The Special Interest Problem

special interest

There are myriad problems that plague democratic government. One, in particular, is that in practice “the will of the people” actually means “the power of interest groups”. While the optimal result would be policies which benefit the entire society at the expense of no one, the reality tends to be legislation which benefits concentrated groups at the expense of most or all of the population.

In his 1990 book “The Enterprise of Law“, Bruce Benson summarized the literature thusly: “Chambliss and Seidman argued that ‘every detailed study of the emergence of legal norms has consistently shown the immense importance of interest group activity, not the public interest, as the critical variable in determining the content of legislation.’ HIstorical studies of legislation tend to agree with the conclusion. When Chambliss examined the origins of vagrancy laws in England, he concluded that vagrancy laws were created and later altered to protect the interests of such specific groups as landowners and merchants. Hall’s study of the growth of modern theft laws and Platt’s examination of the rise of the juvenile court in the United States reached similar conclusions. Joseph Gusfield’s examination of the Volstead Act concluded that temperance advocates represented the interests of a relatively small segment of the population.”

Additionally, a 2014 study by Gilens and Page concluded: “Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.”

Why Does This Happen?

This shouldn’t come as a surprise. An examination of the incentives built into democracy leads us to expect these results. Just like with any other decision, individual voters are confronted with costs and expected benefits when casting a vote or otherwise participating in the political system. The costs of being an informed voter are substantial. If one were to be up to date on the detailed history of all their representatives and their competitors, the workload would amount to at least a part-time job. Just think; what would it take to familiarize yourself with every vote your representative casts, every lobbyist they meet with, every promise they make, etc, etc? Of course, before you start on any of that, you should probably figure out how the political system even works.

As I’ve pointed out before, most people can’t even name the three branches of government. Most also can’t name their representative, never mind being even somewhat informed about them. This is because, while the costs to each individual are high, the possible benefits are usually low. When changes in policy are implemented, they almost never impact only that individual voter. Typically, they affect thousands or millions of people throughout society.

When Participation Pays

However, there are some policies which do benefit a concentrated group of people. Special-interest groups form when these people realize their own efforts at influencing policy can result in a personal reward. This typically only works with small groups because the larger the number of people involved, the harder it is to ensure each beneficiary is putting in the effort or resources to “purchase” the privilege on the political market. Each individual’s participation only pays if others in their group are participating.

Given these incentives, we should expect law under a central state to tend toward benefiting small segments of society. Those individuals who, for example, are in concentrated industries or large firms have a systematic advantage when it comes to crafting law which serves their interests. Democracy then, rather than serving the masses, leads to almost the exact opposite: it rewards organized and concentrated special-interest groups.

What To Do About It

Unfortunately, this puts us in a quandary. We are stuck in a system that makes it unlikely consistent and significant change in a positive direction will occur. If change is going to happen, it will need to be from a self-sacrificing interest group. A dedicated few need to devote countless hours and resources toward a cause that will have widely dispersed benefits. If a group ever finds itself in this position, it must push to remove sectors of the economy from government jurisdiction and make it easier to for individuals to have their voices recognized through secession and local nullification. For the rest of us, I recommend we spend our time building alternative institutions to central planning, removing ourselves as much as possible from government oversight, and spreading libertarianism. After all, markets and non-state institutions do not suffer from the aforementioned perverse incentives. The more we can rely on the market instead of the state, the better.

Originally published on The Principled Libertarian. Read more from Andrew Kern on Think Liberty here.


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