Final answer:
Rent-seeking is an economic concept where individuals or entities seek to increase their wealth without creating new wealth, often through political manipulation. This leads to resource misallocation and inefficiencies, such as lower housing quality and availability due to rent control laws. Such outcomes are undesirable because they do not support economic growth or efficiency.
Step-by-step explanation:
Rent-seeking involves seeking economic gain not through wealth creation, but through the political process—attempting to obtain a share of wealth that has already been created by others. This behavior leads to a wasteful allocation of resources and inefficiencies in the economy. For example, rent control policies are a form of rent-seeking where renters press political leaders to impose price ceilings. These price ceilings, while intended to help renters by keeping rents low, can lead to diminished housing quality and availability as landlords have less incentive to maintain their properties and may convert them to non-rental units. The political process is about determining who gets what resources and how they are allocated, reflecting societal values such as individualism or egalitarianism. Rent-seeking distorts this process by focusing on the distribution of existing wealth rather than the creation of new wealth, often resulting in an outcome that is not desirable—for instance, protectionist policies that benefit certain industries at the expense of consumers. The desirable outcomes of the political process should encourage growth and efficiency, which are hindered by rent-seeking activities.