While in his Washington Post column Robert Samuelson laments the sorry state of the U. S. economy:
The spoils society advances.
The “spoils society” is a phrase I coined some years ago to illustrate a basic problem of wealthy societies, including, of course, the United States. After all, our annual gross domestic product is approaching $20 trillion. The problem is that, as societies become richer, so does the temptation for people to advance their economic interests by grabbing someone else’s wealth, as opposed to creating wealth.
We see the resulting redistributive struggles all the time. They’re part of the social fabric: divorcing couples fighting over the marital assets; Congress debating who should — or shouldn’t — get tax cuts or subsidies (say, Social Security); lawyers launching “class action” suits to remedy alleged wrongs; patent “trolls” suing tech companies over possible infringement issues.
What else would you expect? Considerably more money can be made via rent-seeking at lower risk than via entrepeneurship. That’s why the money spent on lobbying is so high. The return on investment is great and it’s an arena in which only the big boys may play. Just as a single example, IMO the balance sheets of pharmaceutical companies more resemble lobbying organizations that do a little research on the side than research organizations that do some lobbying.
Also, we graduate twice as many MBAs annually as we do undergraduate engineers and vastly more than we do individuals with advanced engineering degrees. That points to the rewards of manipulating the financial economy compared to the rewards of making things and creating processes.
But notice the symmetry between Mr. Samuelson’s column and the other two articles to which I’ve linked today. Mr. Ryu and Dr. Summers are arguing in favor of the status quo, the “spoils society” that Mr. Samuelson is complaining about.