WEBVTT

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In economics rent
seeking is when

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one seeks to gain
existing wealth

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without creating new wealth.

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The term rent in rent
seeking is defined

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as wealth obtained
through shrewd

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or potentially manipulative
use of owned resources.

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Typically, rent seeking
revolves around government

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funded social services and
social service programs.

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For instance, when a company
uses a particular status

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to lobby the government
for grants, subsidies,

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or tariff protection.

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Rent seeking comes
from the studies

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of Adam Smith who is regarded
as the father of economics.

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Smith suggested that
entities earn income

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from wages, profit, and rent.

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Wages are earned
from employment,

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and creating profit usually
requires risking capital

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to gain a return.

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However, income from rent
is the easiest to obtain

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and requires little risk.

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Entities that own
resources can lend

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them to earn
interest rents, lease

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them to earn rental
income, or use them

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in other income producing ways.

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And the term rent
has evolved to mean

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receiving a payment that
exceeds the costs involved

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in an associated resource.

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So entities will take
steps to get economic rent

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like social service grants
that require no contribution

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of production in return.

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