Tuesday, October 21, 2008

I'm an interest, and I am special

Continuing on my pre-election theme of the political process, I’ll rap about legislation and where it comes from. Politicians sell legislation to the public. They price they charge is paid in terms of votes, campaign contributions or a combination of both. They basically try to maximize their own benefit (even if that means using force on others) with only constraint being that they have to remain popular enough to keep getting elected.

Think of a piece of legislation that costs 10,000 people $10 each ($100,000 total), but it benefits 50 people $1,000 each ($50,000 total). Most people who are victimized by this legislation aren’t going to bother to fight it or even learn about it because it only harms them by $10, and because it is hard to organize a group that large. However, the group of 50 who benefit by $1,000 each will find it worthwhile to work to promote the legislation, especially if they are organized together as a special interest group (maybe they are labor union members, developers, a citizen activist group, Christians, or whatever). They will request meetings with the politician, distribute propaganda to promote the legislation, give politician money, etc. The small number of those who benefit will definitely make their voices heard, the many who are harmed may hardly even notice.

Opposing legislation that harms a large number of people by a small amount is a public good, and public goods are under-produced. This is essentially the same reason that there are few private fireworks shows (at least ones that attempt to make a profit). Many people are willing to pay a couple of bucks to see a fireworks show, but why would you pay when you can see the show for free? It’s not like anyone can hide the sky from you. Those who oppose legislation that harms a large number of people by a small amount face this same dilemma.

Anyway, that’s how special interests often work to screw the rest of us. Now I think I will go drink a Sierra Nevada Pale Ale, unless the Bootleggers and Baptists have made that illegal.