Using the arguments in the readings, explain how a market-oriented economic dynamic drives economic progress (wealth creation) through the process of creative destruction, and explain in explicit cause-and-effect terms how rent seeking undermines the creative destruction process.
-How does Buchanan explain “social surplus” (“rent creation” or Kay’s added value) as an outcome of an “ordered market structure”?
-What does John Kay mean when he says: “Market economies do not predict the future, they explore it”?
-Based on your answer to the previous bullet-point, how would you harmonize Buchanan’s idea of an “ordered market structure” with John Kay’s term “disciplined pluralism” in order to describe the process of creative destruction?
-Among the assigned readings, which way of defining rent-seeking do you find most intuitive?
-How would you harmonize your chosen definition with the idea that one form of rent-seeking equates to “organized resistance” to economic change?
-How would Blank, Buchanan, and Kay argue that rent-seeking in the form of organized resistance undermines the process of creative destruction?
-Kay, J. (2012, January 18). A real market economy ensures that greed is good. (Link will open in new tab.) (Links to an external site.) Financial Times.
-Kay, J. (2012, January 25). When capitalism and corporate self-interest collide. (Link will open in new tab.) (Links to an external site.) Financial Times.
-Kay, J. (2012, November 21). The monumental folly of rent-seeking. (Link will open in new tab.) (Links to an external site.) Financial Times.
-Blank, S. (2013, June 24). Strangling innovation: Tesla versus “rent seekers.” (Link will open in new tab.) (Links to an external site.)
-Buchanan, J. M. (1980). Rent seeking and profit seeking. In J. M. Buchanan, R. D. Tollison, & G. Tullock (Eds.), Toward a theory of the rent-seeking society (pp. 3-15). College Station, TX: Texas A&M University Press.
-Kay, J. (2009). The rationale of the market economy: A European perspective. (Link will open in new tab.) (Links to an external site.) Capitalism and Society, 4(3), 1-10.
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