Regulation and the Establishment of Rent Creating Policies

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Steven Teles & Rajiv Sethi on Jailbreaking The Captured Economy (EPE 04)

COMPLEXITY

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Regulation and the Establishment of Rent Creating Policies

Stephanie Coontz: We should think about regulation, first of all, in two forms. There's sector specific regulation and then there's generic regulation. The examples we have are licensing, zoning and housing, intellectual property and finance. And one way to think about this is that doctors being produced all over the world would be willing to practise for less if they could come to the united states. So i'd like to give you some time to exposit on the four places that you see the capture of regulation and the establishment of rent-creating policies.

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As the old nut goes, “To the victor goes the spoils.” But if each round of play consolidates the spoils into fewer hands, eventually it comes to pass that wealthy special interests twist the rules so much it undermines the game itself. When economic power overtakes the processes of democratic governance, growth stagnates, and the rift between the rich and poor becomes abyssal. Desperate times and desperate measures jeopardize the fabric of society. How might nonpartisan approaches to this wicked problem help us walk the system back into a healthy balance?

Welcome to COMPLEXITY, the official podcast of the Santa Fe Institute. I’m your host, Michael Garfield, and every other week we’ll bring you with us for far-ranging conversations with our worldwide network of rigorous researchers developing new frameworks to explain the deepest mysteries of the universe.

This week on Complexity we speak with Steven Teles, political scientist at Johns Hopkins University and SFI External Professor Rajiv Sethi, Professor of Economics at Barnard College, Columbia University about how self-serving economic actors intervene in regulation to stifle innovation, increase inequality, and contribute to the conditions in which violence can flourish. Referencing Teles’ aisle-crossing book The Captured Economy with co-author Brink Lindsey, we link the problem of regulatory capture in its myriad forms to Sethi’s work on race, inequality, and crime, which we discussed in Episode 7 (Rajiv Sethi on Crime, Stereotypes, and The Pursuit of Justice). At the interface between the left and right, public and private, our guests shed light on the forces that divide — and may help reunite — the USA and other modern nations.

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Podcast theme music by Mitch Mignano.

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Referenced in (or related to) this episode:

The Captured Economy: How The Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality
by Brink Lindsey and Steven Teles

Shadows of Doubt: Stereotypes, Crime, and the Pursuit of Justice
by Brendan O’Flaherty and Rajiv Sethi

Complexity 19 - David B. Kinney on the Philosophy of Science