To understand what's good marketing and what's bad marketing watch the rent-seekers

I'm a marketer. Got all the badges. Used to have a big job telling folk how to to it. And I'm here to remind you that there's two sorts of marketing - the good sort that's about a conversation with consumers so we can meet their needs (and maybe prompt them towards something they'd not thought about) and the bad sort that's about persuading authorities to fix the market so as to allow the client a temporary monopoly or other unfair advantage.

Of course, dear reader, I did the first sort and got plenty of flak for doing so. "Where did you get my name and address", "you're manipulating people with your clever personalisation", and "these profiling systems are exploiting people's personal data". But at no point did I collect, analyse or otherwise use data for any other purpose than to make my advertising and marketing pound stretch a little further - I just wanted to sell you what we'd got in the warehouse.

The bad marketing doesn't get the same criticism, we say little or nothing when the farmers' union lobbies for protectionism or the steel companies rant about 'unfair dumping'. Yet these businesses want to fix the market so as to profit - and that profit comes at your and my expense. It's like this:

Yet lobbying requires resources: the building and office supplies used by lobbyists, the fuel used to ferry lobbyists to and fro in their privilege-seeking efforts, but mostly the time and effort of the lobbyists themselves. And the greater the expected benefit of securing a special privilege, the greater is the amount of resources those in search of such privileges will use in that search. Such resource expenditures are beneficial to the rent-seekers themselves, for these expenditures increase these rent-seekers’ prospects of actually securing the sought-after special privileges that yield rents (that is, excess profits). But from society’s perspective these expenditures are wasteful: the building used to house lawyers who seek rents for their clients is not available to be used for genuinely productive activities (such as serving as office space for tech start-ups, or for lawyers who specialize in helping commercial clients write better contracts).

For lawyers in Don Boudreaux's screed you could insert 'lobbyists', 'PR Agencies', 'Public Affairs Consultants' and a host of other titles all dedicated to the job of getting politicians and bureaucrats to fix markets to the benefit of these agents' clients or employers.

So next time someone has a go at people like me - the good marketers who just use data and information to get you better products and services - point to the lobbyists and ask when that will stop. That is corporate welfare, market fixing and it happens at our cost - Boudreaux gives one example:

I have no idea what Mr. Stohr is paid. So let’s low-ball it – I mean really low-ball it: let’s assume that he’s paid a mere $100,000 annually. If so, then at least $33,333 worth of valuable resources – Mr. Stohr’s time, effort, and creativity – are spent simply trying to maintain that which ought not be maintained, namely, subsidies – a special privilege – for American aircraft manufacturers.

Multiply this a thousand - maybe ten thousand - times just for the USA and you see the extent to which the brilliance of us marketers is turned to the dark side promoting the market-fixing interests of large corporations, labour unions and NGOs. And then the same for every country on earth, the cost of lobbying and those fixed markets to us ordinary consumers is immense. If you want a campaign that will really change the world - put an end to rent-seeking driven by the lobby and by the avarice, the ignorance of politicians.

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Government was always a rent-seeker and it's now the biggest robber baron by far

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In broad terms profits are a consequence of imperfections in the market - I know this because it's in the first few chapters of the economics text book I had at A-level. In that utopian perfect market there is no rent ergo no profit. However, what makes markets so wonderful isn't this de facto rent-seeking but the consequences of exchange. In most cases (in theory, in every case) I get something I want and, in doing so, allow you to get something you want.

If I were one of those people who think 'neoliberal' is a swear word and consider markets to be akin to beating you over the head and steal your stuff then I would be all aquiver about these evil profiteers and their rent-seeking behaviour. This is not to suggest that those evil profiteers do not seek rents but to remember that the real world meaning of 'rent-seeking' isn't about markets per se but about the fixing of markets to favour the rent-seeker.

Rent-seeking is a culture in which the principal route to wealth is not creating wealth, but taking possession of or benefiting from wealth created by others.

So says the Financial Time (and who am I to argue). Indeed that definition makes reference to the Rhine's medieval robber barons charging river tolls.

Now let's switch a bit in our focus - away from rapacious plutocrats - and look at government. The government we might, in our naivety, want to protect us from those profiteers. The problem here is that government, in its origins and subsequent behaviour, has always behaved as a rent-seeker. For sure, the feudal lord in his shiny armour promised to protect the serf (from whence the lord's wealth derived) but this was via taking from the serf that which was his - the product of his skills and labour.

To do this government's exercised controls over those things that might threaten their ability to take rents by force. Thus governments created monopolies - chiefly and most powerfully a monopoly of money. They did this absolutely and specifically so they could continue to seek those rents, the rents that paid for the baron's new horse and the king's new crown.

I know, I heard you shouting 'stop' and talking of democracy. But the truth is that democracy didn't see the end of that capture of markets through rent-seeking. In truth that capture has extended through the rhetoric of what Tony Blair called "schools-'n'-hospitals", a sort of 21st century version of giving the masses food and entertainment. Over the period from the 1870s to the turn of the 21st century, government nationalised health care and education drawing schools, universities, hospitals and much else within the control of government - handing them over to rent-seekers within those businesses and then, when those rent-seekers caused problems with the masses (by not being good enough), bringing in external rent-seekers to create a sort of faux competition.

Note how the main form of rent-seeking - taking wealth rather than creating wealth - comes in the form of taxes. In the UK this is over four pounds in every ten - a triumph of rent-seeking beyond the wildest dreams of those medieval robber barons with their ship tolls. And within each of those places seeking rent there are the enthusiasts for more - the teacher unions, the BMA and medical colleges, the CBI. A whole host of well organised (and paid) folk each agitating for more rents, for more taxes to be grabbed from the pot of wealth.

We seek behaviour comparable to those robber barons where the poorest in the land are rolled over for taxes - think for a second about the justice of someone earning just £12,000 having to cough up taxes so some public sector plutocrat can earn over £200,000! That is the sort of immorality that would bring joy to the Sheriff of Nottingham's dark heart.

So next time you see someone frothing about 'neoliberal rent-seekers' or some such other left-wing nonsense, just tell them that the government is by far the biggest rent-seeker. And that government has always been the biggest rent-seeker, indeed government exists purely to capture wealth for those who control government to spend on what interests them.

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Quote of the day....

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On the threats to leave from big energy companies:

The departure of rent seeking tax farming parasites is rarely a bad thing for the people whose taxes are being farmed.

Absolutely.

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We don't need a "National Food Plan" - not even slightly

I’ve been holding off talking about food strategies despite Bradford’s little colony of Green Party councillors ramming one down the District’s throat helped by assorted rent-seekers and political activists. But Mary Creagh, the opposition lead on food has penned an utterly stupid, misinformed and largely ignorant article in the Guardian that requires comment. Ms Creagh leaps into action on the back of a report from the Sustainable Development Commission:

It is a wake-up call for ministers, warning that "policy development within government still remains inadequate". It makes for challenging reading with serious recommendations on how to define and respond to food poverty in the UK.

Now, leaving aside that the Green take on food – obsessing about “food miles”, local production, grow-your-own and organic production rather than how to sustain cheap food production – is the very antithesis of what poor people need, you have to wonder when Ms Creagh starts talking about food prices and makes this suggestion:

Food will be one of the defining issues of the next century – but compare the political attention it is given compared to climate change. We need as much attention on food security and sustainability in the coming years ahead as we have devoted to climate change in the last decade. That means an urgent food plan at home and an international-style Copenhagen agreement for food. It also requires the missing ingredient from government – leadership.

The perennial response of the socialist – managed trade, market intervention and a host of boondoggles for “food strategists” to fly off to and feel important – will make no difference to the issues raised. So for Ms Creagh’s benefits let me explain:

1.       The cheap food strategies of supermarkets (much though I hate the places) have provided more social benefits than all the state intervention over the past 50 years. Ordinary families can afford to eat – indeed, judging by the streets of Bradford: overeat – at a cost unheard of by their ancestors

2.       Developments in higher yield crops, the use of pesticides and fertilizers and other agro-engineering innovations – including GM varieties – are further extending that cheap food strategy

3.       Other pressures – growing population, dietary changes in China and India, non-food crops such as biofuels and climate variation – are pulling in the opposite direction to this cheap food strategy

4.       Our (indeed that of the entire developed world) food policy has been misplaced and producer dominated – in Europe, the Common Agricultural Policy results in skewed land prices, corruption, subsidy for not farming and a host of other insanities. It also kills more people in the developing world that any other western policy

We don’t need a “food security” policy or another load of green cant about “sustainability”, we need just three things:

1.       Free trade in agricultural products

2.       The scrapping of producer subsidies

3.       Ending the restriction on GM crops and other innovations

If we do these three things we will go most of the way to solving the “problem” that Ms Creagh identifies. And, if people like me want to eat locally-grown, quality food, the market will provide for us too  – whether we wish to be locavores or gourmets. All the government has to do is bog off out of the way! To paraphrase P J O’Rourke, we need to take food strategies round the back of the barn and finish them with an axe.

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