In a message dated 2/20/2008 12:31:12 A.M. Eastern Standard Time, [EMAIL PROTECTED] writes:
is this what you meant, al? how does it apply to the proposed hotel? The concept is often (but not exclusively) applied when someone purchases property then lets it lie fallow or allows it to deteriorate, counting on extraneous factors to raise the value -- so it produces income disproportionate to the investment (in money and other "costs") needed to create the wealth. The underlying economic theory -- first developed by Gordon Tullock and Anne Kreuger (acting independently) -- see _http://www.thelockeinstitute.org/journals/luminary_v1_n2_p2.html_ (http://www.thelockeinstitute.org/journals/luminary_v1_n2_p2.html) -- is that the difference between the fair return on the investment and effort does not arise spontaneously but is a cost paid for by society. This is why economic rent seeking is viewed from a negative perspective. In the case at hand, the rent seeking may be de facto rather than de jure (but it's rent-seeking nevertheless). That is, the Nobel Laureates in the Real Estate Dept at Penn somehow convinced the University to part with -- what -- $1.5 million from their $6 billion endowment, presumably as an investment. Then: 1. They spend nothing to improve and as little as possible to maintain the property. 2. It turns out, according to Esaul Sanchez, they have entertained 20 proposals for what to do with it but none seemed worthwhile -- which is to say they bought it without any reason to do so. 3. One of their own comes along with a proposal that will take their little tuchasses out of the line of fire by those who might criticize them for buying this pig in a poke. 4. The proposal will return more on Penn's investment than would be represented by what they put into it, the difference being a cost borne by the people in the area who will have their pleasant residential neighborhood destroyed by a 12-story hotel and restaurant with live entertainment. As bad as this is, it's better than them getting paid off in some overt or covert way to advocate this project on behalf of their former colleague -- which would be another explanation ... of which I'm not accusing them because that would be slander since there's no evidence of any such thing at the moment. Al Krigman Left of Cornelius Vanderbilt **************Ideas to please picky eaters. Watch video on AOL Living. (http://living.aol.com/video/how-to-please-your-picky-eater/rachel-campos-duffy/ 2050827?NCID=aolcmp00300000002598)
