Every American a Statesman

To continue to piece together the puzzle of partisan polarization, I turned to one of the great scholars of behavioral economics, Mancur Olson. Professor Olson’s work, The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities seeks to explain how his theories of collective action in societies can lead to suboptimal outcomes in the economy. I was intrigued initially from an economic standpoint, but after reading some other reviews of the book, I quickly came to realize that there could be something here for students of polarization.

In the second chapter, where Olson lists his “implications” that comprise his logic of collective action he specifically points out that

On balance, special interest organizations and collusions reduce efficiency and aggregate income in the societies in which they operate and make political life more divisive.”

I immediately dove in for a closer look at what his theories of group organization might tell us about politics today.

The above quote is just one of 8 “implications” that Olson uses to describe his theory, which as I said above really is an economic rather than a political theory. I’ll try here to boil down the elements that are essential for the current discussion.

Olson starts with some basic premises that describe how people organize and what incentives cause people to do so. Most fundamental is the fact that smaller groups are more likely to organize because they are likely to receive more benefits for the amount of resources they invest in organizing. Thus history tells us of entrenched aristocracies, cartels, monopolies and labor unions that have damaged the greater good in search of gains for the members of their group. Interestingly, he even uses his theory to explain apartheid in South Africa and the caste system in India.

Conversely, the larger the group that is organizing for a public good, the smaller the proportional benefit each individual member of that group will receive. Thus, there is little reason for large groups like taxpayers, the unemployed, or the poor to organize because their individual benefit will not be worth the cost in resources required to organize, or they simply are not capable make the investment required.

Given all this, the groups that are most likely to organize are those that have come to be known as “special interests.” These groups suffer from a sort of tribalism (as Francis Fukuyama might put it), putting their narrow self interest above the interests of the nation at large.

This is all to be expected if we really look at the incentives involved. Indeed, some level of this type of tribalism has been present in every society, even at their highest peak of achievement. The only way to achieve a perfectly equitable distribution of public goods (also known as a pareto optimality) is for there to be perfect consensus in an entire society. No society has been able to achieve this; the Soviets showed us the futility of even trying.

At any rate, according to Olson,

The typical organization for collective action… will have little or no incentive to make any significant sacrifices in the interest of the society; it can best serve its members’ interests by striving to seize a larger share of a society’s production for them.”

As we discussed in my last post, these groups become more and more deeply entrenched as time between revolutionary events grows. It is those revolutions, like the Civil War or the New Deal, that upset the status quo, reducing or eliminating the power of these “distributional coalitions,” as Olson calls them, for a time.

Because distributional coalitions focus mostly on issues that will shift the distribution of goods their way, these types of issues can come to dominate the political conversation in a society. Every political issue becomes an epic battle between factions that stand to lose a lot of money. Further, the side that loses will do everything it can to make sure the lawmakers who didn’t vote their way lose their seats in the legislature, funding toxic political ads, primary challengers, and making politics more about who spends the most rather than whose ideas resonate with the largest number of voters. (Jeb Bush’s recent exit from the presidential race does provide some hope that maybe political spending isn’t the root problem with our politics).

There is a great deal of depth to Olson’s theories, and I have glossed over so much in the interest of brevity and focus. I hope to continue to study and ponder them by reading his magnum opus, The Logic of Collective Action. Rest assured, there will be a book review on that work on this site in the future.

But for the current discussion of political polarization, any unbiased observer must admit that Olson’s theories show us that the systemic forces described by his implications really can help us to understand contemporary politics a lot better. There’s more to it than the rightward turn of the Republicans.

Every politician loves to rail on special interests, but every single one of them is beholden to some special interests that form their voting coalition. It’s just how our politics work. But there is hope. One thing that could be done to help alleviate the problem would be to simplify the tax code. Eliminating tax carve-outs for large corporations and keeping the tax code simple for corporations would not only drastically cut back the influence of distributional coalitions, but it would also make the economy vastly more efficient as tax returns for all businesses would be vastly simpler.

I am skeptical of arguments that assume humans will always act in the way that an economic scholar thinks they should. There is no behavioral determinism to speak for, at least not yet. I hope to review some books in the future on that exact subject. Short of that, history can again be our guide here: if each of the founding fathers had acted “rationally” we would all still be subjects of the British Crown. If Churchill had given in to the Nazi onslaught, we might be speaking German. Obviously, many important historical events are the result of brave people acting irrationally. The fact that economics isn’t a hard science attests to this.

Which is why I am an optimist. If Americans can educate themselves on issues that really matter, apart from the wedge issues, start voting with their heads rather than their indignant emotions, things can change. It will just take a little bit of irrationality. Putting the time in to research the candidates’ stands on issues rather than who stuttered the most in the last debate is where it must start. It will also require voters to withstand an onslaught of cheap political dialogue on wedge issues, while holding onto their principles.

In a word, it will require every American to be a statesman.


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