Sunday, October 22, 2006

The Logic of Collective Action

The Logic of Collective Action: "Special Interests and Economic Policy
There are a lot of government policies, like airline bailouts, that from an economic perspective don't 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 I've seen 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. I'll give a brief outline of The Logic of Collective Action and show how we can use the results of the book to explain economic policy decisions."