Shakedown at Gucci Gulch: A Tale of Death, Money & Taxes

Ever since Mancur Olson\u27s The Logic Of Collective Action was published in 1965, if not before, the traditional conception of politics in Western democracies has given pride of place to special interests -- small groups with high stakes -- seeking favors from legislators. These groups are able to solve the coordination and free-rider problems that plague larger group interests, and get their way in Congress and other legislative bodies by doling out campaign contributions and other benefits. The groups are the predator, legislators the prey. In this article we argue that in an important range of cases, the traditional conception gets it backward. Legislators who desire money will act rationally to set the conditions under which small groups with high stakes can form, in order to shake them down for contributions. We call this a reverse Mancur Olson or ex ante rent extraction phenomenon. Legislators become the predators, individuals and groups the prey. We illustrate it with an extended case study of estate tax repeal/non repeal, and suggest several extensions. The new conception changes our understanding of the political process