In his book, The Rise and Decline of Nations, that all of you have been reading with great interest, Mancur Olson argues that interest groups are often a detriment to the economy. Specifically, he claims that, over time, more potential groups find a way to overcome the free rider problem. Thus, time in a stable polity leads to the formation of more (narrow) interest groups. Groups lead to demands on government, which increases the size of government (which in turn slows economic growth). Further, groups are inefficient and make it harder to adapt to technological change. This, too, slows the economy.
Olson tests his theory in a number of ways, particularly using data from the 50 US states, as well as Western economies. He generally finds that his theory is correct. Others disagree with him.
Your task is to analyze Olson's theory and his evidence. Making use of the book, our class discussions, and other readings (use Googlescholar to find oodles of pieces that extend and critique Olson's book), what do you think of Olson's theory? Does the evidence support his theory? Be as specific as possible.
This assignment is worth 25 points, and it is due at 5:00 pm on Wednesday, April 16. Good luck!
Wallis and Oates disagree with Olson’s notion that interest groups negatively affect economic growth (1988). They conducted a study where they found little to no association between the two. One of their claims is that Olson uses biased dates of statehood, especially when examining the case of the US. Another factor that they point out is that there are other economic forces that exist that Olson is ignoring when testing his hypothesis (1988). It seems to me that this argument is either looking at Olson’s hypothesis from an entirely different angle or is purposely playing with his words in a way that started out biased with the purpose of showing that Olson was wrong.
ReplyDeleteAnother study found that the age of a country is negatively correlated with it’s political stability, which is to say that as a country ages, it becomes economically less stable. While this agrees with Olson, this study differs with him in the sense that it finds very little relationship between that decline in stability and the role of interest groups (Bischoff, 2007). This study argues that in order to conclude Olson’s findings correct, all parts of his chain of cause and effect must be supported by research and that Olson’s study does not account for country-specific structures, such as adaptability. Bischoff argued that developing countries are more able to adapt and therefore allow for economic growth, while more stable countries no longer are forced to constantly adapt, so when they need to, they may see economic hardships (2007).
Olson’s chain that Bischoff refers to consists of three parts: the amount of interest groups increase when a state is politically stable and aging, the more interest groups there are the higher their influence is, and that interest groups are more focused on redistributing benefits to their members rather than benefitting society as a whole. In this case, the more influential interest groups are, the worse the economy will fare. This, to me, seems logical and is the selling feature of his argument. When interest groups have an influence on the government, it is hardly for the benefit of all of society, but for that interest’s members. The more interest groups that there are, obviously follows the more interest groups there are influencing the government for their particular interest. This leads to individual group interests getting more attention than societal needs. The more money going to individual interests, that are more focused at redistributing the benefits than creating benefits for all, the less the benefits that are gained by society, negatively affecting the economy.
While having competition of interests is important to democracy, there is a fine line between healthy competition of interests and so many interests pulling so many different ways that the country is forced into economic stagnation. There seems to be a lot of support for Olson’s hypothesis. In his study, Heckelman highlights other studies that examine the hypothesis with the breakdown of support as follows: 30 studies that support the hypothesis, 11 that have mixed support for it, and 12 that did not support his findings (2007). While there seems to be mixed results, the majority of studies support Olson’s findings.
I found Olson’s argument rather convincing and the testing of the 9 implications that were based off of the logic in his book “The Logic of Collective Action” was done in a way that his argument is easily understood. While I most certainly agree with Olson’s argument, I also agree with the notion put fourth by Ivo Bischoff, that the ability to adapt is also central to growth. I think that this actually adds to Olson’s argument, and an argument that encompasses both would be very difficult to prove wrong. Interest group’s self-focused agenda pulling the government in every direction combined with a stable government’s lack of ability to adapt to new situations creates an atmosphere where the economy will inevitably negatively affect economic growth, if not stop it completely.
Bischoff, I. (Jul., 2007). Model Uncertainty, Political Learning, and Institutions: A Broader View on Mancur Olson's Theory of Institutional Sclerosis. Southern Economic Journal, Vol. 74, No. 1, pp. 34-49
DeleteHeckelman, J. C. (2007). Explaining the Rain: "The Rise and Decline of Nations" after 25 Years. Southern Economic Journal, Vol. 74, No. 1, pp. 18-33
Wallis, J., & Oates, W. E. (1988). Does Economic Sclerosis Set in with Age? An Empirical Study of the Olson Hypothesis. Kyklos, 41(3), 397.
Is it today or Wednesday we aren't meeting for class?
ReplyDeleteIn The Rise and Decline of Nations, Mancur Olson proposes and tests his theory that stable democracies accumulate interest groups, which in turn slow the economics growth of said democracies. According to the theory, older democracies that have been stable for longer periods of time will provide conditions allowing for the formation of interest groups. These interest groups will in turn place demands on the government which are favorable to only small parts of the population instead of the population as a whole (due to Olson’s theory in The Logic of Collective Action where smaller groups have an easier time and are more likely to form).
ReplyDeleteIn addition, these groups will act as cartels and thus be slower to take action because multiple entities are being required to act as one. This slows the adoption of technological improvements, in turn further slowing economic growth. These groups force discipline on their members to prevent them acting in ways not advantageous to the group as a whole. In a graphic example from China related by Olson, members of a “gold beaters guild” each take a bite out of a member who went against the rules of the guild, because “biting to death is not a capital offense.” Olson tests his theories against the experience of the 48 contiguous states along with testing among some nations. He finds that his evidence confirms his hypothesis.
One of the problems with Olson’s study is that he uses labor unions and rate of unionization of the workforce as his main metric for interest group influence; he does not look at the number of other interest groups present in a given location. In Lowery and Gray’s work, they catalog interest groups from a number of industries and find “no support” for the Olson model. Yet this is in contrast to the findings of Heckelman. In his study of research based around Olson’s work, the majority of the work supports Olson’s findings with a quarter not supporting the findings, and the remainder providing mixed support.
Overall, I find Olson’s theory to be not entirely convincing. Olson’s evidence supports his argument, but he is too limited in what evidence he uses. I am also not convinced by his idea that stable democracies have less economic growth due to interest groups (especially because of the implication, which Olson notes and says he does not endorse, that revolutions which eliminate the existing interest group structure are good for economic growth).
However, I do find a specific part of his fourth implication, which is hardly touched on, very interesting: “… special interest groups … make political life more divisive.” This seems to have been demonstrated in recent years in the growth of spending by interest groups, especially Super PACs. As Super PACs continue to run more negative ads, people seem to be becoming more polarized than ever. This has even had the result of our government recently grinding to a halt over political disagreements. So while I am skeptical of his theory as a whole, Olson was dead on in at least one regard.
Sources:
Delete- Heckelman, J. C. (2007). Explaining the Rain: "The Rise and Decline of Nations" after 25 Years. Southern Economic Journal, Vol. 74, No. 1, pp. 18-33.
- Lowery, D. & Gray, V. (1995). The Population Ecology of Gucci Gulch, or the Natural Regulation of Interest Group Numbers in the American States. American Journal of Political Science, Vol. 39, No. 1, pp. 1-29.
- Olson, M. (1971). The Logic of Collective Action: Public Goods and the Theory of Groups. Harvard University Press: Cambridge.
- Olson, M. (1982). The Rise and Decline of Nations. Yale University Press: New Haven.
In Mancur Olson's book, The Rise and Decline of Nations, he discusses several political science theories that explain different phenomena surrounding the politics of the world today. One of the more interesting theories he proposes has to do with the amount and size of interest groups and their effect on the economy. Olson proposes that the more interest groups you see defeating the free rider problem and becoming prominent, the slower the economic growth you will see. This is due to an increase in the size of government as a part of the larger number of interest groups.
ReplyDeleteOne issue I had personally with Olson's theory was a potential hole I saw in it in regards to correlation/causation. It seemed to me that Olson's theory did not account for the lack of room to grow for certain well-developed areas. That is to say, if a country is extremely well developed and the economy is booming, there is only so much more room for the country to realistically grow in the economic sense. Whereas when you compare this to a country like Nazi Germany or Japan after World War II that had been left in shambles, their economic growth was outstanding due to lots of room to grow.
Like my colleague JT, I also used Bischoff's article in the Southern Economic Journal. Bischoff did not agree with Olson's findings on interest groups having a negative impact on economic growth at all. He argued against Olson's writing and criticized the lack of research done on Olson's part. Olson really only used the state economies, which can be vastly different from the economy of a country as a whole, and certain western economies. Many of these countries aren't in need of hyper developing which allows for adaptability, so Olson was not able to account for anything like this in his writing.
It seems to me that Olson had an idea of what he wanted to do before he began his research, and limited his research in a way that made his hypothesis seem truer than it may be, thus giving it a frame to support him. Perhaps the amount of research done was all that could realistically be trusted, but I still would have liked to seen more variety in the case examples Olson used.
My classmate Kyle brings up a great point that also came to mind for me when reading Olson's book. His fourth point really does paint a picture of what America is like today, as far as the political action of Super PACs goes. As we discussed in class, there have been numerous studies to find that increasing negativity in political campaigns leads to lower voter turnouts, and the ads that Super PACs run can certainly be described as negative. There is more polarization in America today than there ever has been, and in many cases it is not good for the country. When voters have to decide between one extreme or the other, it is the country as a whole that loses, regardless of who has won the election.
On the whole, I disagree with most of Olson's work.
Olson, M. (1982). The Rise and Decline of Nations. Yale University Press: New Haven.
DeletePosner, Richard A. "Theories of economic regulation." (1974).
Bischoff, I. (Jul., 2007). Model Uncertainty, Political Learning, and Institutions: A Broader View on Olson's Theory of Institutional Sclerosis. Southern Economic Journal, Vol. 74, pgs. 34-49
This comment has been removed by the author.
ReplyDeleteA theory presented by Mancur Olson states that the age of a democracy leads to the formation of interest groups. These interest groups forming demand for more and more government involvement which leads to an increase in size of government which would in turn cause economic growth in that country to slow. So Olson is simply arguing that the more stable a nation is the slower that nation’s economy will grow.
ReplyDeleteOlson’s theory in The Rise and Decline of Nations was supported by evidence. The way he framed his theory made it plausible for the time being. The only problem is that Olson manipulated the data in his research to make his theory work perfectly. Unfortunately this makes his theory very fragile. It’s fragile in a way because it is quite easy for political scientists to poke holes in his theory. As it turns out, many political scientists disagree with Olson’s theory because without this manipulated data his theory just flat out doesn’t work.
One way political scientists attacked the legitimacy of this theory was by examining the data Olson used. After analyzing it, anyone can see that Olson simply manipulated data to make his theory work. An example of Olson manipulating his evidence is when he used various starting dates when discussing the 50 states and their economies. As we know from our class discussion and the readings, Olson used the date that states entered the union to test his theory. So post-civil war when the southern states lost, Olson saw this as the losing states hitting the restart button. This meant that northern states were now significantly older then southern states, when in reality the relative age of the most states were not that different from each other.
Another hole that political scientists found was the somewhat obvious factor of the theory. A perfect example was given by my classmate Chris. When you compare a country with a long lasting stable government to a country like Nazi Germany post WWI. The economy of Germany after WWI was about as dead as it could possibly be, so when the new Nazi government takes over and the economy starts to boom it’s not because the government is unstable it’s because the economy could only get better.
Through further research I looked at the work of Ivan Bischoff like my classmates Chris and JT. I found this source to be rather interesting and helpful when analyzing Olson’s theory. According to Bischoff, he was displeased with Olson’s evidence to support his theory. Bischoff believed that Olson focused too much on the state economies and the national economy of the U.S. rather than looking at the world as a whole to support it. The theory was only tested with data from the U.S. but he never tried to test the theory in the UK, France, Russia, or any other foreign Nation. So Bischoff argues that the theory is not a sound theory unless it is proven in all situations all over the world.
All of this analysis leads me to disagree with Olson’s theory. At first look it sounds logical but when you get into proving it, then the theory crumbles. Although Olson did technically prove his theory he manipulated the data so that it made his theory work. Also if the theory was stable then it should work for all nations all over the world but Olson did not account for other countries. Also his theory can be characterized by saying it’s obvious by the Nazi Germany example. Unfortunately Olson’s theory does not hold up as one of the great political science economic theories.
Mancur Olson's book "The Rise and Decline of Nations" is aimed at proving reasons for macroeconomic growth, stagnation, or decline. The main issue is the effect that interest groups have on a nation's economy, mainly that more interest groups slow economic growth. Though he doesn’t claim that it is the only factor, he says that a main reason for this effect is that over time, in stable countries with unchanged boundaries, distributional coalitions (interest groups, collusive organizations) start to form and grow. The longer the country is stable, the more distributional coalitions it will have. These groups influence politics to gain benefits for their group, thereby imposing economic inefficiencies on the country. (1)
ReplyDeleteWhile some of Olson's fundamental theories seem solid, I do not agree with his overall thesis that interest group growth slows economic growth. In one of the key components of his claim, he suggested that the rate of economic growth declines as stable polities grow older, a proposition he tested using data from the United States in the 1960s. According to a study on this in Kyklos Social Science Journal in 1988, this is not the case. They reexamined Olson's hypothesis, using a large panel data set covering the twentieth century in the U.S. They found that younger states typically had relatively large governments, rather than the smaller governments one might suspect if Olson were correct. Second, they failed to find convincing evidence to support Olson's specific claim: that older states have, all things staying the same, lower rates of economic growth. (2)
Another hole in Olson's research is that it seems that most of his classification of interest groups is as labor unions. He fails to acknowledge groups in other fields that have different goals and influences, perhaps because when his book was written in 1982 these groups weren't as relevant as today or simply because of clumsy assimilation. According to the study in the American Journal of Political Science, they found no evidence of Olson's theory at play when dividing interest groups into many categories and examining each group independently. (3)
Interest groups spend loads of money on advertising to influence policy and elections, but perhaps this isn't a bad thing. The economy operates on a simple principle: when people spend money, the economy grows. As long as there aren't peaks and valleys of spending, an economy will be stable and grow as general spending grows. (4) With interest group spending continually increasing, and with not enough of Olson's theory universally acceptable in my opinion, I see no reason why we should believe that interest groups are bad for the economy.
1. Olson, Mancur. "The Rise and Decline of Nations". 1982.
Delete2. Wallis, J. & Oates, W. "Does Economic Sclerosis Set in with Age? An Empirical Study of the Olson Hypothesis." Kyklos: International Review for Social Studies. 2007.
3. Lowery, D. & Gray, V. "The Population Ecology of Gucci Gulch, or the Natural Regulation of Interest Group Numbers in the American States". American Journal of Political Science. 1995
4. Initiative & Referendum Institute. "What Impact Does Money Have In The Initiative Process?". University of Southern California.
In the text, 'The Rise and Decline of Nations,' Mancur Olson presents a variety of theories that deal with the effects of interest groups on economics in democracy. One of the key concepts that Olsen focuses on is how a stable democracy allows many interest groups to form and make demands, which ultimately has a negative effect on the economic growth. These groups demand changes that benefit a portion of constituents, rather than a nation collectively. Olson additionally believes that in a nation this size, interest groups will inevitably overcome the free rider problem and rise in power.
ReplyDeleteIn Chapter 3, Olsen lists and discusses nine implications of interest groups dominating politics and thus negatively effecting growth. A few of these thoughts state they disrupt a society’s capacity to adopt new technologies, increase the complexity of government regulation and exclude a majority of others by seeking to limit their group diversity.
There are some inconsistencies in Olson’s theory. Some of his data collected for this study is manipulated in a way that I believe favors his theories, including the way he measures of state’s ages (ie. Only counts the time from which a state joined the union). He also believes the longer a state has been around, the larger number of interest groups. While this could be true, it is impossible for these results to be completely factual, and remain consistent over many years. He is relying too much on statistics of labor unions, which is not covering the bigger picture.
I read over Brigitte Unger and Frans van Waarden’s critique of Olson’s theories (“Interest Associations and Economic Growth: A Critique of Mancur Olsen…”). They believe that over time if more interest groups form, they are less likely to have great political influence because of the wide variety of contradicting ideas. Actually, they believe that varying interests can be positive for economic growth. They also note that associations will be more likely to merge over time, ultimately creating fewer “small” groups. The data they consider proves that trades between flexibility and stability are healthy for economic growth.
I had a similar feeling that my classmate Chris did when considering the study overall. I feel as though Olson had in mind what he wanted to prove, and mixed up some data to fall in line with his thoughts. I think that while his theories could be framed to be true for a set period in time, I just don’t see how his evidence would prove to be true over different periods of time, both economically and politically.
Olson still provides valid points, and nonetheless does recognize the strong political influence that interest groups have in our country. Elections are the best and most prevalent reflection of this, but overall I have to disagree with his ideas that stability slows growth.
In Olson's Rise and Decline of Nations he argues that stable governments lead to slower economic growth. He claims that stable governments make way for more interest groups and more interest groups eventually slow economic growth while making the government larger. During all of this, interest groups are accumulating more free riders, again slowing the government.
ReplyDeleteOlson said that the longer a state had existed, the higher number of government spending and the lower its economic growth rate- Size of government is inversely related to economic growth. Olson measures the states for as long as they have existed in the union, but argues that the Civil War shattered those not in the union and those states had to start over. Olson twists a lot of his data to make it fit into his theory.
Lowery and Gray argue that Olson and some others focus too much on the growth of the economy and the negative impacts of a bigger government. They go on to say that Olson's findings ignore the total amount of interest groups, and assume interest groups can grow exponentially. Lowery and Gray say that this focus seems very misguided.
I can't say that I agree with Olson's theory that interest groups slow democracy. Olson made his main focus the United States while ignoring other countries to draw data from. I think laying a lot of the blame on interest groups slowing the economy and technological change is too broad a claim. I think the country needs interest groups more than it needs to get rid of interest groups.
In The Rise and Decline of Nations, Mancur Olson argues that maintaining a stable government leads to the developing of interest groups over time. With the development of these interest groups comes a couple of things such as more government and inability to adabt to technology. With more government and it's inability to adapt to technology results in slower economic growth.
ReplyDeleteLater in the book Olson argues that the longer a state has been around the bigger said state's government is and the slower the economic growth that state has.He argues that the unionization of the workforce of the state negatively affects economic growth. He directly connects the older states to unions and argues that the longer a state has been around the more likely the people from that state will work for or in a union. He then says that the higher percentage of union workers, the larger the government becomes resulting in low economic growth.
Overall i find Olson's theory to be correct. He has more than enough evidence for his theory to be true. " All the statistical tests that have been reported (and many others that have not been discussed in the interest of brevity) are consistent with the theory and almost all are staistically significant as well." Numbers don't lie.
In his book, The Rise and Decline of Nations, Mancur Olson gives us his theory regarding interest groups and economic growth in a nation. His theory is that the older a democracy grows the less stable it will eventually become. This, in theory, happens because the number of distributional coalitions in a democratic society rises as time goes on. When you have so many different groups lobbying for so many different things (not all of the necessarily being for the good of society as a whole), it stretches the government thin. When the government is stretched thin enough, they will increase in size so that they may deal with the issues more easily. The increase in government, combined with the fact that many interest groups are generally more interested in the wellbeing of their members than the remainder of society, ultimately slows economic growth.
ReplyDeleteWhile his theory made sense and was backed by research, Olson utilized the findings of his research in a way that would likely make one see things his way. As was mentioned in an earlier post, Olson did not use information of equal merit in discussing the economy as it pertained to the 50 individual states. He attempted to back his theory by using the dates that each state entered the union. This, again mentioned earlier, making the difference between the former Union and Confederate states out to be more significant than it was.
I disagree with Olson’s theory personally. While many interest groups are indeed in it solely for their own gain, there are many times that the wants or needs of a particular group are identical or at least similar with the wants and needs of society as a whole. Interest groups, as underhanded in their actions as they could potentially be, are, in my opinion, an asset to the economy of a democratic society.
Mancur Olson poses a couple interesting theories in his book, “The Rise and Decline of Nations.” According to Olson, more stable societies obtain more interest groups leading to a slower growth of the economy. Olson partly attributes this to the large amount of interest groups “clogging” the government, making it more difficult to advance technology. Olson believes that time is directly related to the formation of interest groups. As more time passes, the greater chance an interest group has of overcoming the free rider problem or any other organizational issue interest groups may face. Some people may agree with Olson’s theories, however in the two articles I have read the authors are a bit skeptical.
ReplyDeleteThe first article entitled “The Population Ecology of Gucci Gulch, or the Natural Regulation of Interest Group Numbers in the American States” discusses Mancur Olson’s inability to measure the amount of interest groups within States. The authors of this article, David Lawry and Virginia Gray measure the number of registered interest groups in a particular state, something Mancur Olson was unable to do. One positive aspect that Lawry and Gray do see in Olson’s study is that Olson “addresses environmental factors” (page 3). He addresses environmental factors when studying the growth and decrease of interest groups over time. Lawry and Gray strongly believe that this is necessary to do because, “attention solely to political collapse seems to restrictive” (page 4).
The second article by Brigitte Unger and Frans Van Waarden has many opposing points to Olson’s ideas. First, this article disagrees with Olson’s main theory that more interest groups negatively affect economic performance. In fact, they state that the more interest groups that arise, the less political influence they have. This is an interesting thought, which makes logical sense to me. Two large interest groups in a government are going to have more of an influence then 100 medium size interest groups, simply because all 100 of their interests cannot be obtained. Whereas, when a government only has two prominent interest groups it is more likely that those two groups will affect policy. Along with these two arguments Unger and Van Waarden use historical evidence to argue that war in fact strengthens interest groups not breaks them up like Olson suggests. This in my opinion was the most helpful article I read in retrospect to a disagreement to the research done by Mancur Olson.
I agree with Kyle when he says that he is not entirely convinced by Olson’s theory. I personally feel that Olson’s theory is somewhat lopsided. He uses the research he finds and twists it to make it fit his theory.
Another aspect I don’t like is the negative prospective he puts on stable governments. Of course unstable governments are going to have an increase in economic growth. Why? Because without this increase in economic growth this political system would crumble. Ultimately, political stability is what countries should starve for, not something they should try to avoid.
Lawry, David, Virginia Gray. “The Population Ecology of Gucci Gulch, or the Natural Regulation of Interest Group Numbers in the American States.” American Journal of Political Science. 39.1 (2008): 29 pages. JStor. Web. 15 April 2014
DeleteOlson, Mancur. The Rise and Decline of Nations. New Haven: Yale University Press, 1982. Print.
Unger, Brigitte, Frans Van Waarden. “Interest Associations and Economic Growth. A Critique of Mancur Olson's `Rise and Decline of Nations.’” Review of International Political Economy 6.4 (1994). Google Scholar. Web. 15 April 2014
In Mancur Olson's book, The Rise and Decline of Nations, he looks at, and tests, several of his theories on the rise and fall of economies. Olson proposes that the longer a democratic nation has been around, and most importantly, has been stable, the slower the economic growth will be. He says that as strong governments get stronger, that spurs interest group growth, which ultimately leads to slower economic growth. Olson also addressed the free rider problem, saying that it helps his hypothesis, because as the groups gain free riders, the economy is slowing down.
ReplyDeleteWhile Olson was correct in his findings, he was only correct when he twisted the results in his favor. Rather than looking at the big picture, Olson was most concerned about being correct and proving that. He twisted the results of states that had experienced major turmoil, like the Civil War, and “reset” their beginning years. Like my classmate Audra, I read the article by Brigitte Unger and Frans Van Waarden which disagrees with Olson. The authors point out some logical fallacies in Olson’s arguments, most notably that as more interest groups gain power, they each lose some of their influence. The way I thought about it was as a pie. There is a set amount of pie, and if you’re eating it alone, you get more pie. But as more people join you, you get less and less pie. That argument goes against much of what Olson has based his research on, as the authors looked at the big picture, not just what proved them correct.
That was my main problem with Olson’s argument. Not everyone can be correct all the time, but sometimes being incorrect in a few areas leads to expanded knowledge and a different perspective. Rather than collecting all the date and presenting it, Olson collected and presented only the data that fit his theory. Just as some people only watch MSNBC or Fox News and therefore only get one side of the news, Olson only presented one side of his argument. While that works for some people, I found it unconvincing.
In the Olsen book "The Rise and Decline of Nations", Olsen gives the readers his theory of interest groups and declining economic growth. Olsen's theory suggests that as a stable government exists, interest groups will form in order to try to lobby the government. As the society and government ages, more and more interest groups form causing the government to grow larger in order to work with the interest groups. Overtime this leads to a decline in economic growth as well as an inability to adapt to technological advances which helps slow economic growth even further. Another reason Olsen says interest groups hurt government is that the government starts to adhere to the needs of the groups rather than the needs of society as a whole. Olsen backs up his theory with some good evidence gathered from the 50 States. He argued that the longer the state has been around the more interest groups and the size of government grew. He also argues more workers entered unions which hurts economic growth as well. However his evidence is a little scewed due to the fact that he studied the states from the time they had entered the union however he says the confederate states had to start over due to the civil war. While the evidence Olsen provides is very convincing i believe it is also twisted a little bit in order for it to fit his theory.
ReplyDelete"The Rise and Decline of Nations" by Mancur Olson takes a closer look at macroeconomic growth and how/why it gets slowed down by the influence of interest groups. Olson comes up with 9 implications to help support his theory which we see at the end of chapter 3. I do believe that some of these implications make sense, such as that stable societies with unchanged boundaries tend to accumulate more collusions and organizations for collective action over time. It is inevitable that times change and people desire to change with the time. However, when it came to data used, I feel as though many of Olson’s dates that he used were biased to help him prove his point.
ReplyDeleteOlson used various differing starting dates when he used the 50 states and their economies as examples. Naturally, this skewed results a bit- conveniently in favor of his arguments. In addition, I must also agree with the point made by my classmates Chris and Sean in noting that when you compare a country with a long lasting stable government to a country like Germany after WWI, your results will be as expected. The economy of Germany after WWI will soon boom dramatically because after the war, it had nowhere to go but up. This is simple economics.
Did Olson convince me that interest groups are a detriment to the economy? Not really. I feel that there were too many problems in his research and that he would need to use the same starting point for each source of data, as well as test his theories across the world to see if it still comes out the same. I don’t believe that the economy and interest groups are as related as Olson makes them seem. With all the holes in his research, I’m not thoroughly convinced.
During a class discussion, one of my classmate stated that Olson’s theory was weak about how war destroys associated institution. This caught my interest because Olson believes that associated institutions take time to create. So mean would that all collective action would have to restart every time the government becomes decimated by war? This topic did not go unnoticed by the scholar community. Ms. Unger and Mr. Waarden published Interest Associations and Economic Growth: A Critique of Mancur Olson's "Rise and Decline of Nations. This study focuses on empirical evidence from studies on interest associations and on sectorial corporatism.
ReplyDeleteThis study critiques Olson by stating that he ‘cannot logically explain the existence of such association institutions in these countries (Unger & Waarden, 1999). They appear to as a deus ex machine in his theory’, a god introduced into a play to resolve the entanglements of the plot.
In response to Olson’s theory, they found that war was not the death of “associated institution; it creates them. In democratic countries more voluntary trade associations were founded during war time.’ In the primary countries they studied (Germany, Austria, and Netherlands) found associated institutions that had lasted through the war and some through both Great Wars.
This study found that war was not only a creator of interest associations. It has an unintended effect my modifying developing and institution association. ‘Ware time led frequently to a ‘redesign’ of associational systems’ (Unger & Waarden, 1999). This is show by the German, Austrian and Dutch trade unions. The Nazis power disbanded the unions and at the end of the war. The allied forces dissolved the disbandment. The associated institutions formed new pattern, much more comprehensive than what existed before the Nazi period. (Unger & Waarden, 1999)
In conclusion I have learned that associated institution life does not end with the stability of the government. I believe that Olson’s theory is to narrow and needs to be refined.
Bibliography
Olson, M. (1982). The Rise and Decline of Nations. Yal University Press: New Haven.
Unger, B., & Waarden, F. V. (1999). Interest Associations and Economic Growth: A Critique of Mancur Olson's "Rise and Decline of Nations". Review of International Political Economy, 425-467.
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ReplyDeleteIn Mancur Olson’s The Rise and Decline of Nations, Olson crosses many borders and creates many conclusions about interest groups and how they affect equality, government growth, and size of government through his study. Olson seeks to explain the variations of economic growth rates in the U.S. and Western civilization through the understanding of interest groups and their power. There are many other conclusions made by other analysts that agree and criticize Olson and his conclusions.
ReplyDeleteOlson states that a stable society leads to more interest groups over time. Stability leads to interest groups, interest groups lead to a variety of things: slower growth, larger government which leads unsurprisingly to slower growth, and the inability to adapt to technology which once again leads to slower growth. So in his theory a stable government directly and indirectly allows for the growth of interest groups and leads to lower economic growth. In class we discussed how Olson uses information that proves his theory and does not include all the information framed in a way that is forthcoming and honest. This makes me question the over all validity of Olson’s argument. If you cannot use the information and statistics to expose the whole truth and only manipulate the data for what fits the hypothesis there is a disconnect with the overall theory.
We discussed in class how one would account for the number of interest groups in a society and how the list of interest group would be managed, or even if it could be managed. Many of my classmates point out it is nearly impossible to control for the amount of interest groups because they vary in area, so others have accounted for this flaw in study. In the study conducted by Virginia Gray and David Lawry, they were able to successfully able to establish a census in a state to determine the number of interest groups that are present. Gray and Lawry found that the organized interest groups are unlikely to grow in an unlimited way it is ever changing and they found that the changes in growth of interest groups are long term changes in government activity and interests (25). They discuss the different patterns of interest groups and a difference in representation and write, “…this might explain why economic interests continue to dominate populations even as opportunities for noneconomic interest mobilization have increased” (26).
I agree with my classmate Audra when she says that political stability is what countries should strive for and not avoid. A country cannot trust instability because when a country is in a volatile state there is room for disaster and tragedy. Political stability is not a bad thing in fact it is a positive and many have argued that Olson’s belief that interest groups that provide stability and slow economic growth should be taken for what it is. A half truthful theory and analysis of data that is framed for his theory and incomplete.
Lawry, David, Virginia Gray. “The Population Ecology of Gucci Gulch, or the Natural Regulation of Interest Group Numbers in American States.” American Journal of Political Science. 39.1 (2008): 29 (25-26)
Olson addresses an important theory in his book, The Rise and Decline of Nations, which give us a glimpse into his reasoning behind the slowing of economies. He believes that the longer a democracy exists, the more stable it becomes, and with this stability comes an onset of interest groups. He attributes the lack of economic growth to these interest groups, which he asserts are muddying the waters of the system and causing all action to slow. As more and more interest groups form, this creates a further regression of economic growth as there is more and more groups targeting only a specific portion of people and not the entire country and less and less of them are having trouble overcoming the free rider problem. The involvement of these interest groups serves to intensify the complexity of the governmental system which is already bogged down, and this causes the economy to slow down considerably.
ReplyDeleteWhile Olson presents theories that seem plausible at the forefront, closer examination shows multiple inconsistencies and fallacies in the way he conducted his research. As many of my classmates have said, Olson skewed data to make his theory seem more convincing. When determining the "birth dates" of the states, Olson used the dates they entered the union and not the day they actually became states. So, the data for the southern states did not include their entire life's longevity, only their period after reentering the Union post Civil War.
The most convincing argument against Olson's theory that I read was that of Unger and van Waarden. Not only did they recognize the inconsistencies and skewed data that Olson proposed, they rebuked his entire theory by saying that interest groups can have a positive impact on the economy, whereas Olson's whole theory centers around the opposite. Unger and van Waarden support their claim by stating that interest groups fuel the economy with their spending, and since it's typically a consistent amount of money being spent on a regular basis, their impact is constant and fuels instead of dampens the economy. Their evidence leads me to believe that Olson portrayed interest groups in a negative light to support his theory and there are other avenues that he completely ignored to make his theory seem stronger.
India Ross
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ReplyDeleteIn Olson's book "The Rise and Decline of Nations", he argues that the longer a stable democracy has been around, the more interest groups will form to try and persuade government in their favor. The more interest groups, there is a need for larger government which in turn slows economic growth.
ReplyDeleteI would say that Olson is technically correct in his theory and does provide evidence to support it but that is only because of the way he manipulated the data. In using the Civil War as an example, he uses the date that the Confederate states rejoined the Union after the war as their starting point. In reality, people have been living in those southern states just as long as the northern states. Presenting the data in this way makes him look correct but the data really isn't accurate. It is easy to make yourself seem right when you present things with an agenda.
Along with Olson following his own agenda regarding economic growth, I kind of think of it as common sense that the longer a stable democracy has been in place, the less they can grow. Having a stable government is definitely a good thing. The examples regarding southern states "starting over" supports my opinion because if you are starting over or starting from nothing, there is only one way to go and that is up. As a fellow classmate mentioned earlier, Germany after WW1 and WW2 and Japan after WW2 both had economies that boomed because they were in such shambles. Things pretty much couldn't have gotten any worse so basically the only thing that could happen was that their economy would grow because it was the only way it could go.
In the book of Marcus Olson "The Rise and Decline of Nations" we can see a study that Olson performs about the impact that the interest groups have in the economy of the countries. Olson focuses basically in the democratic countries where there are no radical political shifts. Due to it is in these countries where the interest groups begin to form and grow. Olson highlights the negativity of these groups suppose for the economy in these countries because they performance demands and request with a personal interest, to benefit of them and not in a collective end, this suppose a negative effect for the economic growth. Thus this requests search a benefit for a few people and not for the entire nation.
ReplyDeleteOlsen talks about some implications of interest groups dominating politics and the negative aspect that this supposes to the economic growth of the countries. A few of these are: state they disrupt a society’s capacity to adopt new technologies, increase the complexity of government regulation and exclude a majority of others by seeking to limit their group diversity.
It is true that some Olson´s theories are correct, but he has others where exist some incongruences, due to there are some data that he uses in his own interest with the target that his theories seem more convincing. It must be said that he was guided by statistics from the labor unions. Olson used the date that states entered the union to test his theory. And we can see that he set a big age difference between the south states that lost the civil war and the north states when actually the difference was not that different.
From my point of view, other of his big failure was that he only focuses for his classification of group of interest in labor unions, and he had not in account another kind of interest groups that had different objectives or influences, maybe because in that moment that he performed the study these groups had not so much influence as nowadays.
From a first contact we could find successful the Olson´s theory but when we analyze it, we can realize of a lot of failures, so I am not agree with it. It is true that the interest groups look for their own interest also it is true that these interest sometimes coincide with the common interest of the nation. By other hand, there are statistic data that Olson used in his benefit to back his theories. And finally We must highlight the fact of Olson only used his theory applied to US and he did not have in account others countries where maybe it does not happened what he argued.
In Mancur Olson’s “Rise and Decline of Nations” he provides three empirically backed hypotheses in an attempt to show a correlation between interest groups and economic growth. The model of Olson’s work solely depends on a ‘chain’ or a ‘linking’ system. Validating all three arguments results in a positive correlation and thus proving Olson’s theories to be true.
ReplyDeleteThe first hypothesis Olson creates is the idea that the number of “distributional coalitions” within a country increases as a country remains politically stable. Ivo Bischoff argues that after years of research and studies, the findings conclude a mixed variation between interest groups and political stability. Years after Olson’s research, political scientists and economists from nearly every aspect of the country contested his theory with their own personal empirical data.
Rather than testing one hypothesis at a time, Bischoff conducts a joint research project to test the remaining two theories. In his findings, he showed “weak or no support” for Olson’s remaining two theories. Furthermore, he argues that, “some institutions are able to increase the probability of successful adjustment in politically stable countries” providing that, “the institutional settings co-determine the political influence of distributional coalitions.” With the results being of mixed variation, it hard to pinpoint what exactly causes the stagnant growth.
Stemming off of what Bischoff says, Unger and van Waarden contest that, “the number of associations have in fact not increased over time” but rather formed a ‘merger’ that inevitably reduced their numbers. Since the process of forming an association could take time, there can be evidence that it may very well not interrupt the overall development of a country.
Overall, I think Olson’s underlying hypothesis of an increased amount of interest groups negatively affecting a countries growth is plausible. However, given the fact that many scholarly sources have conducted their own research on the subject and came back with dissenting opinions, leads me to believe there is a flaw in Olson’s logic somewhere.
Sources:
“Interest associations and economic growth: a critique of Mancur Olson’s Rise and Decline of Nations”, Brigitte Unger & Frans van Waarden, 1999, 425-467
Olson, Mancur. "The Rise and Decline of Nations". 1982.
Bischoff, I. (Jul., 2007). Model Uncertainty, Political Learning, and Institutions: A Broader View on Olson's Theory of Institutional Sclerosis. Southern Economic Journal, Vol. 74, pgs. 34-49
In his book "The Rise and Decline of Nations," Mancur Olson argues that interest groups do damage to the nation's economy. He argues that as time goes on, more and more interest groups find a way to bypass the free rider problem which correlates with the idea that the longer a government exists, the more interest groups emerge. So with the increasing amount of interest groups and the less we see of the free rider problem, Olson argues that the government then must become bigger, which in turn slows the rate of economic growth. To back up his theory, Olson uses evidence from each state beginning with the time they entered the Union. However, this itself is a problem, as for the Confederate states, he starts with the time that they re-entered the Union, therefore ignoring their previous history. This, to me, is a major flaw with his argument and makes it look less trustworthy because it seems like he is just exaggerating the data to fit his theory. As we mentioned in class, technology is another thing that's said to be a detriment to economic growth. The argument in this case is that interest groups are not very efficient and therefore do a poor job at adapting to new technology. While this may be true in some cases, I feel like this is merely focusing on certain groups and ignoring the ones that actually do use technological advancements to their advantage. The same can be said about Olson's argument that more groups over time overcome the free rider problem. Right now, there are plenty of groups who struggle to overcome the issue, as we've discussed this entire semester. If there were sure-fire ways to overcome the issue, the ideas would spread and there would be less instances of the problem as more interest groups found ways to best face the obstacle. To be fair, when you look at what Olson presented, his ideas may look good on paper, but once you further analyze each bit of evidence, it results in an inconsistent and poorly thought out mess that he is trying so desperately hard to make work.
ReplyDeleteIn the Olson reading, he lays out a formula of stable societies = more interest groups = slow economic growth. His argument that interest groups have a negative effect on countries economy is backed up by a few examples and statistics. However, he does not mention the countries his theories do not work with. He found countries that would prove his hypothesis and make his formulas accurate. His theory is very bias to support his hypothesis and I do not agree with what his book claims.
ReplyDeleteOlson claims that as countries grow older, the rate of economic growth slows and may even begin to decline. I do not think interest groups have much effect on a countries economy. Things like war, new policy, new leadership, and other countries changing have a much bigger impact on the growth, decline, and stability of an economy
Christopher Cymny
Mancur Olson argues in his book The Rise and Decline of Nations that economies are less likely to grow at their potential rate due to factors such as the stability of the nation and the increasing power of interest groups. Olson contests that nations that have a stable democratic government will experience slow economic growth due to the rising power of interest groups. He states that over time, interest group power will increase allowing these groups to overcome the free rider problem more easily. This results in an unequal distribution of representation of interests, and thus hinders an economy’s ability to flourish.
ReplyDeleteWhen creating a theory such as this, one has to consider the scope of the claims they are making, and I believe that Olson neglected this. Looking at Olson’s data, we can see that he bases many of his points off of US economic data, both on the national level and the state level. While this may be all well and good if we are discussing what is good for the US economy, as an all encompassing world theory, it falls very short of the mark for appropriate data. This criticism has also been posed by other scholars as well, such as Ivo Bischoff in the Southern Economic Journal.
Olson makes many good points in this text, and indeed his evidence very clearly supports the assumptions he is making. However, as many of my classmates have pointed out, Olson is very specific in how he chooses the data that he presents so as to provide cohesion and solidarity to his argument, and I would have to agree that this raises the question of his credibility on the subject. I would argue that more interest group activity can potentially hinder economic growth, but it is not as black and white as Olson would have us believe.
Mancur Olsen in his book "The Rise and Decline of Nations" proposes a theory about interest groups. He believes that the longer a country is stable will lead to an increase in interest groups which in turn lead to slower growth of the countries economy. More interest groups also leads to an inability to adapt technology which again, will also lead to slow growth. Olsen also brings up the topic of labor unions and has said that the longer a state had been in the union translates to the more unionized workers that the state has.
ReplyDeleteSome on the main critiques of Olsen has been involving his data. First off, Olsen states that the origins of the southern states are younger than they actually are, which definitely helps to skew his evidence in his favor. Another critique I found was in regards to Unger and Van Waarden. They believed that too much of Olsen's data was based on labor unions and not enough on the actual interest groups themselves. Unger and Van Waarden also state that contrary to Olsen war does not destroy interest groups it creates them. They also believe that the growth of interest groups is not ridiculously high, but instead they propose that it's not just new interest groups forming but they merge as well.
The problem that I have with Olsens theory is that he only presented the evidence and twisted the evidence so that it would bolster his argument. The problem with that is that we are not looking at unbiased evidence, such as the dates of the American states that he states are younger than they really are, or as my classmates have mentioned the circumstances with Germany after WW2. Although at first is seems as if Olsen's theory is in fact accurate, while reading the critiques and thinking on my own there seem to be fallacies within Olsen's argument.
While I do not claim to be an economist or political theorist, I remain unconvinced of Mancur Olson's argument. After reading various critiques, holes in his argument surfaced making it questionable. As a history major, I was able to identify some flaws that are common amongst historical works. The study is fairly outdated, thus implying that new evidence has likely surfaced since the book’s publication. Additionally, his use of the labor unions of the 50 states as his “subjects” is flawed. While political scientists like to use states as their experiment dummies, this is not a reliable tactic when analyzing things on a longterm scale. Furthermore, I do not necessarily agree with analyzing the southern states based on their re-admittance to the Union. Prior to the Civil War, the South was home to a minority of incredibly wealthy plantation owners. The success and economic growth of those states since the Revolution should not be ignored. In other words, the pre-Civil War United States should not be ignored. The economic growth of southern states could largely be due to the forced industrialization that came with Reconstruction. Olson also neglected to explain the effect of the major increase in power, economic influence, and economic responsibility of the federal government as a result of the New Deals. Social security, welfare, medicare, and medicaide are consequences of the Great Depression and occupy nearly 50% of the annual budget. As previously stated, I’m not an economist, but surely these factors would effect the growth rate of the economy.
ReplyDeleteThe scholarship contributing to disagreeing with Olson largely cites the factors that Olson ignores, either intentionally or accidentally. One article attempted to dispute Olson by proving that political interest can actually help the economy in three main ways; first, mergers have reduced the number of associations, rather than Olson’s argument that associations have increased overtime. Additionally, war made “distributive coalitions” more “comprehensive.” Second, an increased number of associations does not necessarily mean an increase in influence. Third, interest groups are not a determining factor in economic growth. Another scholarly worked cited Olson’s lack of proper handling of “population attributes.” Additionally, the population of interest groups is not telling regarding their “mobilization.” The lack of a population model (“populations ecology theory”) also contributes to the weakness of Olson’s argument. Though Olson claims his theory applies to interesting groups, its rather unraveling that he doesn’t use interest groups in his stud because he couldn’t gather a number, yet other scholars were able to accomplish this. With much strength (and irony), Olson’s own work contradicts The Rise and Decline of Nations. According to Olson, interest groups are unlikely to form and overcome “disincentives,” thus should be unlikely to survive in a competitive environment and should “decline with density.” Additionally, interest groups are unlikely to grow in an unlimited amount, as Olson suggests, because outside factors influence the growth of interest groups. Moreover, interest groups are unpredictable regarding their growth.
Interest Associations and Economic Growth: A Critique of Mancur Olson's "Rise and Decline of Nations"
Brigitte Unger and Frans van Waarden
Review of International Political Economy, Vol. 6, No. 4 (Winter, 1999), pp. 425-467.
The Population Ecology of Gucci Gulch, or the Natural Regulation of Interest Group Numbers in the American States Author(s): David Lowery and Virginia Gray Source: American Journal of Political Science, Vol. 39, No. 1, (Feb., 1995), pp. 1-29.
The Rise and Decline of Nations is written in a highly compelling way. In particular I found it quite noble when, in the beginning chapter, Olson rails against ad hoc explanations, setting up a rigor which he hopes to keep throughout the work. However, in this section he says the following: "The reader should also be wary about whether the cases I have set out to explain are simply those that happen to fit the theory," (Olson 14). Unfortunately (for him), I think this is precisely what he does.
ReplyDeleteUnger and Van Waarden, individuals who seem to have done the best study in this regard, closely examined three specific claims made by Olson, concluding that his picture is, at best, much too simplistic. First, they examined his claim that, over time and with stability, interest groups will form in a rather linear progression, as more and more groups will find a way to overcome the free-rider problem. Using trade association data from the US, Canada, and the Netherlands, as well as trade union data from Sweden, Britain, and the Netherlands, they concluded that groups such as these fluctuate naturally, going through periods of growth and periods where many groups merge into one - actually reducing the total number. As they say "This is quite unlike the linear trend of more associations with the passage of time which Olson hypothesized."
Moreover, he claims that war, upheaval, regime change, or foreign occupation will abolish interest groups, specifically by looking at historical business interest associations in Europe in light of WWII. Countries like Germany and Austria who experienced massive, sweeping regime changes tend to have older associations than countries who had stable regimes such as Britain, Canada, and Sweden. Thus suggests, again, the the simplistic generalization made by Olson is much too simple.
Secondly, they examine Olson's claim that there is an inverse relationship between the number or interest groups and economic success. Specifically they make two points. First, political science research seems to have shown that when there is a single interest group in a particular sector, it has quite a bit more influence on policy than the total affect of a plurality of interests in a sector due to its ability to present a unified message to lawmakers. This suggests that more interest groups could, actually, be better. Second, they argue that, if a plurality of unregulated firms is better for the market, it seems that a plurality of groups would be better for lawmaking, as free competition would allow the best to gather a following and succeed. This highlights what they think is a contradiction in Olson's thinking.
Finally, they challenge the general idea that interest groups are harmful to the economy. Underlying this assertion, they claim, is the idea that the market can never have a "failure" or area of inadequacy which the market itself couldn't solve. They then go on to show several examples of market failures where interest groups helped the market. Firstly, they claim that, especially in generic products, there is a market incentive to, in essence, lie about the quality of the good because claims (such as "great tasting") can only be assessed after a transaction has taken place. However, this type of opportunistic behavior makes consumers less likely to buy in the future, hurting economic progress. This can be solved by a regulatory push with interest groups - since firms are now coerced into being trustworthy, consumers buy more and the economy is better off. Also, generally increasing this trust may reduce the risk of conflict (strikes, boycotts, etc.) which could danger the success of the economy.
DeleteSecondly, they observe that firms are often tempted by market pressures to operate only in the short-run, sacrificing research and development (R&D) to make short term profit. This lack of development hurts an economy in the long run because it will not be able to continue competition with international firms which do participate in R&D. However, interest groups could use government power and money to encourage R&D, leading to long-term benefits for the economy.
Next, they argue that groups can reduce the affects of ruinous competition by examining the construction industry. They argue that the formation of cartels can prevent situations which customers force a price down well below a sustainable level for any firm. This allows for more stability in the market and a better economic effect.
Finally, they argue that, by examining several European economies, the US, ad Canada, international data, at the very least, does not support the claim that more associations (they examine corporatism) does not affect economic growth. This argument, however, appeared, to me, to be their weakest, as several factors could have skewed the data they looked at.
In conclusion, I think there are several reasons to be skeptical of the claims made by Olson in The Rise and Decline of nations.
Source:
Interest Associations and Economic Growth: A Critique of Mancur Olson's "Rise and Decline of Nations"
Brigitte Unger and Frans van Waarden
Review of International Political Economy, Vol. 6, No. 4 (Winter, 1999), pp. 425-467
Published by: Taylor & Francis, Ltd.
Article Stable URL: http://www.jstor.org/stable/4177322
This comment has been removed by the author.
ReplyDeleteBoth economics and political science are at work Mancur Olson’s text, The Rise and Decline of Nations. Olson proposes that a nation’s stability leads to an increase and collection of interest group whom inevitably slow the nation’s economic growth. These interest groups slow economic growth by increasing government intervention which hinders a nation’s flexibility/ability to adapt.
ReplyDeleteCritiques of Olson’s work include his definitions of “stability” and “instability,” reclassification of Southern states, discounting or ignoring numbers/vast diversity of interest groups, and not acknowledging other influences (technology, adaptability of young country, war).
In order to properly evaluate stability and the collection and destruction of interest groups, one must incorporate transnational interaction and specifically war. I agree with Unger and Van Warden in their proposal that over time interest groups will fall to the wayside and new ones will follow, instances of war and other influences may increase growth even in a “stable” nation. Interest groups develop and thrive in times of war and moral tension. In a quantitate approach, Olson focuses primarily on unions, not only because of the ease of access and information, but their overarching prevalence in 20th century American, but unfortunately, this approach gives a narrow view of interest groups. Not all interest groups rise to the top of the marketplace, seek government intervention, aid, and legislation, and clog government. Encompassing interest groups actually help economic growth; it is the groups that exhibit rent-seeking behavior that slow economic growth.
I personally agree with Olson that interest groups, on average, clog government and create stagnant political climate as government resources are spread thin, locked in, and legislated to those of heightened economic means. That being said, I also agree with the incoming critiques in Olson’s methodology. Recently The Rise and Decline of Nations celebrated its 25th anniversary, and in the years following publication, other economists and political theorists soundly agree that Olson needed more inclusivity in his analysis. Hindsight is 20/20, I believe given the resources and a view of current international politics Olson could further develop his argument.
Mancur Olson’s text, ‘The Rise and Decline of the Nations’ argues that interest groups have a negative effect on economic growth. Olson says that stability leads to more interest groups, which inevitably overcome the free rider problem and rise in power. Those groups demand more from the government, leading to a larger government. Think about it – when you have so many groups lobbying for so many issues, it will stretch the government thin and it will need to grow. Olson says interest groups benefit only a portion of constituents. This slows economic growth. Interest groups inability to adapt to technology also slows growth. Olson lists nine implications of interest groups controlling politics, including disrupting a society’s ability to adopt new technology, increasing government regulations and excluding other interest groups by limiting their group diversity.
ReplyDeleteOlson has nice ideas that support his theory – he studied the United States in the 60s and 70s and concluded older states have higher percentages of union workers, higher government spending per capita, and lower overall economic growth. However, as we all pointed out in class, there’s an issue with correlation and causation. Olson didn’t account for the lack of room to grow in well-developed areas. Younger countries obviously have higher economic growth because there is room TO grow. How much more can China realistically grow? I also believe his data is manipulated to favor his theories – look at how he measures the ages of certain states – from the time it joined the union. Older states had more time to form unions, which is the basis for his analysis.
Would Olson argue that economic stats restart after a government faces war? I found a study by Ms. Unger and Mr. Waarden: Interest Associations and Economic Growth: A Critique of Mancur Olson’s “Rise and Decline of Nations. This study basically called Olson out for studying labor union stats instead of all interest associations (Unger & Waarden, 1999).They argue war isn’t the death of the economy, but the creator. They also didn’t like how Olson primarily studied the US and they looked at Germany, Austria and Netherlands and found associated institutions that lasted through many wars. The Nazis separated from the Union and the associated intuitions formed a more comprehensive pattern.
Unger and Waarden also point out as interest groups gain power, they lose influence and I like how my classmate Zevi states: “The way I thought about it was as a pie. There is a set amount of pie, and if you’re eating it alone, you get more pie. But as more people join you, you get less and less pie. That argument goes against much of what Olson has based his research on, as the authors looked at the big picture, not just what proved them correct.”
I think Olson’s theories are too narrow in order to support his claims. One of the first things you should do after you try to push a theory is look at opposing sides and critiques and his book seemed one sided. He didn’t collect all the data and present it accordingly.
Bibliography
Olson, M. (1982). The Rise and Decline of Nations. Yal University Press: New Haven.
Unger, B., & Waarden, F. V. (1999).
Interest Associations and Economic Growth: A Critique of Mancur Olson's "Rise and Decline of Nations". Review of International Political Economy, 425-467.
In conclusion, interest groups don't damage an economy, at least not as much as Olson leads readers to believe. War, new leaders, catastrophe or other such occurrences the reason for a rapid economic growth as a country recovers.
Delete.
ReplyDeleteIn the Rise and Decline of Nations, Mancur Olson states that stable government leads to the growth of interest groups over time. Interest groups lead to bigger government and the inability to adapt to technology. All of these things lead to slower economic growth. Olson also argues that the longer a state has been a part of the union or gained statehood the slower the economic growth. I feel that Olson manipulates some of the data to fit his theory. Lowry and Gray make the argument that Olson focuses too much on the on the growth of the economy. They also mention that Olson’s data excludes the total amount of interest groups and assumes that interest groups can grow infinitely, which is somewhat unlikely.
ReplyDeleteOverall, I find points of Olson’s theory to be accurate. He does present convincing evidence to support his claim. However, I think Olson could have used more data. I think that interest groups do play an important role in our government and are not just hurting it.
-Carly Stover
In Mancur Olson’s, The Rise and Decline of Nations, he builds on his first book, The Logic of Collective Action, by explaining why some groups overcome the free-rider problem and then he argues why interest groups will eventually lead to the decline of the democratic state, economically. He argues that a government with a stable economy is where interest groups will thrive most since interest groups have more opportunities to receive federal aid in different ways. This leads to interest groups calling for demands on a government budget to further their success as a group, but no necessarily the national economy. With so many interest groups demanding government aid, they prevent national economic advancement.
ReplyDeleteOlson’s theory has several large flaws though. Firstly, he concludes that interest group activity leads to economic decline by analyzing information only surveying labor union activity. This is problematic because Olson conjures up a theory about affects interest groups have on economy while using empirical evidence that doesn’t even analyze or account for interest groups. Also, there is no official way to acknowledge what constitutes an interest group, or how many of them there are in a given area. Because of this reason there are no ways to follow the movements of all interest groups thus any hard evidence to support his claims are extremely questionable. In his article in the Southern Economic Journal, Ivo Bischoff argues that one of the primary flaws in Olson’s piece lies in his inconclusive research.
Olson argues that in a stable and successful economy, Interest groups will slow down the economy by increasing the size of government thus causing a need for funds to be allocated over a wider range of space. My fellow classmate, Chris, also feels that Olson’s theory is flawed because he does not address how a nations economic success can hinder them from further success. I disagree with his reasoning that Olson’s theory is flawed because it fails to recognize that when an economy is already booming it will not grow to be more successful because it will peak. The idea that if a well-developed country has a booming economy then their success holds them back from further growth is false. What I believe to be more factual is that countries that have extremely weak economies have more potential for great success only because minor advancements are so rewarding. This in turn makes minor economic advancements from largely successful economies look less relevant, but a gain is beneficial no matter the conditions.
As numerous of my classmates have mentioned, Mr. Olson, in his "Rise and Decline of Nations", talks about how stable democracies lead to the creation of interest groups, which he believes leads to the slowing of the economy. Olson formulated a theory and used evidence to back up a lot of his claims as to why he thinks this is so. While people like Wallis, Oates and Bischoff disagree with his arguments and question whether or not he even did enough research to make the claims he did, it is important to note that Olson didn't do horrible for his time. The theories may seem outlandish now, but they fit in with the time frame he lived in. The main argument that Olson makes is that the increase in interest group influence leads to an increase in demands for a larger government which then slows down the growth rate of the economy. I don't think that in itself is a ridiculous theory, but I agree with my classmates and Wallis, Oates and others, that the claim that economic growth can be based purely off the age of certain states. As discussed by my fellow classmates, Olson cherry picked and manipulated data to fit his narrative and arguments (like resetting the south's state ages due to the civil war), thus making his evidence look solid. I do agree with the side that says that this was disingenuous of Olson to do, but I don't agree with that idea that all of his arguments are now defunct. I think Olson brings up some great points about interest group growth and the relationship it has states or countries. One can see clearly that the former confederate states are growing at faster rates then the Northeastern states. I think this has a direct correlation with Unions, which Olson has talked about in depth. I think this portion of his arguments and theory are very much legitimate opinions in today's world. States like Michigan have seen population losses in recent censuses (2010 specifically). Also, I remember reading in a newspaper a few days ago that West Virginia was most likely going to see a decline in population in the 2020 census. Both are Michigan and West Virginia are Union states and that cannot be ignored. However, there are states in the north, like Indiana, that are conservative and aren't growing like southern states are. So, I don't think this is an ideological problem, but more a perception problem. The north is seen as "old and worn out" in comparison to the south. I think Olson did a good job at finding some coincidences between Union/Interest group strength and economic growth, but he wasn't able to put all the pieces together. I guess what I think about Olson's work is that it was a very good start for his time and now we must use the parts of his data that is useful to find a better theory. I think a theory is only useless if it uses no facts whatsoever. Olson clearly used a decent amount of facts into creating his theory on this matter.
ReplyDeleteMancur Olson’s book, The Rise and Decline of Nations, is seen by many as a summary of his previous works, displayed in a way that presents his theory of the interest group’s role in the growing nation. He felt that strong industries would be able to create, for lack of a better word, a "monopolistic" legislative branch. It’s possible that, as the United States grows older, interest groups would be able to grow to tremendous sizes. In turn, a sound democracy would begin to harbor private coalitions that can exhibit a very strong political force, when necessary. However, I question the degree to which size can actually be an influential factor of United States politics. I don’t necessarily disagree with all of Olson’s work. In fact, I thought he was spot on, with reference to much of his analytical process.
ReplyDeleteI do feel his, and his opposers, end results were inaccurately stated. Individually, his assertions about strong interest groups having power in the government, and a large government hindering economic growth, were spot on. However, I don’t agree with an attempt to combine the two, and tacking on that the bit about groups being able to weed out free riders. In reference to the free riders comment, I feel that a growing interest group will only attract more free riders, if nothing else. They would be harder to monitor, and certainly less manageable, especially when looking at a national level. The other issue, stating that an incursion of strong interest groups within the political process would force the government to geo wot economically disastrous level is irresponsible. He does have data to support his argument. However, the data was very selective and a significant portion is dated and loosely applies to the capitalistic economy of the United States. Likewise, his opposition manipulated their data to form their own contradictions.
Obviously, formulation of a theory, within the boundaries of political science, is significantly different from doing so within the context of biology. In biology, there is only so much to account for and, generally speaking, scientific facts are permanent. Formulation of a political theory is bound to become subject to contradiction, as it isn't an exact science. I believe, where Olson went wrong, was his need to create an all inclusive theory, designed to summarize the inevitabilities of an interest group-based government. Referring to the United States, and what it has become since 1985, there has been a significant change in both its political processes and the mentality of its citizens. An attempt to apply such a strict set of rules to such an obscure country, is what makes Mancur Olson's theory questionable.
In Mancur Olson's book he uses the argument that the more stable a government is, then less economic growth will occur. He attributes this in large part to interest groups, citing that the more stable a government is the more likely interest groups are to come to fruition. His reasoning for this is that interest groups hold up economic progress because they are only making the government larger and harder for any type of legislatures to "flow" through it.
ReplyDeleteThe main test that Olson uses for the government stability theory is by going through the states based on how old they are and then looking at the states economic growth rates. This test mostly concluded that the longer a state was around, the slower the economic growth rates. Most of these numbers can be contributed to older states having a larger union worker force, which he feels negatively affects the economy of each state. Olson draws the parallel that larger unions equals more government, and more government equals slower economic growth.
I agree partly with Olson's theory that larger governments tend to slow economic growth, but not entirely with the notion that stable governments are bad for it. In my opinion the size of the government does not necessarily have bearing on how stable it is, as its possible to have a huge and unstable government. So the ultimate answer would be to cut down the size of the government, unions, and interest groups but keep most of the same policies in place to keep the economy going. So overall I think his tests prove more or less that size kills the economic growth, not the stability.
In Mancur Olson's "The Rise and Decline of Nations" he relies on a theory that stable nations create a habitat that is ripe for interest groups to form, for those groups to demand the government of more things therefore growing the size of the federal government, and finally slowing down economic growth. He compares Germany and Japan with Great Britain to show that Great Britain economy slowed while Germany and Japan's exploded after WWII because those two countries in a sense were "new" because of the new governments. Many could argue that Great Britain was new in the sense that much of the country was bombed to rubble during the War. Also, he does not take into account the massive amount of foreign aid received by Germany and Japan after the war. Also, because Germany and Japan had already much of it's infrastructure built for their war machines, all they needed to do was to convert them to produce peace time products.
ReplyDeleteAnother set of examples Olson used was the former states of the Confederacy in the American South. He considers the Southern states that seceded new once they rejoined the Union. This is mainly done because it fits his theory of new states have higher economic growth. He does not count states who never left the Union but those border states (Kentucky, Maryland, and Missouri) did experience a large amount of upheaval and instability throughout the Civil War.
My last critique of Olson is that he does not provide very good evidence that the growth of government leads to slower economic growth. Though he does focus on post-WWII, a good theory would work in any time period. During the Great Depression FDR greatly expanded the size of the government through the New Deal but economic growth was seen, this could also be attributed to the war effort brought on by WWII. It seems though that Olson has many theory that could work but there is always a caveat.
I find it hard to agree with Olson's theory based on the holes and many caveats he has in his theory. I do not believe that interest groups cause economic stagnation.
In Mancur Olsen's book I agree with him that an increase in the size of government which slows economic growth. So he is saying that interest groups have a negative impact on economic growth. Others have disagreed with Olson. There was a study were there was no association found between the two. One argument that Olson had was that as a country ages then the economy becomes less stable. There was another study that agreed with Olson on this argument.
ReplyDeleteStability leads to a collection of interest groups which leads to slower growth. The longer that a state has been around the larger the union. Which brings higher government spending and lowers its economic growth. So if this is true then it will hurt governments. Unless there can be some stability. So if there was stability then maybe Olson's theory would be wrong but it is hard to do that because the increase in government does lead to slower economic growth.
Mancur Olson, one of the premier minds behind generally accepted political-economic theory, offered perhaps his most famous theory in The Rise and Decline of Nations. His theory, as many of my colleagues have stated, is that the longer a polity exists, the more stable it becomes, and with that comes the formation of more interest groups. Naturally, as said interest groups begin to proliferate, the demands placed on government grow accordingly, resulting in logjam that eventually slows economic growth. Having said that, I believe Olson is oddly misguided in his assessment of interest group activity and how it affects economic growth.
ReplyDeleteMany of Olson's examples, such as Germany post-WWII and southern states post-Civil War, seem to be too obviously skewed to be credible. Yes, in these unstable situations the economies of the respective states grew, but where else could they have gone? Germany's economy was absolutely decimated. Much of the former Confederacy, and also the Union, was similarly in shambles, nearly rock bottom. The article written by Unger and Van Waarden that Audra referenced in her response seems to sum up my thoughts perfectly regarding Olson's theory. Yes, the way he presents it seems to be logical and solid at first glance, but there is nothing to it. Logical fallacies (coming from somebody whose philosophy background is only Philosophy 100 as a GEC) abound in Olson's assessment of interest group influence. Obviously, that as more interest groups arise, the respective amounts of influence goes down. Nothing is infinite and can be distributed indefinitely. Why has average family size in the US gone down in the past 100 years? Parents realized that money can only be allocated so many ways before the money no longer adequately covers each member of the family. Similarly, as more interest groups arise, each will have less relative influence on government than if there were only one to focus on.
In closing, I do respect Olson's opinion, but I find it kind of odd; odd that a scholar like him would commit these seemingly basic mistakes when forming his theory. At first glance, it makes a lot of sense, and probably does when only examining part of the argument, but it's thin as paper.
Anthony Cicconi
Mancur Olson hypothesizes that stable democracies allow for interest groups to form, by way of these interest groups forming and flourishing, economic growth declines. In his book The Rise and Decline of Nations he tries to prove this hypothesis by showing how governments that have been around the longest, and have been successful are slowly declining economically. He believes this to be the truth because he says as more and more interest groups form the pressure they put on the government will slow the government down, and focus more on what the interest groups want. This cause and effect concept is called Institutional Sclerosis.
ReplyDeleteOlson continues his argument by say this action makes the government slow down and focus more on what the interest groups want, instead of more economically effective things. Mancur calls these types of interest groups “cartels” using funds to lobby things in Washington that will only help their businesses out and not the entire population.
Since the publication of Mr. Olson’s book he has gained a lot of criticism pertaining to the research he did while proving his ideas. Many people have responded in scholarly journals showing that there is information out there to dispute his findings. The concept of Institutional Sclerosis is a concept that has been argued since the publication of The Rise and Decline of Nations. Many people have done studies that agree with Mr. Olson’s findings and believe them to be true; however on the other the studies have shown mixed answers.
For the most part I believe that Mancur Olson’s thoughts and findings on this concept are true to his perspective, but his perspective was tunneled. He never took into consideration how may little things that happen in states that may make their economics surge or decline. The main problem that I have with his research is that he never took into consideration for smaller interest groups. He only used labor unions in his example, this is not a great sample when trying to find out how interest groups affect economic decline. Never once did he include a thought about Super PAC’s which in today’s government plays the biggest role. One other small problem I have with his research is he using states stable boarders, as well as a states age and growth to show regression. Problems lie within this matter constantly, natural disasters, as well as huge economic recessions placing tough times on industries in certain states. Mancur at the time of his research used what he could in the best way he could, but there are very big disputable facts that make his work to this day a very conflicting concept.
Bibliography:
1. Heckelman, J. C. Explaining the Rain: "The Rise and Decline of Nations" after 25 Years. Southern Economic Journal, Vol. 74, No. 1. 2007.
2. Olson, Mancur. The Rise and Decline of Nations. 1982.
In his book, The Rise and Decline of Nations, Mancur Olsen’s theory is very simplified. Like my classmate JT Pittman states, this makes Olsen’s argument easy to understand. I do think, however, that Mancur Olsen oversimplified his basic argument about distributional coalitions in stable democracies. As we saw with special cases in the American South and France, Olsen’s argument didn’t always work perfectly. So, he had to add in other factors to make these two exceptional cases work with his argument.
ReplyDeleteThat being said, I still agree with Olsen’s underlying premise that distributional coalitions slow down economic growth in stable democracies while encompassing coalitions can aid growth. One area where Olsen did not give as much attention as I would have liked him to his in the cultural/ethnical make-up of democracies. Cultural/ethnical make-up can have a huge affect of what types of coalitions are dominant in democracies. Olsen did examine this a little when talking about the homogeneity of Sweden, but he could have examined it more when talking about United States. In particular, I believe that heterogeneity, to a point, helps the growth of democracies, but homogeneity is what leads to economic growth in the long run thanks to more encompassing coalitions.
One article that I came upon, “Interest Associations and Economic Growth: A Critique of Mancur Olson's ‘Rise and Decline of Nations.’” by Brigitte Unger and Frans van Waarden was highly critical of Mancur Olsen. In their article, they argue that mergers have actually reduced the number of associations, war has strengthened “distributional coalitions” not weakened them, and interest associations are not necessarily detrimental to economic performance and growth. I did find some problems with their evidence, however. Take their argument that mergers have actually reduced the number of associations, for example, that appears to be true by the evidence that is provided, but forgets to mention the complex federal structures that many associations now have. The Chamber of Commerce, they would say, is an example of a merger that has reduced the number of overall associations. This is true, but Unger and van Waarden are forgetting that localized business associations that fall into the wider Chamber of Commerce umbrella can take on minds of their own. In the 2010 election the Chamber of Commerce donated almost exclusively to the Republican party. Not all local business associations that fall under the Chamber of Commerce umbrella agreed with these one-sided donations that the umbrella was giving, so some of these local business associations threatened to leave the group (http://www.rawstory.com/rs/2010/12/07/underreported-primary-states-shun-chamber-commerce/). In short, just because we have seen the merging of associations does not mean that there still aren’t the localized, small “distributional coalitions” that make up these more “encompassing coalitions.” While we must add in a some more factors into Olsen’s argument to make it work, it still, for the most part, rings true today.
Unger, Brigitte and van Waarden, Frans. “Interest Associations and Economic Growth: A Critique of Mancur Olson's ‘Rise and Decline of Nations.’” Review of International Political Economy Vol. 6, No. 4 (Winter, 1999). pp. 425-467.
In Mancur Olson’s The Rise and Decline of Nations, he theorizes that interest groups, over time, can harm the economy. He claims that over time interest groups will be able to overcome the free rider problem, thus making them more direct and giving them influence on the government. This influence will cause an inflation in the size of government; with a larger government and more interest group power there will be inflation and stagflation. Firms and unions with “monopoly power” will control the economy.
ReplyDeleteAccording to David Lowery and Virginia Gray from their article “Interest Group Politics and Economic Growth in the U.S. States”, Mancur Olson’s evidence for his theory is “incomplete”. He did little to study the relationships the correlate to the growth of interest groups power over time. Policies that would potentially affect the growth of interest groups is also ignored in his work.
Though Mancur Olson did not incorporate all of the relationships he should have into his study, I do believe that he is on to something when he says that more powerful interest groups are a detriment to the economy. With interest groups gaining more power and overcoming the free rider problem, they will gain more members with the money to streamline their group. This narrowing of the group will cause the group and other powerful unions to gain power over the money circulating within our economy. I agree with his theories on the “monopoly power” of the firms and unions. With more control over the money they will be able to raise prices of products, this inflation will then lead to stagflation as the wages of the groups’ workers will most likely come to a stand-still meaning that no one will be able to afford the products of other groups.
Mancur Olson. The Rise and Decline of Nations.
Virginia Gray and David Lowery. “Interest Group Politics and Economic Growth in the U.S. States. American Political Science Review. Vol. 82. (1988).