Imagine that Queen Elizabeth I, in her time, had the opportunity to give out a monopoly for playing cards within the kingdom. She knew she was going to give it to one of her courtiers. These courtiers would then all try to curry her favour. Meanwhile, they would not contribute anything to the product of the kingdom, in fact, they were wasting resources trying to secure a single prize. That, more or less, is rent seeking.

If you are going to spend for one group, you have to spend the same for every group, just like if you tax one group you have to tax everybody. You have to go back to having more general laws, more general taxes and more general spending programs.

I have long been in favor of a balanced budget restriction at the level of the federal government of the United States. Because the federal government has money-creating powers it can, in fact, be very damaging if it runs a series of budget deficits. With the state government in the United States, they don't have money-creating powers. The automatic discipline imposed by the fact that they are in a common monetary unit and don't have control over the money power means that the balanced budget restriction is less needed.

You can get a coalition of senators from particular states in America, for example, who want to construct highways or dams or ports which may well be very inefficient. The taxes would be paid by the people over the whole country, but the benefits would go to the few people in those particular locations. This type of spending is a rather gross waste of resources that worsened over the years as the government has been allowed to do more particularized things.

If politicians get money to spend and don't have to be responsible for taxation, then of course that will bias their attitude toward more spending as opposed to cutting back on spending.

Politicians and bureaucrats are no different from the rest of us. They will maximize their incentives just like everybody else.

People share a universal behavioural trait: if there are profits to be made, the effort to get that money will attract investment. This is true in the private sector, the market sector, as well as the public sector.