Rhode Island as Experiment in Decline of Nations


As Robert Samuelson describes him in Washington Post essay, Mancur Olson should be made the official patron economist of Rhode Island, or something:

Although an economist, Olson revolutionized thinking about the political power of interest groups. Until Olson, conventional wisdom held that large groups were more powerful than small groups in pursuing their self-interest — say, a government subsidy, tax preference or a protective tariff. Bigness conveyed power.

Just the opposite, Olson said in his 1965 book “The Logic of Collective Action.” With so many people in the large group, the benefits of collective action were often spread so thinly that no individual had much of an incentive to become politically active. The tendency was to “let George do it,” but George had no incentive either. By contrast, the members of smaller groups often could see the benefits of their collective action directly. They were motivated to organize and to pursue their self-interest aggressively.

Here’s an example: A company and its workers lobby for import protection, which saves jobs and raises prices and profits. But consumers — who pay the higher prices — don’t create a counter-lobby, because it’s too much trouble and the higher prices are diluted among many individual consumers. Gains are concentrated, losses dispersed.

Around here, one can see this dynamic at both the state and local levels.  The special interests have much more incentive to become active.  So conspicuous is this, at the local level, that those who benefit disproportionately from the higher taxes find it selfish when those who do not push back on excesses.  The doubling of a town’s tax levy over a decade is just a few thousand dollars per year to the average taxpayer, but it’s $30 million in brand new elementary schools to teachers, administrators, and parents, as happened not long ago in Tiverton.

Of course, if the effort required of the large group (Samuelson’s term) is relatively minor, and if a small, motivated team can offer the people an option, the large group can still win.  However, the special interests will do their best to utterly destroy that team, working especially hard to make sure that few see them as motivated out of a sense of fairness and justice.  Rather, there must be some explanation of greed or personal corruption.  They must be bad, evil people.

It’s quite an education to be on the receiving end of that dynamic.  In some local circles, for example, I’m the symbol of all politically empowered greed in the world because I work to give people a substantive option when it comes to their tax bills, which causes problems for those who want to take money away from their neighbors by force and spend it on things that benefit themselves.

We’ve reached the point, in other words, that the special interest advantage has become a sense of entitlement.  That attitude, if not stopped, will lead inexorably to tyranny as entitlement transitions into a sense of a right of ownership.

  • Mike678

    Isn’t his seen locally in every town vis-a-vis school bonds/budgets? In my town we have 12,000 households, 3,900 of which have school age kids. The minority drive town finances/tax increases as they are motivated to vote for increases..they get something for their effort while also reducing their direct costs by spreading the burden to others.

    • Dave Fraser

      Are you implying that it’s the parents of those children who are driving the tax increases?? Get real…. it’s the unions all the way…….

      • OceanStateCurrent

        The teachers unions do the organizing, the political heavy lifting, and such (after all, we’re paying them to do it), but they do pull in parents for the votes and, to a lesser extent, the activism.

        • Dave Fraser

          Yes, I agree, it’s the unions that are driving the bus. But we’re paying them to teach, not to do “political heavy lifting”. Too late now though. Public sector unions are definitely the worst thing to ever happen to taxpayers. It’s only going to get worse, the unions will NEVER have enough.

      • Mike678

        Not implying, stating. Teachers couldn’t get their exorbitant salaries if the moms and dads were informed and pushed back. They don’t. And if you think you are paying teachers to teach and not organize , you need to “get real.”

  • Rhett Hardwick

    “Gains are concentrated, losses dispersed.” Isn’t this the theory of any dispersal of government largess? It might be said to be the theory of insurance.

    • Mike678

      Yes…until you hit the tipping point of more takers than producers. The Iron Lady made the point and I paraphrase: socialism works until you run out of everyone else’s money….

      As for insurance, that program spreads the risk from individuals to a larger group. People who pay get a benefit. What benefit do I get by politicians taking my income and passing it to others to garner votes?

      • Rhett Hardwick

        Of course, just making the point that the idea always seems to have appeal. When the “gains” get large enough, they cannot be effectively dispersed. Consider our current medical insurance situation. The “gains” received by each patient can no longer be effectively dispersed among the healthy. The simple and obvious solution of cost cutting (death committees?) does not seem to be attractive, although it is made to work in Britain. Unlike government, insurance companies cannot long run a deficit. I assume that is a large reason behind the attempt to transfer payments to the government.

        • Mike678

          Does it work in the UK? And how long can the Gov’t run deficits?

          • Rhett Hardwick

            “Does it work in the UK” Well they do refuse care to patients who they deem too elderly to be a useful investment of resources. The populace seems to accept this, much the way that we seem to accept that much is not covered by Medicaire. Oddly, much that is denied to people who “earned” Medicaire is provided under “welfare” health plans. There is no serious hue and cry.
            More appropriate to the actual pith of this article is the nationwide effort to kill Uber. I do not see any compelling state interest in this. But, it does benefit the cab companies with the cost being placed on the public.

  • Dave Fraser

    Spot on. Well said. Justin Katz for Governor!