Solutions to Rent-Seeking - Research Paper Example

Third, NIE is reform oriented, seeking to change the institutions that it studies and through them the greater society at large. Different from other socio-cultural philosophies, NIE seeks validity in judgment through cost/benefit and traditional economic methods based in statistics. Whereas traditional economics may be considered the logic of the status quo in modern society, NIE retains a challenging and critical force using economic theory and analysis to promote reform or change in institutions.

The institutions themselves may be public, private, corporate, governmental, educational, non-profit- all can be analyzed equally through the principles of NIE and from this research change in business practices, governmental policies, and industry regulation may result. Arguably, this is the positive social role for economics in modern societies, and contextualizes NIE in a relationship with a progressive view of society and societal evolution. The foundational research for NIE was conducted by Ronald Coase, Douglass North, and Oliver Williamson.

“Institutions frame behaviors and exchanges in markets, business networks, communities, and organizations throughout the world… The fast-growing field of ‘new institutional economics’ (NIE) analyzes the economics of institutions and organizations using methodologies from a wide range of disciplines (including political science, anthropology, sociology, management, law, and economics).” (Brousseau & Galachant, 2008) Having defined New Institutional Economics, this essay will examine the work of Ronald Coase as paradigmatic of the NIE school of thought, and show how it creates the ground for Gordon Tullock’s research on rent seeking.

From this basis, the essay will examine current events as transpired with the recent “Wall St. Bailout,” estimated to have cost the U.S. taxpayers between $4 and $15 trillion