Here are Bob Subrick's predictions (HT: Scott Beaulier). Bob suggests a possible prize for Gordon Tullock, Anne Krueger, and Jagdish Bhagwati for their work on rent-seeking. I've been rooting for Tullock for a long time, and I think that now more than ever he deserves the prize. By and large, government policy is made by ignoring Tullock's entire research program, with disastrous consequences. First, it is widely assumed that people will behave irrationally and opportunistically--except for a small caste of enlightened worthies who can be trusted to transcend their individual interests, behave perfectly rationally, and nudge the rest of us as hard as we need to be nudged in order to lead us to utopia.

Second, policy is made by ignoring what Tullock had to say about rent-seeking. Consider, for example, policies that are justified on distributional grounds. Even among some of those who acknowledge its disemployment effects, minimum wages remain popular because the increased income transferred to unskilled workers is supposedly worth incurring a little bit of deadweight loss. According to Tullock, however, the prospect of a transfer from employers to employees encourages rent-seeking on the part of employers (who seek to protect themselves from the transfer) and on the part of employees (who seek to acquire the transfer). The full value of the transfer will be frittered away through the political process.

Arguments for supposedly more efficient (or less inefficient) programs like the EITC or other tax-and-transfer schemes are undermined by the theory of rent-seeking. Even if we could implement a perfect tax-and-transfer scheme, the full value of the transfer will disappear down the political drain. From what I can tell about policy debates, however, this is only considered when people express surprise at the unintended consequences of the policies they endorse. Even only then, it is usually treated as a moral failing rather than a predictable consequence of the incentives in place.

Tullock has made a series of contributions that should have, by now, changed the way everyone looks at human action. If we had taken him seriously, we probably wouldn't have made the host of policy mistakes that caused the current crisis. If that doesn't deserve a Nobel Prize, what does?