Sunday, July 24, 2011
Politicos and Rent Seekers: Manipulating Variables
Suppose a political party seeking control actively recruits a massive coalition of special interest groups aka rent seekers. Each group has its own interest and those interests are quite diverse. The cohesive theme of the political party is not some common thread of ideology, the theme becomes a common thread of "funding".
How does a rent seeker find funding and/or special conditions? Funding and/or conditions are secured through politicos operating through the mechanism of government. Hence a particular political party deploys a strategy of purposely attracting diverse rent seekers then acts as the consolidation agent offering funding through politicos operating through the mechanism of government. That the political party seeking control is not acting on ideology to consolidate support, rather the political party becomes a stealth mechanism of collusion leading to funding to consolidate support.
Considering the above proposition, then funding and/or special conditions must flow from the particular politicos of the political party through the mechanism of government to the special interests. Any threat to the stealth collusion, meaning any disruption of funding, reduction in funding, and changes in special conditions must be averted. If a threat appears to the stealth collusion, the political party loses control and the rent seekers lose the ability to manipulate variables.
Lets assume for a moment that such a political party acts as a stealth collusion mechanism for rent seekers. Further assume that the political party wins election and gains the objective it seeks of control. The next step would be for the politicos of said political party to immediately and generously bestow funds and/or special conditions to the coalition of rent seekers. One would then assume a massive spike in government spending with such spending falling resoundingly with the rent seekers.
However, the model of stealth collusion of a political party purposely consolidating rent seekers with the aim of manipulating variables requires constant and consistent funding. Further, the rent seekers can not sustain "growth" unless additional spending is funneled in their direction. Hence a spike in government spending as political pay back for supporting the political party must be followed by additional spending to satisfy the rent seekers and the rent seekers' particular constituency.
The model of stealth collusion of a political party purposely consolidating rent seekers quickly becomes unstable as other people [politicos] spending other peoples' money [taxpayer] on a recipient class [rent seeker] soon becomes an un-financeable proposition (run out of other peoples' money). When the spending run-up becomes clear to James and Jane Goodfellow and government finances become increasingly precarious, then popular support swings to a funding cut back. However, when funding cut back proposals emerge and before such funding is cut back the rent seekers, acting in their own self interest, spend money and manpower in organized protests against funding reductions.
The eventual funding cut back then causes the political party, sponsoring the stealth collusion, to pick winners and losers among the consolidated rent seekers. The picking of winners and losers not only causes decent among all rent seekers making up the cabal, but dissention occurs between the final chosen winning and losing rent seekers.
One must consider if the above theoretical example does or does not seem familiar to current affairs.