Rent Seeking At Its Finest

Rent seeking in economics is where firms or individuals seek economic rents (unearned profits) via the political process. Here is a nice example.

Senator Richard Shelby, the top Republican on the Senate Banking Committee, placed a blanket “hold” in part because of the feud pitting Airbus parent EADS and its partner Northrop Grumman against Boeing, his office said.


The European Aeronautic Defence and Space Company and its rival Boeing have been locked in a long-running rivalry to win a 35-billion-dollar contract for a fleet of new aerial refueling tankers.

The EADS/Northrop partnership would build the airplane in Shelby’s home state of Alabama but have accused the Pentagon of favoring Boeing in a draft request for proposal and warned they may withdraw from the competition.


Shelby is also “deeply concerned” that Obama may block the construction of an FBI center in Alabama to test improvised explosive devices — the “roadside bombs” that have killed hundreds of US soldiers in Iraq and Afghanistan.

And its always nice when they can put such a nice patriotic spin on it too,

“This decision impedes the US military, the intelligence community, and federal law enforcement personnel in their missions to exploit and analyze intelligence information critical to fighting terrorism and ensuring American security worldwide,” said Graffeo.

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Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.