A Constitutional Amendment to Prohibit Rent-granting and Rent-extraction

Abstract

Political economists have given the problem of rent-seeking a prominent position in their analyses and have made numerous proposals to mitigate the problem. All of those proposals, however, approach the problem indirectly, merely changing the rules of the game. Normal politics cannot be expected to produce constraints in rent-seeking and granting because such activities are fundamental to normal politics. Proposals to limit lobbying implicate limitations on the First Amendment and are so likely to either be unconstitutional or set dangerous precedent. There is both theoretical and historical justification for approaching the problem at the Constitutional level. I propose the text of a constitutional amendment to prohibit the granting of special economic privileges that create rents and consider how that text ought to be applied to real-world grants of economic privilege, including subsidies, tariffs, environmental regulation, and occupational licensing. By limiting the granting of economic privilege, the amendment would constrain politicians’ rent-extraction behavior and limit the incentives for rent-seeking behavior.

Keywords: Rent-Seeking, Rent-Granting, Rent-Extraction, Constitutional Politics

JEL Classification: D72, H10, H11,