Was Mancur Olson Wrong?

Beginning today’s super hectic day with this nice article by Jonathan Rauch. The article  is a review of this  book: Strength in Numbers: The Political Power of Weak Interests. The book is  by Prof. Gunnar Trumbull’s of HBS.

The book criticises Mancur Olson’s ideas of logic of collective action. Olson said people with narrow interests can organise themselves better as interest groups.

Question: Why is there a National Cotton Council but no National Anti-Cotton Council?

After all, as you may or, more likely, may not know, the federal government subsidizes cotton growers to the tune of almost $2 billion a year (the average from 1995 to 2011). Unless you happen to be a cotton grower, you can probably imagine better uses for those federal dollars. Yet the cotton program, a New Deal vestige, goes on. And on.

It has a lobby, of course. But why no counter-lobby?

In 1965, a young University of Maryland economist named Mancur Olson (the first name is pronounced “mansir”) formulated a crucial part of the answer in his book The Logic of Collective Action. To organize a group is costly for the organizer in money, time, and energy. Constituencies with narrow, focused interests can surmount that problem more easily than can constituencies with broad, diffuse interests, because the broader group will have more of a problem with free riders: people who sit back and let others do the hard work of organizing while expecting eventually to partake of the booty. “In short,” wrote Olson, “the larger the group, the less it will further its common interests.”

Cotton, a classic narrow interest, illustrates the arithmetic. Because big cotton farms account for a large share of output, the largest 5 percent of recipients collect more than half of subsidy benefits and the largest 20 percent collect more than 80 percent. (The figures are published by the Environmental Working Group.) In 2010, the biggest 1 percent of farms collected almost $175,000 each. That is a lot of money — well worth organizing for, even if you know that some cash will slosh into the pockets of small producers who don’t lift a finger to defend subsidies. (Which actually is a public-relations plus. Support the family farmer!)

On the other hand, the cost of the program comes out to less than $6 per year per taxpayer, hardly enough to be worth organizing to oppose, or even to be worth learning about. Which is why you may not know that U.S. cotton subsidies exist.

The author reviews the book saying it disapproves Olson’s work and then also points how Olson would react to criticism and finally adds  the suggestions Olson would have to make the criticism more relevant.Rise of social networks makes lives both easier and harder for collective action..

Very interesting read..



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