightclub, I was advised (by some attorneys who meant well) that the ideal career change for me would be to sue business owners for non-compliance with the ADA."Attorneys fees are there by statute!" I was told.
Great. Now that I was out of business, I could be born again as a despicable parasite and help ensure that other business owners would be put out of business. It struck me that if I became a homeless derelict, I'd be doing more for the world than if I helped ruin other people's businesses. (It didn't help much that one of the many reasons my business failed was that the building was cited by the fire marshall for inadequate handicapped access, and there was no way to remedy this without major alterations to the building, which I did not own, for patrons in wheelchairs who never came.)
However, it's important to note that competition among builders is not similarly wasteful. Yes, some businesses will fail, but when they do it's because their products were inferior to the others in the same niche The wealth of the losers is lost, but the wealth of the winners is multiplied and society benefits. This phenomenon is known as "creative destruction" in capitalist economies.
What is to be avoided is competition over existing treasure; it is much more efficient for competitors to work together, as cheaply as possible, and distribute the treasure amongst them.
(HT: Instapundit.)
