Economic Inequality v. Economic Unfairness

Why should we talk about law and how it can be used to create wealth versus being used for rent-seeking purposes?  A couple of reasons quickly come to mind.  First, many politicians are lawyers and one of their jobs is to make the lives of their constituents  better.  Utilizing those legal backgrounds to figure out innovative ways to grow the pie seems like a thing worth doing.

Second, the mood of the current day, and perhaps for roughly the last decade, is that we live in a time of vast economic inequality and that that inequality will lead to our demise.  I, and others, believe this to be an incorrect view.  As this paper points out, what people are unhappy about is economic unfairness, which is different from economic inequality.  Again, wealth creation, if done correctly, versus further rent-seeking from lawyers writing the laws could turn this around.

Growing the Pie

Interesting paper putting forth the legal innovations that led to the birth of the corporate form, which allowed long-term capital commitments and brought wealth to a great many.

In an era of seemingly endless rent-seeking, it’s important to be reminded of the possibilities of legal innovation leading to wealth creation.