, Columnist
Banks and Colleges Are Wasting Our Money
Too many people want financial and academic jobs. That's a sign of inefficient "rent-seeking."
Who's paying?
Photographer: Balint Porneczi/BloombergThis article is for subscribers only.
Let’s say you’re willing to do some job — say, regrouting a bathroom — for $15 an hour. Now let’s say you find a homeowner so desperate to replace his sand-brown grout with fashionable charcoal gray that he is willing to pay you $30 an hour if you will just come over and get it done right now. That extra $15 is what economists call a “rent.”
Naturally, all of us would like to be paid more than the minimum we’d accept. This can lead to what economists call “rent seeking,” where you try to arrange things so that you have less competition, and therefore more room to jack up prices.