Special Interests and Majority MistakesMike Rappaport

Bryan Caplan seeks to reorient our thinking about why democracies adopt undesirable policies.  It is not just special interests, it is also that majorities are mistaken in their ideas about how economic policy should work.   His views are set forth more extensively in his new book, which is high on my reading list.

Here is an excerpt:

Keeping foreign products out is popular. Since 1976, the Worldviewssurvey has always found that Americans who “sympathize more with thosewho want to eliminate tariffs” are seriously outnumbered by “those whothink such tariffs are necessary.” Handouts for farmers are popular. A2004 PIPA-Knowledge Networks Poll found that 58% agree that “governmentneeds to subsidize farming to make sure there will always be a goodsupply of food.” In 2006, the Pew Research Center found that over 80%of Americans want to raise the minimum wage. It is safe to assume,then, that few people want to abolish it. These results are notisolated. It is hard to find any “special interest” policies that mostAmericans oppose.

No wonder special interests so often get their way. They do not have toforce their policies down the public’s throat, or sneak them throughCongress unnoticed. To succeed, special interests only need to persuadepoliticians to swim with the current of public opinion.

None of this means that special interests don’t matter, but it does puttheir activities in a new light. Special interests do not have to sneakbehind the majority’s back; they just need to ask for the right favorin the right way. The steel lobby could have demanded a big handoutfrom the federal government. But that would have struck many voters aswelfare for the rich; steel-makers can’t expect the same treatment asfarmers, can they? Instead, the steel lobby took the crowd-pleasingroute of blaming foreigners and asking for tariffs. Tariffs were lessdirect than a naked subsidy from Washington, but they enriched thesteel industry without alienating the majority.

I think there is a great deal to this.  The job of special interests is to keep people persuaded of these mistaken policies, and to direct the government action their way in a manner that does not run up against  popular support. 

I might disagree with Caplan to a limited extent.  Suppose we could eliminate the power of these special interests (and also of ideological interests).   My guess is that people would be much more likely to become convinced of the correct theory.   There are loads of people who believe that the current recipients of social security are simply getting back what they paid in.  Without the special and ideological interests, there is much more chance they could be convinced that instead current social security recipients are on average receiving enormous subsidies from the young.