it out with stegosaurus'. Instead it refers to a way a couple of scientists became downright

nasty in their pursuit of fame, fortune and dinosaur bones. Meet Othneil Marsh and Edward

Cope. These two 19th Century Paleontologist were some of the most successful and esteemed

dinosaur hunters of their day. They wowed the public with their discoveries and attracted

a lot of research money in the process. In the early days, their competition was beneficial

to science. Each drove the other to work hard and each was quick to point out if the other

had made a mistake. Over time, the feelings between them grew less and less friendly.

By 1890 the competition had literally become destructive. Their teams began throwing stones

at one another when digging in the same territory. Both sides allegedly destroyed important sites

with dynamite just to keep them out of the reach of the other. Burying or obliterating

a still unknown number of priceless specimens in the process. This rivalry which at once

pushed these men to advance science, now grown them to undermine it. Here's where their story

can teach us an economics lesson. Under what circumstances does competition of vital force

for innovation and progress actually become destructive? The answer is, the competition

becomes destructive when people start using fraud or force to out-compete their rivals.

By literally destroying the competition's work, an economist would say that each of

these men was attempting to artificially contrive exclusivity. In other words, they were trying

to get an unfair advantage. In today's economy big businesses rarely dynamite

one another but they don't have to because they can use force provided by the government

instead. Economists refer to the profits gain from exclusivity as rents. The attempt to

use government power to get exclusive benefits has been dubbed rent seeking. Rent seeking

is probably the most important economic term that most people have never heard of. It's

everywhere in our economy today. Whenever big corporations and other special interests

ask a government for special favors, they're rent seeking. They do this because government

can offer them a number of special privileges. Some firms like Goldman Sachs, City Group

and GM have obtained the privilege of a federal bail out. Others like major agribusinesses

are privileged with federal farm subsidies. Still others like major Hollywood production

companies are privileged through favorable state and local tax laws.

There have now been studies of rent seeking in the economics of special privilege. These

studies find that whatever it's guise rent seeking is an enormously destructive force.

It wastes resources, it slows the entrepreneurial process and it locks in inefficient technologies.

Beyond this though, it's fundamentally unfair. It allows some to succeed based not on their

ability to please customers, but on their ability to work the political system. Like

the dinosaur wars, rent seeking is an ugly corruption of fair competition and an impediment

to progress. Click here to learn more about the destructive economic consequences of rent

seeking and government favoritism.