Economist use the term “rent” in a very different way from normal folks. In economic terms, rent is the price paid for the use of land — or any other resource with a fixed supply.
Why is this special? Because a zero-production-cost, fixed-supply resource like land — a “free and nonreproducible gift of nature” — has perfectly inelastic supply. Any amount of rent is a surplus, because it performs no incentive function to provide more supply.
For that reason, it was once popular to argue that rent should be taxed away, since it is unearned, or that land should be nationalized and owned by the state. (Since land isn’t uniform, and since land has multiple alternative uses, it’s not that simple to wipe away rent though.)
More generally then, rent refers to any such surplus — or how much more you’re paying than you’d have to pay to get something. Most of a pro athlete’s salary is rent; he’d certainly rather play pro ball for “just” $100k per year than go with his next best option. The same is true of a “hot” actor’s pay. And when a monopolist knows you’ll pay $10 for a $6 widget, he charges the full $10 and extracts $4 in rent.
And that’s where rent-seeking comes in. If a businessman knows you’ll pay $10 for a $6 widget, it’s worth $4 to him to become a monopolist. (Obviously I’m simplifying the math terribly.) Thus, to each special interest group, it’s worth good money to curry government favor and gain legal advantages over competitors — but the rewards aren’t an economic gain to society, as with trade; they’re a transfer, an inefficient transfer, from one group to another.
In The Fundamentals of Rent-Seeking, Gordon Tullock, Professor of Economics at the University of Arizona, gives a brief history of the economic concept of rent-seeking:
Once the concept of rent seeking was discovered — and defined as the outlay of resources by individuals and organizations in the pursuit of rents created by government — there followed a flourishing of research as relevant ideas began to disseminate throughout economics.
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It is perhaps worthy of note that the three early contributors to the rent seeking literature — myself, Anne Kreuger and Jagdish Bhagwati (1984) — had all spent a good deal of time in the Far East. This is a region where there co-exists a number of immensely successful cultures capable of generating high quality art, and literature. Yet many of these civilizations are economically backward, despite the fact that their emigres perform extremely well in foreign environments. The rent seeking concept provides an explanation for this curiosum.
In many cases then, rent-seeking is a high-falutin’ term for lobbying — or corruption.