Concentrated vs. Dispersed Interests
By David Henderson
From my former student, Michael Williams:
What I am wondering, or maybe proposing, is that as communications become easier and require less effort (i.e. writing an email as opposed to writing a letter) and information becomes easier to access will special interest groups lose their power? My reasoning follows (from teachings in your class):
Special interest groups have a lot of power in the political and public interest world because they can rally support within their specific “area” or “field” to influence public officials to pass advantageous (to them) legislation. One example used in your class was the subsidies [actually, import quotas, DRH] to the sugar industry. It is worth the time and effort for a sugar grower to write to his legislative representative to advocate that the government continue to subsidize the sugar industry. It is not worth it for the average consumer to write to his legislative representative to stop the subsidies going to the sugar industry since he may see only an eight or nine cent drop in price (I’m completely making that up).
But will it become advantageous to the average consumer to write (or communicate by some means) to his representative to stop subsidizing sugar as the opportunity costs drop? In the past you had to put pen to paper and mail the letter in but now you can simply write an email (or twitter). I realize the the sugar grower also has the same ease in communications that average consumer does but I think that the opportunity cost for the consumer is approaching the gain (savings in products they buy) they would see at the supermarket.
I think there will be a shift in the direction you say but that it will be small.
First, although the opportunity cost of writing the Congressman does approach the potential gain from eliminating the sugar import quota, that’s not the right comparison. Even if the potential gain from eliminating the sugar import quota were a multiple of the cost of communicating with the Congressman, the relevant comparison is between the cost of communicating and the expected value from contacting the Congressman. This latter equals the reduction in the probability of the quota being renewed times the gain to the consumer if the quota is not renewed. Because this probability is extremely low, the expected value is likely to be well under one penny.
Second, what I’ve heard (and I’ve forgotten where but I think an activist told me) is that Congressmen don’t pay much attention to e-mails precisely because they’re so cheap to generate. That same person told me that if a member of the House of Representatives gets even 10 stamped letters on an issue that are all in one direction, he/she will pay serious attention. So we’re back to the old-fashioned letter. It’s kind of a Gresham’s Law thing going on here.
Finally, though, what does change substantially in the direction of the effect you think will happen is the cost of getting information. Now it’s much easier for consumers to get the information that the lobby had little trouble getting. That effect goes all in one direction.