When Gordon Tullock submitted his article, The Welfare Costs of Tariffs, Monopoly and Theft, to the top journal in economics, The American Economic Review, John Gurley, then Editor, rejected it, saying “You will no doubt note that the referee neglects your point regarding the amount of real resources devoted to establishing, promoting, destroying monopolises, etc. However, I have noted it and, while I think it is certainly valid, it does not appear significant (as a theoretical contribution).”

Tullock’s contribution was eventually published in 1967 in the rather less prestigious Western Economic Journal. It also went on to serve as one of the founding contributions in my main field of academic economic interest – Public Choice. Google Scholar tells me that it has now been cited by 3,280 other articles; it is more cited than anything that appeared in the issue of the American Economic Review from which it was rejected. And it helped to found a field that has changed the world.

Tullock’s article explained how monopolies and tariffs are costly not only because of their direct costs to the economy, but also because of the investments that individuals and firms will make to receive government-granted monopoly licences or tariff protection. Tariff protections and monopoly privileges provide firms with hefty profits. In a competitive system, firms will compete in lobbying to receive those privileges, if they’re available. In the limit, the entire value of the monopoly profits can be wasted in the competition to become the monopolist. Those who can remember New Zealand’s pre-1984 system of import permits would know that those permits were not allocated randomly. This phenomenon was later given the name “rent-seeking” by Anne Krueger.

The broader field of public choice, of which Tullock was the founder, with James Buchanan, applies economic theory to political decision-making. Individuals do not stop maximising and responding to incentives when they become politicians, cabinet officials, or bureaucrats. We can far better understand politics when we ask who is maximising what, and think about the constraints they face.

Gordon Tullock died on Tuesday, aged 92. He taught me public choice at George Mason University; I served as his research assistant. Every year, when the University of Canterbury’s Economics Department ran its Nobel Prize sweep, I bet on a Tullock prize, joint with Anne Krueger, for rent-seeking. James Buchanan won the Nobel in 1986 for his contributions to public finance and public choice; his prize should have been shared by Tullock, but engaging in the flattering of the Swedish academy necessary for securing the prize was not in Tullock’s nature: Tullock doesn’t rent-seek. He never got his Nobel, but my son’s middle name is Tullock. We give what prizes and plaudits we can.