Right-wing take on Rent-Seeking

Notice here that he is reinforcing the idea that "market forces" eliminate rent-seekers... http://www.firstthings.com/onthesquare/2012/06/income-inequality

Sometimes the editors at the New York Times get it right, even when they’re wrong. In a May 26 editorial they opined that Democratic attacks on Mitt Romney’s career as head of Bain Capital are fair game: “Private equity, rarely by design, has created many jobs. But the practice of leveraged buyouts, in which Bain was a big player, has also contributed significantly to the growth of the income gap, moving wealth from the middle class to the top end.” Economists use the term “rent-seeking” to describe our efforts to find ways to extract more wealth from organizations than we contribute. The social and economic arrangements of the first three decades after World War II allowed the managerial class in America to get “rents” from the corporate system. How they did so was legion. But it meant that the large corporate structures of our postwar economy began to accumulate a great deal of profit-making potential that was either inconvenient for the managerial class to exploit—or in some cases positively at odds with their self-interest. What CEO wants to divide his company into five pieces, none of which will have the high status (and high pay) of the big conglomerate? ... Financial analysts of the sort Mitt Romney oversaw at Bain Capital began to analyze the profit-making potential of companies: not as they were being run by current managers, but as they could be run if reorganized and run by somebody else. “Reorganized” is one of those anodyne words that mask harsh realities. You don’t reorganize a well-organized operation. As the leveraged buyouts proceeded, a new class of hard-driving managers came on to the scene, often cutting layers of management. This marked the end of white-collar social contract. No more lifetime employment. No more smooth escalator rides up the ranks of management. ... The upper middle class world responded to the leveraged buyout revolution by upping their commitments to education and economically oriented self-discipline. The old white-collar social contract subsidized three martini lunches and all they represented. Junk bonds put an end to that culture. And the white-collar parents who suffered from that sudden and severe change in corporate culture told their kids that it’s a very tough, competitive world out there, one with no guarantees. ... So, yes, the editors of the New York Times are right. In some small way Mitt Romney and Bain Capital contributed to income inequality in America. The leveraged buyouts of the 1980s destroyed an informal but powerful system of upper middle class subsidies, ones that allowed for habits and mentalities that lead to unproductive behavior. Once that system was dismantled—something Michael Milken deserves credit for—habits and mentalities changes. Well-to-do families and elite institutions adjusted, shaping a generation of go-getters.

And the sting in the scorpion's tail...

But that’s not the whole story. Why hasn’t middle class America been able to keep pace with the top twenty percent? The Times consistently insinuates that the success of the top twenty percent has somehow been stolen from the rest of us (“moving wealth”). A better explanation: the policies favored by the Times that subsidize unproductive behavior, leaving most Americans disarmed in the face of a rapidly changing and harshly competitive global economy. It seems a paradox, but it’s not: guarantees of economic security have a way of transferring wealth—or at least wealth-creating virtues—away from their beneficiaries.