Rent-seeking
" ... redistributing the surplus of one group of the middle class to another group of the middle class via the government."
I have only recently learned about the very useful concept of rent-seeking. The concept was first articulated and then named by two American economists, Gordon Tullock in 1967, and Anne O Krueger in 1974.
An article on the The Library of Economics and Liberty explains.
“Rent seeking” is one of the most important insights in the last fifty years of economics and, unfortunately, one of the most inappropriately labeled. Gordon Tullock originated the idea in 1967, and Anne Krueger introduced the label in 1974. The idea is simple but powerful. People are said to seek rents when they try to obtain benefits for themselves through the political arena.
Oxford Reference gives this definition.
Spending time and money not on the production of real goods and services, but rather on trying to get the government to change the rules so as to make one's business more profitable. This can take various forms, including seeking subsidies on the outputs or the inputs of a business, or persuading the government to change the rules so as to keep out competitors, tolerate or promote collusion between those already engaged in an activity, or make legally compulsory the use of professional services.
Here is a definition from the Corporate Finance Institute.
Rent-seeking is a concept in economics that states that an individual or an entity seeks to increase their own wealth without creating any benefits or wealth to the society. Rent-seeking activities aim to obtain financial gains and benefits through the manipulation of the distribution of economic resources.
This piece from Forbes makes the interesting observation that “Much rent-seeking is redistributing the surplus of one group of the middle class to another group of the middle class via the government. Although there might be great incentives for one group to seek another's surplus, there is no added value for society as a whole.”
Obtaining benefits for themselves through the political arena?
Trying to get the government to change the rules so as to make one's business more profitable?
Redistributing the surplus of one group of the middle class to another group of the middle class via the government?
Is this all starting to sound horribly familiar?
It certainly rang bells for me. I work in the UK university sector (which would, if viewed by a Martian anthropologist, look very much like a mechanism for redistributing the surplus of one middle class group - the middle class parents of young people aged 18 to 23 - to another predominantly middle class group - university staff - with the oversight of if not actually via the government, but I digress) and here’s something that looks to me like a perfect example of rent-seeking. I received this email from Alice at MyPD about a three-day training course entitled Strategic Approaches to Equality, Diversity, and Inclusion. Don’t you love that Oxford comma. (Who are MyPD? That’s a whole other rabbit hole, leading me to Companies House and a Lecturer in Social Justice at King’s College London.)
Of course, I went to the link to look at the price of the course. It’s £1,899 plus VAT, a total of £2,278. And who is leading the course? One Fiona Daniel, the CEO and Founder of FD2i Inclusion Business Partners.
I was astonished to find out from LinkedIn that Fiona is a She/Her.
So who is this “passionate, funny, authentic, highly respected, well-networked, business savvy professional” ? According to LinkedIn, Fiona started her working life at HSBC in 1997. In May 2010, she became HSBC’s Senior Customer Experience Manager and UK Race Lead. Who knows why HSBC thought they needed a UK Race Lead? My guess is that it was part of the UK’s descent into our own version of Critical Race Theory, following the 1999 publication of the Macpherson report into the failure of the police to investigate the murder of Stephen Lawrence in a timely and impartial way. Just to be clear - I do not mean that the report itself was inflected by CRT thinking. The report didn’t need CRT thinking to make it abundantly clear that the police investigation was a mess, shot through with institutional racism and grotesque incompetence at all levels. But my working theory is that the UK’s three “branches of state” (executive, legislature and judiciary) and the fourth estate - journalism and the media - were so appalled by the report that they embarked on a long period of over-correction. Because of the way senior and well-connected people circulate around the governing bodies of the three branches of state, the fourth estate, and big business, it was inevitable that big businesses like high street banks would be swept into the over-correction. It seems to me that the decision to appoint a UK Race Lead would have been a symptom of that phenomenon.
So from May 2010, when Fiona was invited to step into the social justice elevator at HSBC, until April 2019 when she left the bank, she progressed from UK Race Lead, to Global Head of Resource Groups (and UK Race Lead), to Senior Global Diversity Relationship Manager & Acting Global Head of Diversity and Inclusion, to the giddy heights of Head of Diversity & Inclusion HSBC UK. I certainly don’t blame Fiona - who wouldn’t want to swap the anonymous grind of being just another ordinary employee at the bank for the dizzying rush of being celebrated just for being yourself by audiences all over the UK and in glamorous global locations?
In April 2019, she left HSBC and a few months later founded her own company, FD21 where they “truly believe that Diversity, Equity and Inclusion (DEI) is all about mindset and behaviour, leading to tangible and sustainable action.”
One more snippet about Fiona, gleaned from the all-rent-seeking-all-the-time organisation d&i Leaders - she sits on the UN Women National Committee UK.
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The UN Women National Committee UK will lead you off down a whole new rabbit hole. They appear to be a private company, rather than a charity - they’re registered on Companies House not the Charity Commission - and who knows what their connection with the actual United Nations might be?
They came back into view in November 2023 when they appointed well-known female impersonator Munroe Bergdorf as their very first women’s champion - and just yesterday this astonishing piece of news appeared on twitter/X.
But while thinking about the UN, I’ve drifted away from my point, although the UN has turned into an expert practitioner of rent-seeking behaviour. To return to the email which started my train of thought, the total cost of the course is £2,278, about the same as the UK average monthly net salary. What would be the return on investment for my employer, if they shelled out this not inconsiderable sum to enable me to spend three days in central London sitting at Fiona’s feet with fellow seekers after wisdom?
The benefits for MyPD and Fiona are very easy to see. MyPD would benefit in a very straightforward way from the injection of cash into their account. Fiona Daniel would benefit from the fee that MyPD pay her to lead the course. And both MyPD and Fiona would be able to include me in their annual statements of the numbers of people they have trained.
But what would my employer gain? They’d be able to record that I had attended an EDI course, which might be something they could include in their own internal EDI dashboard, and possibly in their return to Stonewall and the Race Equality Charter and any other (similarly rent-seeking) organisations that they are signed up to.
But where the rent-seeking comes in, I think, is that MyPD and Fiona hope that the course will change the way I think. Obviously, they explicitly hope that the course will change participants’ thinking, what with understanding equality, diversity and inclusion at a strategic level and all the other bullet points in the course overview.
But there’s also an implicit agenda. Providers of courses like these hope that the participants will SEE THE LIGHT and start spreading the good word to their colleagues. The course is aimed at “senior managers and leaders” who will be in a position to send the people who report to them on the course.
They might even be in a position to commission MyPD or Fiona’s FD21 to run bespoke training for groups of staff. They’ll be policy-makers and thought leaders, the kind of people who wield the influence that, quite inadvertently, enabled the over-correction after the MacPherson report.
But how would I benefit? I am 99.9% sure I wouldn’t learn anything, except possibly some cringe-making new EDI jargon, but I would presumably get a certificate and maybe even a pin badge to attach to my Lanyard of Office. Which would be nice.