Living Economics

The Logic of Collective Action
Olson, M.
Narrow special interests are often more politically powerful because they are easier to organize and the benefits of membership exceed the cost of participation.

Trade protection in the form of import quotas and tariffs often succeed in saving domestic jobs at costs that are many times the wages of the saved jobs. For example, the consumer costs of saving one job in the meat industry is estimated to be close to $1.9 million. A meat cutter certainly does not make anywhere close to that amount.

How can the minority beneficiaries in the protected industries carry so much clout against the majority consumers that are being fleeced?

The logic behind this apparent paradox is quite simple: It is much easier to organize a small group of people who have intense interest in promoting their cause than to organize the mass of people with diffused interests against the minority's cause. In other words, the ability of an interest group to achieve collective support from its members is inversely related to its size.

When the special interest group is small, the benefits of membership often exceed the cost of participation because the benefits are shared among only the few. Free-ridership is also much easier to detect. The organization is thus very motivated and strong. And its members are more likely to vote in close elections.

As the size of any special-interest group increases, the personal costs of active membership often exceed the individual benefits. It becomes more and more difficult to obtain support from its members, because each member can see that the importance of his contribution is diminishing. The tendency to free ride on other members' contribution is very strong. Broad-based special interest groups are generally very weak politically.

The promise of "pluralism" in democratic politics thus often ends up benefiting the competing narrow interest groups at the expense of the many who find it too costly to organize. So concentrated producer lobbies would be strong and dispersed consumer lobbies weak.

Note:
  1. Editor's note: The power of organized special interests is particularly strong in issues where the two political parties or the voters are evenly divided.
  2. Editor's note: The power of organized special interests is particularly strong in issues where the two political parties or the voters are evenly divided.
References:
  • Olson, M. The Logic of Collective Action. Harvard University Press 1965.
  • U.S. International Trade Commission. "The Economic Effects of Significant U.S. Import Restraints." 1995.
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