Interestingly, the book says two things that are potentially different avenues of explanation, but may be made consistent. The one they explicitly endorse halfway through in explaining why you have this kind of overly sclerotic regulatory state, which is crushing the delivery and the supply of goods, is by an economist named Mancur Olson.
Olson published a book in 1982 called The Rise and Decline of Nations, in which he predicted that as democratic countries get richer, democracy itself gives rise to more and more organized interest groups. Those organized interest groups become demand groups who make more and more demands on the state, and in so doing, increase the obligations of the state, and through the state, obligations of the economy, which takes investable resources. And rather than putting investable resources back into productivity, enhancing investments, and expanding employment, they instead put them into the pockets of these interest groups. And the state becomes a place where these interest groups pass legislation and regulations, each one carving out a niche for itself. And so it becomes an overly balkanized, layered apparatus, captured by these special interests.
Now, Klein and Thompson kind of say, ‘Well, that’s what’s happening here.’ But the problem is that, in a democratic state, there’s an inevitability to the state being overburdened by all these demand groups. Okay, well, that’s one explanation for where this is coming from.
The problem, of course, is that there’s, in their own book, this counterfactual — sometimes explicit, sometimes implicit — that other rich countries are doing this better, European countries in particular. Well, none of those countries are dictatorships. They’re all democracies.
So, the Olsonian framework starts falling apart when you see other democratic countries with states that don’t fall prey to this kind of overregulation and paralysis, which means the real problem isn’t…
Auteur: Matt Huber
