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LABOR MARKET: A market that exchanges the services of labor resources. For the macroeconomy, this is a critical aspect of the aggregate resource markets, especially the short-run condition of rigid prices. Labor market wages tend to be rigid in short run. Such wage rigidity, was well as other short run problems, prevent labor markets from achieve equilibrium. The result is either unemployment or overemployment, both of which prevent long-run equilibrium in the aggregate market.

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SPECIAL INTEREST GROUPS:

A group of people with shared interests who have more to gain or lose from a candidate, issue, or policy and thus try extra hard to ensure that the political system is aware of their preferences. Special interest groups are the other side of the coin of voter apathy. Motivated rational choices, some people have little or no involvement in the political system others have a great deal. The study of public choice indicates that special interest groups are one source of government inefficiency. Other sources are politicians, voters, and government bureaucracies.
Special interest groups are organizations that represent the specific (or special) interests and concerns shared by groups of people in the political arena. They emerge from the same utility-maximizing rational decision-making underlying all forms of consumer behavior, including the rational ignorance and rational abstention choices that lead to voter apathy. Some people rationally choose to not be informed and to not vote, because the costs of doing so outweigh the benefits. However, others rationally choose to be informed and to vote because the benefits of doing so outweigh the costs. These people often participate through special interest groups.

While special interest groups are one source of government failure and public sector inefficiency, they are also an inherent part of any society. People have different likes and dislikes, different interests, and different concerns. Special interest groups then represent these interests and concerns in the political arena. Whatever the interest, there's bound to be a special interest group represented. Want to protect gun ownership rights? The National Rifle Association is there for you. Interested in promoting public education funding? The National Education Association supports your concerns.

Concentrated Interests

To illustrate the role of special interest groups in the political arena, consider the predicament facing Lance LaLandon, Shady Valley Vice Mayor and Chairman of the Committee for the Historical Preservation of Footwear. Lance receives periodic (daily) telephone calls from the Director of the National Association of Pedestrians and Shoe Scuffers (NAPSS). It seems as though the NAPSS Director, Angela Kunkleburgton, has a few special favors to ask of the Committee, favors that would please the NAPSS membership, all 57,290 of them, all 57,290 of whom would be willing to cast a favorable vote in the next Vice Mayoral election, all 57,290 of whom would be happy to assist overworked public servants in lawn care, mortgage payments, and tropical vacations.

The NAPSS membership includes 57,290 people who share an interest in pedestrian activities. As such, they have more to gain or lose from any government decisions that might affect their interests. A new walking path, for example, is bound to benefit NAPSS members more than others. Alternatively, a tax on shoes is likely to harm the NAPSS folks more than the rest of society.

The NAPSS is a special interest group. Because an interest group has more to gain or lose from particular government actions, it is also likely to be more involved in the political process. It is more likely to vote in elections that affect the interests of its members. It is more likely to actively campaign for candidates and issues. And it is more likely to provide financial support (both legal and illegal).

Utility Maximizers

Special interest groups arise from the same utility maximizing behavior that prompts rational ignorance, rational abstention, and voter apathy. Some people rationally choose NOT to be informed and NOT to participate in the political process because the costs exceed the benefits. They choose ignorance and abstention.

However, for others the benefits exceed the costs. They rationally choose TO be informed and TO participate. They choose information and participation. The members of NAPSS, for example, are likely to be quite involved when the Shady Valley city government looks into the construction of a new walking path. They will vote for candidates who support the path. They will campaign for the walking path. They will seek more information and pass that information along to others.

Groups Enough for All

People who choose to participate in the political process are no different that those who choose not to participate. Both are motivated to maximize utility. In fact, almost everyone is at least informally a member of one or more special interest group. Almost everyone has more to gain or lose from something that the government sector does.
  • George Grumpinkston, an economics professor at the Ambling Institute of Technology, is extremely interested in state government higher education funding, an interest shared by students Alicia Hyfield and Chip Merthington.

  • Mona Mallard, the founder and president of Mona Mallard Duct Tape Industries, is extremely interested in federal government worker safety regulations, an interest shared from the other side by Mona Mallard employees Lilith Quirkenstone and Blaine Claytonberg.

  • Hector Hamilton, a farmer on the outskirts of Shady Valley, is extremely interested in federal government agricultural subsidies, an interest shared by neighboring farmers Herb Haberstone and Harold Hoover.
People have diverse interests. They work at different jobs, live in different locations, consume different goods, have different cultures, follow different religions, belong to different demographic groups, and pursue different hobbies. They have more to gain or lose from specific government actions. All are represented by one or more special interest group. And some are motivated enough to actively participate in one or more special interest group.

Disrupting Efficiency

Special interest groups contribute to public sector inefficiency because their interests are disproportionately represented in the political process. Their motivation to be more involved means that political leaders are more inclined to consider their preferences when making decisions. But to the extent that political leaders then do not consider the preferences of other members of society, inefficiency is bound to arise.

Suppose, for example, that Hector Hamilton and his fellow farmers are each likely to receive $10,000 a year from agricultural subsidies. However, this program only costs each of the citizens in the country, including consumer Pollyanna Pumpernickel, $1 year. Hector has more to gain from the program and thus is motivated to make political leaders aware of his preferences. Pollyanna, however, has very little to lose from the program and thus is NOT motivated to make political leaders aware of her preferences.

As such, political leaders are bound to make a decision on agricultural subsidies based on the benefits obtained by farmers but NOT based on the costs incurred by other citizens. And that is a recipe for inefficiency.

<= SOCIALISMSPECIALIZATION =>


Recommended Citation:

SPECIAL INTEREST GROUPS, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: October 20, 2018].


Check Out These Related Terms...

     | public choice | voting problems | median voter principle | logrolling | voting paradox | government failures | rational ignorance | rational abstention | voting rules | government bureaucracies | political entrepreneurs |


Or For A Little Background...

     | market failures | government functions | public finance | efficiency | public sector | private sector | utility maximization | market efficiency | fifth rule of imperfection | rational behavior |


And For Further Study...

     | capture theory of regulation | rent seeking | Tiebout hypothesis | principal-agent problem |


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