Your Opinion: Airport 'rent-seeking'
Wednesday, October 31, 2012
Our children learned some Latin: “omnes ceteris paribus”, “ all other things being equal.” They got the same allowance, and when our son learned he was older, he wanted a raise: “I’m older”; it didn’t work. If he had succeeded the daughter would have screamed “that’s not fair”, another great phrase.
A News Tribune article of Oct. 20, announced Delta Air Lines’ view about the $3 million deal (a “minimum revenue guarantee ... which protects the airline from any potential losses”) between the Columbia Regional Airport and American Airlines.
Delta’s spokesman complained “We are all for competition in the marketplace ... we want to see a level playing field in any market in which we compete”; in other words “that’s not fair”. He might be right: was Delta Air Lines presented a similar enticement when it began operations at CRA?
And if Delta had received some goodies and no comparable deal was now offered to entice American, would Delta be enjoying a competitive advantage? You bet, the tables would be turned, and American would be crying “not fair.”
Wonderful example of rent-seeking and why we should avoid it like the plague. It is a terribly misleading label for anti-competitive behavior, but it is very real and it costs us billions of dollars every year. On the other hand, everybody likes rent-seeking if it’s your candy-bag that’s filled.
We are familiar with the K-street lobbyist in Washington, D.C.; their job is rent-seeking. We are familiar with the billions of dollars funding government-chosen solar energy companies.
Closer to home we have the failure of Mamtek’s disappearing artificial sugar manufacturing plant in Moberly; which prompted a review by state legislators of the incentives offered to several industries.
Sometimes it’s “greasing the wheels” or “looking for an angle”, or “providing a stimulus or incentive”. But generally, rent-seeking comes down to gaining a benefit through the political arena. More rent-seeking arrangements, less competition. The deal between the Columbia Regional Airport and American Airlines may not have been initiated by America Airlines. Yet the end result is the same regardless of who initiated it. It takes two to tango, and the taxpayer always ends up sad and forlorn.
Competition demands and enforces productivity gains which foster additional competition.
Rent-seeking minimizes productivity gains and competition.