Adventures in Rent Seeking: Kenyan Matatu Edition

One day about six weeks ago I was waiting on the side of the Kenyan coastal highway. I knew where I was going and needed no help finding a matatu (the staple of East African public transport — think a VW bus with twice the passengers and half the safety features.) Two local Kenyans hanging out by the road approached, told me they would help me get a ride, and then made sure that the next Matatu, which was already in the process of stopping for me, did in fact stop for me. Despite the fact that they did absolutely nothing to aid the Matatu’s business, the conductor threw them a few coins.

At first I was baffled that a business person in a third world country was giving away real money. Eventually I realized it was a good old fashioned case of successful rent-seeking/collecting. The men controlled that part of highway. If the conductor failed to pay them off they would tell me and everybody else to take any matatu but his. For the conductor is wasn’t worth it to not pay them.

This type of “finder’s fee” transaction is fairly common around the world, but the Kenyan scenario was different because it wasn’t a taxi driver at a crowded airport who needed help fending off other drivers to get fresh tourists. It was a relatively barren stretch of rode on which the matatus were 10-15 apart. Immediate competition was nonexistent. The Kenyans paid by the conductor were literally providing no value.

What I saw in Kenya got me thinking about whether that type powerless, wealth-free,  nothing-to-lose rent-seeking could work in America. Find a street corner, hang out there all day, and if the cab drivers don’t pay you off tell all the cab-seekers that the drivers are unlicensed, unsafe, and cheats. It would have to be in an urban area small enough that the same cab drivers frequent your location, but large enough that there are enough people to make it worthwhile to pay you off.  You’d also have to avoid problems with law enforcement officials or property owners, but would it be worthwhile for some of the unemployed or homeless to give it a shot?

To connect this to a broader point, one of the challenges of a movement like Occupy Wall Street is to find leverage that can be used to extract concessions from those in power. On the Kenyan highway, my matatu friends were able to use their one resource — time — in order to capture rents and better their situation (although it’s not as if the matatu conductors are the 1%.)  Time is also the resource that OWS protesters have in great quantity, but so far they haven’t found a way to turn it into real leverage.

More on the economics of Kenya here and here.


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