Monday, January 17, 2005

Government's End

GOVERNMENTS’S END: WHY WASHINGTON STOPPED WORKING

In this book, the author - Jonathan Rauch - tries to assess the inner workings of the United State Congress. He pays particular attention to the role of interest groups in how government works. He provides a very bleak assessment of the situation in Washington. He begins his assessment by providing a background of the growth of what he call the "Parasite Economy," he then explores the effect of the transfer seeking industry on how government and society works. He goes on to provide an assessment of possible "treatments" for government’s inability to perform effectively (Demosclerosis).

In this review, I intend to trace the authors main points, from the formation and proliferation of groups, the nature of the groups, the effects of group activity and his assessment of what needs to happen in order to remedy the situation. I will then provide and assessment of the author’s claims. With particular attention paid to his portrayal of the nature of the interest group industry. I will conclude with an evaluation of the perceptions I have on groups, after reading Join Me, by Danny Wallace and Government’s End by Jonathan Rauch.

According to the author, the development of interest groups is a natural result of a stable democracy. He argues that all interest groups need a stable environment in order to flourish. It is therefore, a hallmark of democracies to develop interest groups: " ‘The logic of the argument’ Olson wrote, ‘implies that countries that have democratic freedom of organization without upheaval or invasion the longest will suffer the most from growth-repressing organizations and combination.’ And so stable democracies are a natural preserve of what Olson pungently called interest-group depredation." (35) The inherent tendency of democracies to support lobbies, coupled with the increased role that Washington has, and continues to play in society, has contributed to the explosion of interest groups, especially since the New Deal. Increased government activity breeds increased interest group activity. The growth of interest groups has also been fed by and government’s focus on redistributive politics.: "Economic thinkers have recognized for generations that ever person has two ways to become wealthier. One is to produce more. The other is to capture more of what others produce. The former is productive activity - transfer seeking, an investment of time or energy in transferring wealth from other people to oneself." (28) Government is today involved in redistributive politics, moving resources from one area, and moving it to another. This has spurred the development of interest groups to maintain, or increase ones share of the national pie. The fear of losing one’s share, or government enacting legislation that would be detrimental ones interests, force and compel groups to form. And the creation of one interest group, typically compels the development of another, in what the author calls a vicious cycle. Interest groups are therefore, interested not in the good of society, but in their own "special" interest. They will push for the enactment of legislation that favors them, protects them and gives them their "fair" share of the national pie. They insist on the passage of tax-breaks, subsidies and other anti-competitive policies, to ensure they come out on top. Typically at the expense of other groups and technologies that would make society more efficient and competitive. The author provides a multitude of examples to illustrate this point. From the messengers wanting to limit the acceptance of fax machines (fictional) to the all to real attempt by dairy farmers to bar competition from margarine. The author makes a very important point, that though some groups "gain" and others "lose" in this game of lobbying, the "transfer seeking" economy always benefits. Every time one group feels compelled to form a group, or get their "fair" share of the pie, they will rely on lawyers and lobbyists to do the job. Lobbyists always win.

A significant portion of the book is dedicated to an assessment of the negative impact of interest groups on how government works and the quality of its work. The authors makes the point that even though the quantity of legislation coming from Washington has seen an increase, that does not meant that they are solving any problems. In fact, the opposite happens: "As it grows, [interest group industry] the steady accumulation of subsidies and benefits, each defended to perpetuity by a professional interest group, calcifies government. Washington loses its capacity to experiment and adapt and so becomes increasingly prone to failure." (18) A principal result of growth, has been an inability of government to end programs that it created (or reform) programs that it has created, the author gives numerous example of this. From licences for peanut farmers (developed in depression era) to tax breaks for a handful of agora wool farmers in Texas. The government tries to get rid of these programs, but it is very difficult to do so. The author also argues that the investment of time and many in transfer-seeking, means that investment in more productive ventures, is short changed: "Every bit of energy people spend fighting over existing wealth is that much less energy spent on producing more wealth." (73) A necessary result of this is a reduction of rates of economic growth, as has been experienced by Germany, Britain and Japan and will soon be experienced by "economic miracles" like South Korea and Taiwan (37). In essence the author argues that the benefits of lobbying are quite visible and tangible (tax breaks, subsidies, favorable regulations), while the costs (waste, inefficiency, rigidity, complexities and policy inconsistencies) are diffuse and often invisible (102) In this sense the author ascribes to the conservative axiom of the "Visible hand" and "invisible foot" of government.

The ultimate result of the transfer-seeking industry is a general belief in the populace that government is not working: People felt they deserved more, yet they felt they received less, and they didn’t understand why. The more they struggled, the more they felt beset." (10) Trust in government has dropped at the same time, to lows of between 20 and 30 percent.

The author does provide some possible remedies for the situation. He begins by cautioning that the fight for reform would be tough and tough. He believes that only a concerted effort of evolution and not revolution, will stem the torrent of "Demosclerosis." The author argues that there is a need for individuals to change their perception of government, from one that can be used as a tool of social change, and instead come to the realization that government can no longer come up with such radical programs as the New Deal, those days are long gone. And in no little measure, due to the transfer-seeking industry created after the New Deal and other government programs. On a more functional level, the author has three prescriptions that he believes can help alleviate the situation. First, devolve some of Washington’s control to the states and other lesser jurisdictions (241), this would have the effect of scattering the benefits of lobbying further, therefore, reducing the pressure of lobbyists on one level of government. Second, eliminate the incentives for lobbies. That means eliminating subsidies, tax-breaks and programs that favor few groups. This should be combined with an effort to eliminate anti-competitive programs, and goodies from government. The author believes that opening up industry to domestic and foreign competition, will have a positive effect on the situation, by forcing organizations to focus on productive, rather than transfer-seeking activity.

The author provides a pretty dim view of interest groups and their activities and the negative effect they have on government and society as a whole. I found a number of issues the author raised very illuminating. Coming from a third world country, and a recently democratized one, I have always wondered why interest groups do not play a larger role in my society. Mr. Rauch’s discussion of the need for a stable democracy for groups to develop, was very interesting and answered some of my questions on the issue. I was also learnt a great deal form his discussion of subsidies and in particular farm subsidies in America and France. Third world countries, constantly, clamor for a reduction of agricultural subsidies and it is important to realize that it is very difficult to do so. It means stepping on the toes of a rather powerful lobby, that would fight to the death to maintain their subsidies. It would, therefore, serve third world countries to find a way to make themselves and interest group, or find other ways to convince Washington and European capitals to change their policies.

However, I had a couple of problems with the author’s point of view. To begin with, the current system of interest groups, is better than what used to be. It is inherently better to have lobbies that are diffuse, and transparent, than the fat-cat system that was. The current system (though larger) is not as corrupt as the yester-years and this is inherently good for democracy: "while influence peddling was once the province of the privileged, it is now everyone’s game. Americans have achieved the full democratization of the special interest deal: influence peddling for the masses." (52) Moreover, I see no problem with the proliferation of interest, it only means that our leaders have to take in to account the effect of public policy on the gamut of groups in society. This means that policy making becomes a more deliberative and deliberate process, not to be hijacked by radical ideals that may harm large portions of society. This would be in keeping with the wishes of the founders of this nation, who wanted a deliberate process, that emphasized compromise and encompassing the wishes of the minority. I was also disappointed with the author’s negative fixation with lawyers (111-112). I believe that the profession is a noble one, that performs a necessary function in society and works to enhance the effectiveness of society. There may be negative elements within it, that should be no cause to call the whole profession into question.

The two books on interest groups read so far (Join Me and Government’s End) have served to illuminate me further on the issue of interest group. From Wallace’s treatment, I learned that forming a group is not very easy, it takes a lot of time and effort from the entrepreneur. It also takes a great effort to convince people on the necessity for and the need to join one’s group. However, the book does provide a more positive assessment of groups, showing that they can be used for good and not necessarily for transfer-seeking alone. Moreover, they serve to connect peoples from far flung areas with similar interests together and to pool their resources in order to make a positive difference in society. Rauch’s treatment provides a more negative assessment of interest groups. From their focus on transfer-seeking activities, to their negative impact on the economy, government and society as a whole. Interest groups are not formed with the aim of the greater society in mind, but instead the transfer of the states resources to their own special interest.

The books leave me with a better understanding of interest groups. I understand the hardship of forming an organization and the effects groups can have on society. Rauch’s discussion of fear and compulsion, does also serve to inspire me to create an interest group of my own focused on issues concerning Africa. I am of the opinion that government is unlikely to take your issues into account, unless you show them it in their interest. Is that a bad thing, I do not know, it is just how it is.

5 Comments:

Blogger Empowerqueen said...

It is a government of the people ,interest groups are comprised of people! In America we as citizen's put forth ideas as you said showing the government the benifits of implementing them. In a united Africa they can utilize the successful ideas and grow the promised land through the casting of lots by empowering the citizen's with capital assets that brings them into the economic ballgame! Check out the www.economicengine.blogspot.com and watch this idea come forward and enlighten the world to a brand new day!
Thank You
Grace be with you all

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