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RENT SEEKING & PUBLIC CHOICE

RENT SEEKING & PUBLIC CHOICE. TRANSFORMASI KONSEP EKONOMI KLASIK KE DALAM EKONOMI POLITIK 3 KONSEP INCOME (PENDAPATAN): Profits (Keuntungan) Wages (Upah) Rents (Sewa). A. PROFITS. RISK CONTENT REAL GROWTH OF WEALTH IN THE ECONOMY REPRESENTS ENTREPRENEURSHIP

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RENT SEEKING & PUBLIC CHOICE

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  1. RENT SEEKING & PUBLIC CHOICE • TRANSFORMASI KONSEP EKONOMI KLASIK KE DALAM EKONOMI POLITIK • 3 KONSEP INCOME (PENDAPATAN): Profits (Keuntungan) Wages (Upah) Rents (Sewa)

  2. A. PROFITS • RISK CONTENT • REAL GROWTH OF WEALTH IN THE ECONOMY • REPRESENTS ENTREPRENEURSHIP • INNOVATION AND EFFICIENCY • THE MOST DIFFICULTS

  3. B. WAGES • REPRESENT NO RISK • FEE OF SERVICES • PROPORTIONAL TO PRODUCTIVITY • CAPITAL INVESTMENT IN PERSONS • VALUE OF PERSONS • HUMAN CAPITAL • TALENTS, ETC • EASIER THAN PROFITS

  4. C. RENTS • MONEY FOR USE OF CAPITAL ASSETS • EASIEST KIND OF INCOME • NO EFFORTS LIKE INCOME OF PROFITS WITH RISK OR WAGES WITH INVOLVEMENT OF PERSONS AND TALENTS

  5. THREE LEVEL OF CONCEPT • EASIEST INCOME IS PREFFERRED • RENTS IS AN EASIEST INCOME • RENT IS PREFFERED RATHER THAN WAGES AND PROFITS • THIS HUMAN MOTIVES IS CALLED RENT SEEKING MOTIVES

  6. TRANSFORMATION OF MEANING & CONCEPT IN POLITICAL ECONOMY • MOTIVASI JALAN PINTAS TERGAMPANG DALAM BISNIS NORMAL DENGAN INCOME MELALUI RENTE (SEWA) TIDAK BERMAKNA NEGATIF SEPANJANG ASET YANG DISEWAKAN MERUPAKAN HAK MILIKNYA YANG SAH • NOTHING WRONG DENGAN USAHA MELALUI TIGA JENIS PENDAPATAN TERSEBUT

  7. MASALAH MUNCUL KETIKA MOTIF INI PINDAH KE DOMAIN PUBLIK • MOTIOVASI RENT SEEKING DILAKUKAN DENGAN MENGGUNAKAN KEKUATAN KEKUASAAN UNTUK KELOMPOK KEPENTINGAN KECIL • KEKUASAAN BUKAN ASET MILIK SEKELOMPOK KECIL TERSEBUT TETAPI MILIK PUBLIK ATAU RAKYAT BANYAK • KEKUASAAN DIPAKAI MENYIMPANG KARENA DIPAKAI OLEH SEGELINTIR ORANG

  8. KESIMPULAN PENGUSAHA ATAU SEGELINTIR ORANG YANG MENGGUNAKAN KEKUASAAN (ASET PUBLIK) UNTUK DIRINYA SECARA INDIVIDU DISEBUT RENT SEEKERS

  9. RENT SEEKERS: • SEEK SPECIAL FAVORS FROM THE GOVERNMENT IN POWER • AT THE EXPENSE OF ALL OTHERS COMMUNITY • A VERY SERIOUS PROBLEM OF THE SOCIETY • COSTING TAXPAYERS IN LARGE AMOUNT OF PUBLIC MONEY • POLITICAL PARASITISM

  10. RENT SEEKING: • THE EXPENDITURE OF RESOURCES • FOR UNCOMPENSATED TRANSFER OF GOODS AND SERVICES • FROM ONOTHER PERSON OR PERSONS TO ONE’S SELF AS THE RESULTS OF AFAVOURABLE DECISION ON SOME PUBLIC POLICY

  11. EXAMPLE OF RENT SEEKING BEHAVIOUR: • INCLUDE ALL OF VARIOUS WAYS BY WHICH INDIVIDUALS OR GROUPS LOBBY THE GOVERNMENT FOR TAXING, SPENDING AND REGULATORY POLICIES • CONFER FINANCIAL BENEFITS OR OTHER SPECIAL ADVANTAGES • AT THE EXPENSE OF THE TAXPAYERS OR OF CONSUMERS OR OF OTHER GROUPS POF INDIVIDUALS WITH WHICH THE BENEFICIARIES MAY BE IN COMPETITION

  12. RENT SEEKING DAN KASUS • An autocrat who seeks to maximize personal financial return favors an inefficiently large public sector and distorts other public sector priorities more than does an autocrat who seeks to maximize national income. • One explanation for Africa's failure to develop is the weakness of its public institutions: rent-seeking and corruption at the top of government.

  13. A kleptocrat whose decision variable is the level of government intervention in the economy will select an excessive level of intervention, in which national income is less than optimal. • Like all monopolists, the kleptocrat seeks productive efficiency except where inefficiency creates extra rents.

  14. Facing a kleptocrat, citizens prefer a smaller than optimal-sized government but get one that is too big. • A kleptocrat may need to permit lower-level officials to share in corrupt gains thus introducing additional costs. He or she will then favor a smaller government than if subordinates could be perfectly controlled.

  15. Rent: profits from passive ownership (as opposed to profits from productive activity). • The classic example of an input in fixed supply is land economists often think of rents as the returns to the ownership of land.

  16. Legal entitlements in fixed supply can also provide `rents’ to those who own these entitlements investing in lobbying to acquire scarce legal entitlements is called rent-seeking.

  17. Rent-seeking: if the govt creates rents by establishing scarce legal entitlements, then private parties will invest resources in seeking the rents from these entitlements. • Manufacturers lobby government for tariffs to exclude imports. • Professional groups (lawyers, physicians) lobby for licensing restrictions.

  18. Airlines lobby the government to regulate the industry to reduce competition. • Workers lobby the government for immigration restrictions. • Universities lobby for research funding.

  19. Until 1974, the term 'rent seeking' did not exist. • Kreuger's paper focused attention on third world mixed economies in which government intervention was extensive.

  20. According to her estimates, such losses amounted in 1964 to 7.3 per cent of the national income of India and to a staggering 15 per cent of the national income of Turkey. • Numbers of this magnitude were sufficient to turn the heads of even the most left-leaning of the world's development economists.

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