The Logic of Collective Action by Mancur Olson

There are a lot of government policies, like airline bailouts, that from an economic perspective dont make any sense at all. Politicians have an incentive to keep the economy strong as incumbents are reelected at a much higher rate during booms than busts. So why do so many government policies make such little economic sense? The best answer to this question comes from a book that is almost 40 years old: The Logic of Collective Action by Mancur Olson explains why some groups are able to have a larger influence on government policy than others. In this brief outline, the results of The Logic of Collective Action are used to explain economic policy decisions. Any page references come from the 1971 edition. It has a very useful appendix not found in the 1965 edition. You would expect that if a group of people has a common interest that theyll naturally get together and fight for the common goal. Olson states, however, that this is generally not the case: But it is not in fact true that the idea that groups will act in their self-interest follows logically from the premise of rational and self-interested behavior. It does not follow, because all of the individuals in a group would gain if they achieved their group objective, that they would act to achieve that objective, even if they were all rational and self-interested. Indeed unless the number of individuals in a group is quite small, or unless there is coercion or some other special device to make individuals act in their common interest, rational, self-interested individuals will not act to achieve their common or group interests.(pg. 2) We can see why this is if we look at the classic example of perfect competition. Under perfect competition, there is a very large number of producers of an identical good. Since the goods are identical, all firms end up charging the same price, a price that leads to a zero economic profit. If the firms could collude and decide to cut their output and charge a price higher than the one that prevails under perfect competition all firms would make a profit. Although every firm in the industry would gain if they could make such an agreement, Olson explains why this does not happen: Since a uniform price must prevail in such a market, a firm cannot expect a higher price for itself unless all of the other firms in the industry have this higher price. But a firm in a competitive market also has an interest in selling as much as it can, until the cost of producing another unit exceeds the price of that unit. In this there is no common interest; each firms interest is directly opposed to that of every other firm, for the more the firms sell, the lower the price and income for any given firm. In short, while all firms have a common interest in a higher price, they have antagonistic interests where output is concerned.(pg. 9) The logical solution around this problem would be to lobby congress to put in place a price floor, stating that producers of this good cannot charge a price lower than some price X. Another way around the problem would be to have congress pass a law stating that there was a limit to how much each business could produce and that new businesses could not enter the market. Well see on the next page that The Logic of Collective Action explains why this will not work either. The Logic of Collective Action explains why if a group of firms cannot reach a collusive agreement in the marketplace, they will be unable to form a group and lobby the government for help: Consider a hypothetical, competitive industry, and suppose that most of the producers in that industry desire a tariff, a price-support program, or some other government intervention to increase the price for their product. To obtain any such assistance from the government, the producers in this industry will presumably have to organize a lobbying organization... The campaign will take the time of some of the producers in the industry, as well as their money. Just as it was not rational for a particular producer to restrict his output in order that there might be a higher price for the product of his industry, so it would not be rational for him to sacrifice his time and money to support a lobbying organization to obtain government assistance for the industry. In neither case would it be in the interest of the individual producer to assume any of the costs himself. [...] This would be true even if everyone in the industry were absolutely convinced that the proposed program was in their interest.(pg. 11) In both instances, groups will not be formed  because the groups cannot exclude people from benefiting if they do not join the cartel or lobbying organization. In a perfect competitive marketplace, the level of production of any one producer has a negligible impact of the market price of that good. A cartel will not be formed because every agent within the cartel has an incentive to drop out of the cartel and produce as much as she possibly can, as her production will not cause the price to drop at all. Similarly, each producer of the good has an incentive not to pay dues to the lobbying organization, as the loss of one dues paying member will not influence the success or failure of that organization. One extra member in a lobbying organization representing a very large group will not determine whether or not that group will get a piece of legislation enacted that will help the industry. Since the benefits of that legislation cannot be limited to those firms in the lobbying group, there is no reason for that firm to join. Olson indicates that this is the norm for very large groups: Migrant farm laborers are a significant group with urgent common interests, and they have no lobby to voice their needs. The white-collar workers are a large group with common interests, but they have no organization to care for their interests. The taxpayers are a vast group with an obvious common interest, but in an important sense they have yet to obtain representation. The consumers are at least as numerous as any other group in the society, but they have no organization to countervail the power of organized monopolistic producers. There are multitudes with an interest in peace, but they have no lobby to match those of the special interests that may on occasion have an interest in war. There are vast numbers who have a common interest in preventing inflation and depression, but they have no organization to express that interest. (pg. 165) In a smaller group, one person makes up a larger percentage of the resources of that group, so the addition or subtraction of a single member to that organization can determine the success of the group. There are also social pressures which work much better on the small than on the large. Olson gives two reasons why large groups are inherently unsuccessful in their attempts to organize: In general, social pressure and social incentives operate only in groups of smaller size, in the groups so small that the members can have face-to-face contact with one another. Though in an oligopolic industry with only a handful of firms there may be strong resentment against the chiseler who cuts prices to increase his own sales at the expense of the group, in a perfectly competitive industry there is usually no such resentment; indeed the man who succeeds in increasing his sales and output in a perfectly competitive industry is usually admired and set up as a good example by his competitors. There are perhaps two reasons for this difference in the attitudes of large and small groups. First, in the large, latent group, each member, by definition, is so small in relation to the total that his actions will not matter much one way or another; so it would seem pointless for one perfect competitor to snub or abuse another for a selfish, antigroup action, because the recalcitrants action would not be decisive in any event. Second, in any large group everyone cannot possibly know everyone else, and the group will ipso facto not be a friendship group; so a person will ordinarily not be affected socially if he fails to make sacrifices on behalf of his groups goals.(pg. 62) Because smaller groups can exert these social (as well as economic) pressures, they are much more able to get around this problem. This leads to the result that smaller groups (or what some would call Special Interest Groups) are able to have policies enacted that hurt the country as a whole. In the sharing of the costs of efforts to achieve a common goal in small groups, there is however a surprising tendency for the exploitation of the great by the small.(pg. 3). Now that we know that smaller groups will generally be more successful than large ones, we understand why the government enacts many of the policies it does. To illustrate how this works, well use a made-up example of such a policy. Its a very drastic over-simplification, but its not that far out. Suppose there are four major airlines in the United States, each of whom is near bankruptcy. The CEO of one of the airlines realizes that they can get out of bankruptcy by lobbying the government for support. He can convince the 3 other airlines to go along with the plan, as they realize that theyll be more successful if they band together and if one of the airlines does not participate a number of lobbying resources will be greatly diminished along with the credibility of their argument. The airlines pool their resources and hire a high-priced lobbying firm along with a handful of unprincipled economists. The airlines explain to the government that without a $400 million dollar package they will not be able to survive. If they do not survive, there will be terrible consequences for the economy, so its in the best interest of the government to give them the money. The congresswoman listening to the argument finds it compelling, but she also recognizes a self-serving argument when she hears one. So shed like to hear from groups opposing the move. However, its obvious that such a group will not form, for the following reason: The $400 million dollars represents around $1.50 for each person living in America. Now obviously many of those individuals do not pay taxes, so well assume that it represents $4 for each tax-paying American (this assumes everyone pays the same amount in taxes which again is an over-simplification). Its obvious to see that its not worth the time and effort for any American to educate themselves about the issue, solicit donations for their cause and lobby to congress if theyd only gain a few dollars. So other than a few academic economists and think tanks, nobody opposes the measure, and it is enacted by congress. By this, we see that a small group is inherently at an advantage against a larger group. Although in total the amount at stake is the same for each group, the individual members of the small group have much more at stake than the individual members of the large group, so they have an incentive to spend more time and energy trying to change government policy. If these transfers just caused one group to gain at the others expense, it wouldnt hurt the economy at all. It wouldnt be any different than someone just handing you $10; youve gained $10 and that person lost $10, and the economy as a whole has the same value it had before. However, it does cause a decline in the economy for two reasons: The cost of lobbying. Lobbying is inherently a non-productive activity for the economy. The resources spent on lobbying are resources that are not being spent on creating wealth, so the economy is poorer as a whole. The money spent on lobbying could have been spent buying a new 747, so the economy as a whole is one 747 poorer.The deadweight loss caused by taxation. In the article The Effect of Taxes on the Economy, its illustrated that higher taxes causes productivity to decline and the economy to be worse off. Here the government was taking $4 from each taxpayer, which is not a significant amount. However, the government enacts hundreds of these policies so in total the sum becomes quite significant. These handouts to small groups cause a decline in economic growth because they change the actions of taxpayers.

Power and Discourse Analysis Essay - 1811 Words

Power use is around us whether noticed or not. Power in Discourse Analysis is a medium to achieve an end. The end is for stronger of the two sides of the discourse. Power in discourse analysis is the use of language in a discourse allowing the person who acquires knowledge and high status in the discourse takes control of the discourse thus having the higher power. In the following paragraphs, I will discuss nature of power argued in Discourse Analysis, attempts made to define ‘power’ in social research and discuss the different types of power. First, nature of power argued in Discourse Analysis is related to the nature of language. Using language in life is accompanied by using its power. Different conditions vary the power and the†¦show more content†¦Pragmatics is strictly focused on language as a use of language according to a certain strategy planed by language speaker or writer. Cognitive psychology and Artificial Intelligence analysis on language study is too narrowed. It has no ideological and social implications shaped by human being. How does a computer machine know emotions intended in single word? It can’t. Within discourse analysis, comes a more practical and useful approach which is Conversation analysis. But it is also narrowed. It shows the study of every person in a conversation and each time every person speaks or writes. The moment that a person stops to speak or write again is very important. What he meant before might change at every time he stops. Second, there are many attempts to define ‘power’ in social research. â€Å"The description of discourse analysis (henceforth DA) can be viewed as a challenging enterprise, given the variety of approaches that this field encompasses† (Zanà ³n 1-2) so there are more than one definition for discourse analysis. Saussure’s understanding of language is like an abstract before the use of language and the use of it is what he calls â€Å"parole†. The variation of language is matters of individual choice but Sociolinguistics argue that the term discourse is socially identified and its variation is socially constructed. Basically as there is power manipulation and domination in society thus discourseShow MoreRelatedCritical Discourse Analysis1510 Words   |  7 PagesCritical Discourse Analysis Social communication is increasingly becoming a subject of scientists’ discussions from different disciplines, as well as ordinary language users.  In contemporary social sciences, especially in linguistics, we see a clear shift to discourse.  Discourse allows us to talk about use of the language, as well as the language as a socio-cultural activity.  In this sense, discourse, on one hand, reflects the social reality, on the other hand, it shapes it, therefore participateRead MoreCritical Discourse Analysis1347 Words   |  6 Pages2.1. Critical Discourse Analysis (CDA): 2.1.1. What is CDA? 2.1.1.1. 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Wage Gap Between Genders Free Essays

Earnings often signify how in dividends are valued socially and economically, therefore earning ratios between men and omen have been essential for social movements. The remaining is often wage discriminate ion since it is the difference in earnings between identical males and females. Women with equal 1 credentials should be paid equal as men Pay Equity Discrimination Women should be paid equally as men because gender makes no difference I n what a person can do on the job. We will write a custom essay sample on Wage Gap Between Genders or any similar topic only for you Order Now The resulting â€Å"urban legends† of gender difference can affect men and women at work and at home, as parents and as partners. When it co mess to personal relationships, bestselling books and popular magazines often claim t at women and men don’t get along because they communicate too differently. A lot of people believe that just being female they can not do the same as males. The fact that people belie eve females to be physically and mentally shows discrimination in genders. Women are been g put down because of their gender but can be physically and mentally better than men. As stated in Human Psychology 101 most discrimination is due to past prejudice. Whooped and ‘Pay Equity Discrimination Institute for women’s policy 201 1. 9 DCE. 20 14 http://www. iwpr. org/initiatives/payequityanddiscrimination others were regarded as women’s most significant professions. Since e early times women have been uniquely viewed as a creative source of human life. Women should be paid equally as men because historically the inequality has proven to be pure discrimination. Discrimination between genders is deeply rooted in our modern society. The gender pay gap affects all Women, but for Women Of cool r the wage gap is worse. Asian American women’s salaries show the smallest gender pay gap, at 90 percent of white men’s earnings. Hispanic women’s salaries show the largest gap, at 5 4 percent of white men’s earnings. White men are used as a benchmark because they make e up the largest demographic group in the labor force. Let is unlawful to harass a person because of that person’s sex. Harassment can include â€Å"sexual harassment† or unwelcome sex al advances, requests for sexual favors, and other verbal or physical harassment of a sex al nature. Harassment does not have to be of a sexual nature, however, and can include offensive remarks about a person’s goalmouths the law doesn’t prohibit simple teasing g, offhand comments, or isolated incidents that are not very serious, harassment is illegal I when it is so request or severe that It creates a hostile or offensive work environment or when it results in an adverse employment decision.. Most discrimination is caused due to either peer pressure to curry favor with their friends around them, or because they have a total lack k of selectors and selfsame, and they can’t feel good about who they are unless they are p outing down someone else, or making another person feel badly. In the past most believed that the male gender was the superior gender and put women down to keep it that way. W omen were first thought to only be made to carry children and do household chores. Before it as prohibited for women to have professions except for teaching and writing. Some feared t hat the female gender would take over. It is unlawful to harass a person because of that person’s sex. Discrimination between genders is nothing new; it all goes back to before cool nail times. In the 1 9th century the medical profession was an example of a change d attitude. Beginning in the 19th century education was required but, women were bare d from attending colleges for any profession other than teaching. This usually proven Ted women that married and bore child’s at young ages to begin any professional career they c SSE. Around this time discrimination rose. For example in 1846 the American Medical Sass conation barred women from being members. It wasn’t until 1915 that the American Medical a association began to allow female admittance-Since the signing Of the equal pay act Of 19 63, it is now illegal to pay men and women substantially different wages for equal work (N WAC, 2013). Pay difference between men and women remains a hot topic that keeps resume facing over the years and reasons behind the gap are highly debated. Gendered violence (GOB) is violence that is directed against a person on t he basis of gender. It constitutes a breach of the fundamental right to life, liberty, security, dignity, equality between women and men, nondiscrimination and physical an d mental integrity. Gendered violence and violence against women are often used indistinguishable as most gendered violence is inflicted by men on women and girls. Gendered violence includes: domestic violence, sexual harassment, rape, sexual violence during conflict an d harmful customary or traditional practices such as female genital mutilation, f arced marriages and honor crimes trafficking in women, forced prostitution and violations of human rights in AR De conflict (in particular murder, systematic rape, sexual slavery and forced pregnancy) ; forced sterilization, forced abortion, coercive use of contraceptives, female infanticide and prenatal sex selection. Domestic violence remains one of the most widespread forms of genders violence. Battering, often referred to as domestic violence happens to women of every age, race, class, and nationality. Battering takes many forms and includes a RA Eng of threatening and harmful behavior. It may take the form of verbal and emotion anal abuse, with the direct or implied threat of violence. Gender equality is a human right. Gender Equality is not only a fundamental human right, but a necessary foundation for the creation of sustainable and p useful societies. Women are entitled to live with dignity and with freedom from want and from fear. Women are treated in many other aspects Of life as equals so why not be paid equally also. Gender equality is at the very heart of human rights and United Nations values. A fundamental principle of the United Nations Charter adopted by woo RL leaders in 1945 is â€Å"equal rights for men and women†, and protecting and promoting woo men’s human rights is the responsibility of all States. Empowered women contribute o the health and productivity of whole families and communities, and they improve pros sects for the next generation. All women and girls have equal access to quality education, employment, housing, and health, irrespective of race, class, income, immigrant Zion Status or involvement with the criminal justice system. For more than 30 years, LINEN A has advocated for women and girls, promoting legal and policy reforms and gene resistive data collection, and supporting initiatives that improve women’s health and e expand their choices in life. Protecting and promoting her reproductive rights is essential t ensuring her freedom to participate more fully and equally in society. The UCLA has alls o been working to secure gender rights and ensure all women’s are able to lead lives of dignity free from violence and discrimination. They have been making sure that educe action privileges are equal between genders. They keep all job opportunities the as me. All opportunities are being kept equal yet women still haven’t been given an ex. al and fair amount of pay. Women have been in the workforce for generations. They strives to be equal to men and gain the same rights as them. How to cite Wage Gap Between Genders, Papers