A pretty amazing article from Jonathan Rauch in 1992. I’ve heard references to this article over the years but never read it. I find it fascinating, and even more true 13 years later.

His basic thesis, based on the writings of a guy named Olson, are that interest groups seeking to redistribute resources in their favor naturally form as societies develop, and that over time these groups become more entrenched and more powerful and eventually begin to clog up the society, slowding down growth, and eventually leading to “sclerosis” of the political and economic arteries. When a society is newly formed after a revolution or occupation or major societal upheavel, there are few interest groups. Interest groups are hard to form and the founders will benefit little compared to the effort of founding. Also citizens are reluctant to join a group until it proves successful. But as succesful interest groups form, more and more people join until eventually a very large chunk of society is enmeshed in a web of interest groups. These groups focus on their narrow interests, to the eventual harm of all.

There is nothing amazing in this analysis - we all see this happening and to a large degree “enlightened sefl interest” is one of America’s key values. But his point is that as a society stays stable and peaceful and avoids the kinds of massive revolutions, military defeats etc which lead to dismantling existing society, the longer a society does well as we normally define it, the worse this problem becomes. Its the cloud around the silver lining of America’s long stability and prosperity.

And if you compare his comments of 1992 to the present, you will see that his analysis rings even more true now. I am particularly thinking about all the articles I’ve read about how California is now “ungovernable” and I’m also thinking about the current national administration, a very conservative administration, failing to cut spending and presiding over the largest expansion of government since the Great Society. Now nobody wants a violent revolution to “fix” this problem, so what can we do?

Discuss :0

How on earth does a group of senator’s inability to cut back on a collection of wildly popular benefit programs map into this supposed interest group thing?

Actually I think that most of the Bush admin’s increased spending has NOT been to “wildly popular” programs, certainly not in terms of unscheduled spending increases. For example, Social Security spending, which is wildly popular, has gone up quite a bit, but it is my understanding that the increases in SSI are consistent with past projections based on demographic change and that we’re more or less where we expected to be in terms of SSI spending.

What’s blown the budget to hell are 3 things: 1)the effects of 9/11 which account for roughly 1/4 the change from a surplus to a deficit; 2)increased spending above projected entitlement levels, also contributing about 1/4 to the problem, and 3) the Bush tax cuts which account for about 1/2 of the problem. Factors 2 and 3 are subject to political control, and in both cases I feel that interest group pork is a BIG factor in slamming the budget into deficit.

In regards to increased spending, a lot of the spending is in narrowly defined slices of the budget: targeted subsidies for certain industries; special federal building projects in certain favored areas, etc. Most of this is classic pork. Look at the big entitlement increase Bush passed: the Medicare drug benefit. It is NOT popular - most polling I’ve seen says the people feels it is over-complicated and not very helpful. And it’s a HUGE interest group giveaway: both to the intended elderly recipients who are getting a new medical benefit without any direct trade-off, and also to the pharmaceutical industry who is protected from Medicare’s market power in negotiating prices.

The other source of our budget woes are the Bush tax cuts which are so rife with pork that I can’t come close to cataloguing. The big rate cuts of 2001 also contained a slew of new deductions and exemptions targeted at very specific groups. The corporate tax code saw the introduction of numerous new “tax incentives” and other creatively named loopholes. And the second round of tax cuts in 2002, the “dividend tax cut” is a true smogasboard of pork: one of the most complicated tax code changes ever, with a little something for everyone. My friend who is a specialist tax attorney says the Bush tax cuts are the worst pork he’s seen.

I don’t feel that every spending increase is a pork-laden giveaway to “special interests”. But the trend has been that more and spending is pork. Rauch’s ideas, based on Olson’s writings, sound like the right explanation to me: as a society stays stable, interest groups grow over time and gain ability to redistribute the spoils to themselves. Stability and prosperity are good things but they seem to generate a political “sclerosis” as a side effect. I especially see this in California where we’ve had an unbalanced budget for 4 years despite a Constitutional mandate to balance the budget and a Constitutional prohibition on borrowing.

I don’t know what the solution is, but I feel that Rauch has correctly identified a big part of the problem.

Rauch expanded his argument into an entire book (also called Demosclerosis). Pretty interesting.

My favorite part about this is that I read it while working on my first lobbyist job (white hat, nonprofit) back in the mid-90s. Since then I’ve realized that, while there is a lot of truth to Demosclerosis when it comes to little stuff, the big stuff really requires massive coalitions of special interests to come together and then either spend money like it grows on trees or mobilize grassroots (or both) to make serious changes in policy. In many instances, special interests on both sides basically cancel each other out.