Implication 1: There will be no countries that attain symmetrical organization of all groups with a common interest and thereby attain optimal outcomes through comprehensive bargaining.
Implication 2: Stable societies with unchanged boundaries tend to accumulate more collusions and organizations for collective action over time.
Implication 3: Members of “small” groups have disproportionate organizational power for collective action, and this disproportion diminishes but does not disappear over time in stable societies.
Implication 4: On balance, special-interest organizations and collusions reduce efficiency and aggregate income in the societies in which they operate and make political life more divisive.
Implication 5: Encompassing orgs. have some incentive to make the society in which they operate more prosperous, and an incentive to redistribute income to their members with as little excess burden as possible, and to cease such redistribution unless the amount redistributed is substantial in relation to the social cost of the redistribution.
Implication 6: Distributional coalitions make decisions more slowly than the individuals and firms of which they are comprised, tend to have crowded agendas and bargaining tables, and more often fix prices than quantities.
Implication 7: Distributional coalitions slow down a society’s capacity to adopt new technologies and to reallocate resources in response to changing conditions, thereby reducing the rate of economic growth.
Implication 8: Distributional coalitions, once big enough to succeed, are exclusive and seek to limit the diversity of incomes and values of their membership.
Implication 9: The accumulation of distributional coalitions increases the complexity of the regulation, the role of government, and the complexity of understandings, and changes the direction of social evolution.
Monday, May 5, 2014
Distributional coalitions slow down a society’s capacity to adopt new technologies and to reallocate resources in response to changing conditions, thereby reducing the rate of economic growth.
From The Rise and Decline of Nations by Mancur Olson. Nine implications arising from his relatively robust survey of the data regarding economic growth, stagflation and social rigidities. This was published more than thirty years ago but has held up well. A summary of validation and support for Olson's construct is in Explaining the Rain: The Rise and Decline of Nations after 25 Years by Jac C. Heckelman.