The logic of pressure groups and federalism

Constructing a complete model of the relations between politicians, bureaucrats, interest groups, and voters is not an easy task. Consequently most economic models of government have to do away with some of these relations. One way to simplify matters is the so-called group theory of politics (or "pluralism”) which assumes that the influence of interest groups dominates policy-making. In political sciencel, where this line of thinking has been important for a long time, the theory is not very striking, since it isnot always clear that an interest group is anything more than a number of individuals, or firms, who share a common concern, Lg. an interest category. Thus, the theory can be made as empty or innocuous as one wishes In economics, the interest group theory of government is normally much stronger or bolder. The reason for this difference is that economists have been provided by Olson [1963] with a sharp distinction between interestcategories (which he calls latent groups), and mobilized or organized groups. As a consequence o f the rationality of free riding, many interest categories are not organized. At any point in time, (organized) interest groups represent only a subset of interest categories. Consequently, theories, such as the one formulated by Becker (1983) which explain policy-making exclusively by the interplay of groups within this subset (hence which concede no independent influence to voters, who are assumed to be "bought“, or to politicians or bureaucrats, who are assumed to be "hired"), are strong theories indeed. (...