Friday, May 6, 2016

Bluebirds Feast on Entitlement

As consumers sing the blues

At, bluebird is defined as:
Sales slang for an opportunity (or actual sale) that presents itself to the salesperson or the selling organization without having made much direct effort in securing it.
In economics a rentier is the recipient of economic rent: "benefit received ... by creating official privilege over natural opportunities". For businesses relying on profits derived from "official privilege", Mr. Bluebird lands on their shoulder every day. This morning a friend commented on my previous post about Virginia's vehicle safety inspection program:
It's always difficult for industries and/or governments to give up guaranteed revenue streams – no matter what logic is employed to the contrary.
Official privilege and its resulting economic rent are central to Mancur Olson's The Rise and Decline of Nations. I've cited this work here, here, here, and here partly because Mr. Olson taught one of my grad school classes but also because I see the specter of his conclusions today: individuals and groups have secured or are seeking government favor to the detriment of the consumer's best interests and the nation's well being.

When businesses are entitled to "guaranteed revenue streams" they grow complacent, stop competing, and put their interests over that of consumers. And with time (as shown on some of the feedback I got on my Washington Post opinion), consumers in closed markets start to believe that forced consumption is good for them.

Likewise, governments start to believe they're entitled to certain revenue streams; I see this in many opinions about "lost" revenue or tax avoidance "vital" to this program or that service. These gripes are an admission that it's really hard to achieve tax simplification for greater compliance and program streamlining for cost savings. Individuals, businesses, and organizations are used to the status quo and – as a result – their political reactions are tuned to a skewed reality. Politicians play to the status quo, promising change but whitewashing the pain that goes with change. As columnist Robert Samuelson wrote: "No one wants to take away; it’s more fun to give."

The feast has gone on too long. It's time to clear the table and wash those dirty dishes.