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Rents are difficult to sustain without government support: state-granted monopolies, permits, licences and the like. And the beneficiaries are invariably those with influence and connections: the people at the margin of society are hardly in a position to extract these favours. Neither are the people in the middle class, come to that.

So the traditional agenda when it comes to rents has been to work to eliminate them, dismantling first the old feudal system of monopolies and guilds, and later working to restrain the market power of large corporations. This hasn’t been as easy as it sounds – people who are in a position to extract rents are typically well-placed to preserve their positions.

The strategy is not so much picking winners as it is setting up a buffet for well-connected rent-seekers

But not all government-created rents are harmful. Sustained economic growth depends on the creation of new ideas, or new technology, or innovation, or whatever it is you want to call it: the economist Paul Romer prefers the term “recipes.” But the economics of recipes are non-standard. Since recipes are non-rival – one person can benefit from one without affecting the ability of another person to do so – it’s hard to recover the costs of research and development (R&D). If no one can afford to finance the costs of R&D, fewer ideas are created and economic growth suffers.

The standard solution is for governments to enforce intellectual property (IP) rights, so that the owner of a recipe can act as a monopolist. These monopoly rents can then be used to cover the costs of R&D. Governments have to strike a delicate balance here. If IP is too weak, researchers can’t cover their costs. But if IP is too strong, other researchers will be unable to build on existing work – the existence of patent trolls illustrates the dangers of allowing too much market power to accrue to the owners of IP.