Proust: art and commerce

I thought this was a particularly interesting factoid to discover: that Proust apparently paid for positive reviews of his work. It’s a bit like learning that Shakespeare slept with a theatre owner. Although, given the material in some of his plays, that seems slightly more plausible.

 

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Books: Dark Money, Foundation, and the Ministry of Fear

Dark Money, by Jane Mayer

I’m no physicist, but my rough understanding is that dark matter is something that has not been directly observed, but which is believed to exert an influence on the things we can observe, and without this hypothesised dark matter, the model doesn’t quite fit.

It’s an apt metaphor for the role of political donations in the political system – not deeply discussed, difficult to observe in detail, but likely to have an impact (if not a significant one).

It seems that a critical moment for Mayer in her research on political donations was writing a profile of David and Charles Koch (they have two other brothers, but when people say ‘the Koch brothers’, they’re typically referring to David and Charles). After an attempted smear campaign against her, Mayer has published an in-depth book on political donations in American politics – and in particular, conservative political donations.

The book is mostly told through the lens of individuals. In particular, Charles and David. She chronicles their childhoods, their growth and subsequent careers as political donors. She touches on some of the other key donors, in particular networks. She also looks at individuals whose lives have been impacted – there are devastating stories of people who have suffered tremendously, employees who didn’t receive compensation, small people on the losing end of the power of the Koch brothers’ companies.

Through tracing these individual stories, Mayer tells the story of how political donations have come to exert a huge influence on the American political system. As a review in the New York Times notes:

The brothers had spent or raised hundreds of millions of dollars to create majorities in their image. They had succeeded. And not merely at the polls: They had helped to finance and organize an interlocking network of think tanks, academic programs and news media outlets that far exceeded anything the liberal opposition could put together.

It is this conservative ascendancy that Jane Mayer chronicles in “Dark Money.” The book is written in straightforward and largely unemotional prose, but it reads as if conceived in quiet anger. Mayer believes that the Koch brothers and a small number of allied plutocrats have essentially hijacked American democracy, using their money not just to compete with their political adversaries, but to drown them out.

It’s an excellent book, based on what must have been years of in-depth research. I’d highly recommend it, as one of the more detailed accounts of how capital can be used to influence academic and media systems, which in turn can influence democratic votes.

The only area where I thought the book might have been improved, was if it had provided a little more big-picture context. Particularly in historical and political economic terms. Historically, it would be fascinating to know how the influence exerted by some of today’s wealthiest donors compares to the wealth and influence of key actors during the gilded age. In turn, that leads to interesting questions of political economy – is this political use of wealth unprecedented? How has it interacted with other parts of the political system previously?

This is an interesting area, that I’ve seen some fascinating work on (research that suggests elite preferences have much more impact on outcomes, and other research suggesting that people may not vote in their own self interest). It would have been interesting to see at least some links there, from Mayer’s in-depth and valuable research, to a broader conceptual framework.

But it’s worth quoting here a statement (not by Mayer) that Mayer thought was worth including in her book:

The system is controlled by a handful of ultra-wealthy people, most of whom got rich from the system and who will get rich from the system.

Mayer is very careful throughout to allow that the donors may genuinely believe in all the ideas that they’re financing, regardless of what they stand to gain. But it’s important to note, as she does, that:

… it was impossible not to notice that the political policies they embraced benefited their own bottom lines first and foremost.

It’s also interesting with these types of books (written by journalists about very wealthy individuals – for example Virtual MurdochMurdoch’s Pirates and McKnight’s Rupert Murdoch). For example, Mayer carefully words this quote with a qualifier:

” … a lot of people got sick, and there were more birth defects in Saltville than in other parts of the state,” she asserts, although there has been no study proving this or establishing any causal correlation.

But for all those minor flaws, this is an excellent read. Well worth it.

UPDATE: Just a quick note, that given the context that Mayer’s book provides, this article at Vox by Andrew Prokop is an interesting read: The GOP can’t quit Obamacare because of their donors. It’s an interesting read.

Quotes

In his telling, he was almost feverishly bent on finding some overarching system of political theory to bridge his father’s emotional anti-Communism with his own more analytical approach to the world. He also wanted to merge his thinking about business and his interests in engineering and mathematics. “I spent the next two years almost like a hermit, surrounded by books,” he told the Wall Street Journal in 1997. Visitors to his apartment recall him littering almost every surface with abstruse economic and political texts. He later explained that having learned that “there are certain laws that govern the natural world,” he was trying to discover “if the same isn’t true for the societal world.” …

The conservative publication omitted Hayek’s politically inconvenient support for a minimum standard of living for the poor, environmental and workplace safety regulations, and price controls to prevent monopolies from taking undue profits …

In order to alter the direction of America, they realized they would have to “influence the areas where policy ideas percolate from: academia and think tanks.” …

A consequence [of charitable trusts], however, was that the tax code turned many extraordinarily wealth families, intent upon preserving their fortunes, into major forces in America’s civic sector …

Called “The Structure of Social Change,” it approached the manufacture of political change like any other product. As Fink later described it in a talk, it laid outa  three-phase takeover of American politics. The first phase required an “investment” in intellectuals whose ideas would serve as the “raw products.” The second required an investment in think tanks that would turn the ideas into marketable policies. And the third phase required the subsidization of “citizens” groups that would, along with “special interests,” pressure elected officials to implement the policies. It was in essence a libertarian production line, waiting only to be bought, assembled, and switched on …

And if there was one test of its members’ concentrated financial power over the machinery of American democracy, it was this minority’s ability to stave off government action on climate change as science and the rest of the world were moving in the opposite direction … For most of the world’s population the costs of inaction on climate change were far greater than those of action. But for the fossil fuel industry, as Mann put it, “it’s like the switch from whale oil in the nineteenth century. They’re fighting to maintain the status quo, no matter how dumb.” …

But an effort by the congressman’s staff to reach the angry constituents revealed that the letters were forgeries, sent on behalf of a coal industry trade group by Bonner and Associates, a Washington-based public relations firm …

A political minority, responding to the interests of its extreme sponsors, had succeeded in rendering the most powerful democracy in the world dysfunctional …

It was one more indication that an invisible wealth primary was shaping the discourse and the field long before the rest of the country had the chance to vote …

 

Mayer also examines the progressive side of politics, noting both the presence of political donors, but she is also willing to draw contrasts, rather than falling into false equivalence bias. One progressive operative recounts:

“I remember meeting at a restaurant in California with some of the major Democratic operatives and funders, Margery Tabankin, Stanley Sheinbaum and Gary David Goldberg. I was telling them that they needed to figure out a way to fund books on the left. But books aren’t sexy. They weren’t interested. They didn’t think that in the political culture it mattered. The Democrats were hostage to star personalities and electoral politics.” …

That year, the Clintons were in the headlines for campaign-finance scandals ranging from virtually renting the Lincoln Bedroom to big donors to taking contributions from a dubious Democratic bundler who later pleaded guilty to raising some of the money from China.

Foundation, by Isaac Asimov

It’s been so many years since I read some of the Foundation series that I can’t remember which ones I read, or whether I’d read the original novel.

Foundation tells the story of a collapsing empire, and psychologist (Hari Seldon), able to predict its collapse through the laws of psychology. In an attempt to shorten the period of disarray that will ensure (from thirty-thousand to just a thousand years), he sets in motion his own plans.

The approach felt in some ways reminiscent to Cixin Li’s Three Body Problem. In each, the driving force isn’t really the characters or their motivations, but the unfolding of a set of fascinating science fiction questions.

In Asimov’s, this is handled by having the story tell three separate points in time, each a stage where Hari Seldon’s carefully planned society must defeat external or internal threats to survive. Asimov’s writing and handling felt better than Li’s – more depth, and a little more believability to the characters. Well worth a read, if you enjoy sci-fi.

The Ministry of Fear, by Graham Greene

The Ministry of Fear tells the story of Arthur Rowe, a man with a deep sense of pity – so intense that he struggles with others’ suffering. When we first encounter Arthur he is visiting a church fete, a welcome relief from the gloom of London during the Blitz. It’s there that he accidentally receives the cake that sets of a series of surreal and bizarre chases.

The style is so surrealist that at points I wondered if Greene had decided to forgo a coherent plot as part of a broader theme, but the different pieces are explained in a coherent way in the last third of the novel. I won’t say more here [SPOILER ALERT – you can read more on the plot below]. 

What makes the novel excellent is Greene’s beautiful writing, which can make even a lazy Sunday church fete feel poignant, or transform a set of bombed out Blitz ruins into something far more significant.

Throughout, he has a very surreal atmosphere, which only recedes in the last third of the novel. He also toys with the question of pity and cruelty – what does pity drive us to do, and what does it mean for our humanity? It’s well worth a read if you enjoy Greene, although it’s not quite as good as his best stuff.

[SPOILER ALERT FROM HERE]

The plot that emerges clearly in the last third of the novel is that Rowe has stumbled onto a German intelligence attempt to get classified information out of the UK. In searching for more information, he goes through a bizarre sequence of events including being framed for a murder at a seance, surviving two bomb blasts (one dropped, the other planted), trying to cash a cheque from a widower during the funeral, and ending up in an asylum after losing his memory.

Throughout, we learn that Rowe’s sense of pity is so intense that he murdered his wife, who suffered from a painful, incurable disease. This hangs over Rowe, and Greene returns to it throughout the novel.

In the final scenes, Rowe is told that he is a murder, bringing that weight back into his life after the amnesia had lifted it from him. His parter-to-be is desperate that he not know, and so he sets out to deceive her for a lifetime; while she will carry the secret that she thinks he has forgotten.

Quotes

That attempt failed. A bomb that hit your house destroyed the cake and everything – and probably saved your life. But they didn’t like the way you followed the case up. They tried to frighten you into hiding – but for some reason that was not enough. Of course they meant to blow you to pieces, but when they found out you’d lost your memory, that was good enough …

He was bewildered: he didn’t know what to do. He was learning the lesson most people learn very young, that things never work out in the expected way. This wasn’t an exciting adventure, and he wasn’t a hero, and it was even possible that this was not a tragedy …

It was a Ministry as large as life to which all who loved belonged. If one loved one feared … He was pledging both of them to a lifetime of lies, but only he knew that … They sat for a long while without moving and without speaking; they were on the edge of their ordeal, like two explorers who see at last from the summit of the range the enormous dangerous plain. They had to tread carefully for a lifetime, never speak without thinking twice; they must watch each other like enemies because they loved each other so much. They would never know what it was not to be afraid of being found out.

Virtual Murdoch by Neil Chenoweth

Neil Chenoweth is one of the better Murdoch biographers out there. In part, that’s because he’s an excellent business journalist. Rather than trying to create a picture of a character, he hones in on the deals that have made Murdoch: mergers, acquisitions, and the like.

His book on a particular News Corp subsidiary, Murdoch’s Pirates, was at times overly complex and slightly baffling (to be fair, it’s a difficult topic). Virtual Murdoch is a similarly complex piece, in that it tracks Murdoch’s career from its very start until publication at the turn of the millennium. Perhaps because Murdoch as central character gives it something to hang from, the book feels a little more tightly knitted than Murdoch’s Pirates; it follows each stage of the deals and gambles (and Chenoweth very much presents them as gambles) that Murdoch has undertaken throughout his career.

In on instance, he outlines the leveraging the Murdoch was able to use to acquire an asset without losing equity control:

In 1985, under the US accounting standards News Corp had net assets of $166 million, which suggested Murdoch could only borrow about $175 million. He was raising new debt of $2.7 billion, fifteen times more than the banks’ lending limit allowed him. It was enough to induce cardiac failure in even his most hardened bankers. The only way that Murdoch could borrow more money was to increase his net assets, or shareholders’ equity. The easiest way to do this was to raise capital by issuing stock, as Turner eventually did with the cable companies. But it cost Turner control of his company. Murdoch was never going to allow that to happen.

Murdoch had two ways of getting around this bothersome lending restriction. First, his finance director Richard Sarazen argued that News Corps’ newspapers were worth far more than the modest values assigned to them in the group’s balance sheet. And to prove this point, he kept revaluing them … Between 1984 and 1987, Sarazen wrote up the mastheads of the group’s newspapers by $1.5 billion …

The revaluations solved half the debt-raising problem. Arthur Siskind and the legal team at Squadron Ellenoff solved the other half of the problem. Murdoch needed to raise $1.15 billion in junk money from Michael Milken to buy Metromedia. It was, as Siskind later told American Lawyer, ‘an extraordinarily complicated and very unusual financing’. Siskind’s twist was that instead of treating the loans as junk bonds, News would call it preferred stock. While in essence this would be a $1.15 billion loan, it would appear on the News Corp balance sheet as a stock issue. Because it was called a stock issue, it would be treated like an asset.

Later, Chenoweth summarises quite neatly a set of causally linked crises that he’s described:

Murdoch had never been able to afford his great move in 1985-86 to buy Twentieth Century Fox, the Metromedia television stations and to launch the Fox network. To pay for it, he moved his British newspapers to Wapping and triggered a year of violent industrial confrontation. The Wapping success produced a new debt problem that he tried to solve by taking over the Australian newspaper industry. When that plan went wrong he had been forced into a deal that left a crippling debt in a family company. Then, in the deals after Black Monday 1987, Murdoch flipped the problem back to News Corp. Cruden’s loan problem was now once again News Corporation’s lurking debt crisis.

Then documents some fascinating patterns in corporate accounts:

David DeVoe celebrated News Corp’s escape from the debt crisis with the accounting equivalent of a barrel roll. Sarazen had produced his party trick once in the News Corp accounts each year. DeVoe did it three times in the same set of accounts. Profit before abnormal items came in at $A391.391 million. Minority interests of $A70.070 million were subtracted to give a profit of $A321.321. The odds against three numbers repeating themselves like this were more than 100 million to one.

There’s a lot more in the book that’s worth reading, if you’re interested in media economics and finance. It is of course hard to know how seriously to take Chenoweth’s Kremlinology, given that he relies very much on secondary sources; but it’s an interesting read, and has experience at the AFR that gives him some credibility.

Oh, and if you’re interested in reading about the infamous ‘poison pill’, this is one of the better explainers I’ve found.

God Bless You, Mr Rosewater by Kurt Vonnegut

Kurt Vonnegut is an interesting writer, and one of my favourites. God Bless You, Mr Rosewater is perhaps the most determinedly socialistic of his pieces I’ve read. It was published only a few years after Harrison Bergeron, a short story by Vonnegut which takes a very different approach to questions of distributive justice.

The story follows a wealthy princeling, who is perceived by his father as insane when he tries to give away everything he owns, loving each and every person in Rosewater county. There are some lovely passages that contrast the Senator’s desire for love that is unique to him, from his son, with his son’s love for each and every human, no matter how hopeless they are.

There are also some lovely passages where Vonnegut reflects on distributive justice; again, in a very different way than in Harrison Bergeron.

Overall, this is well worth a read.

Quotes

The Money River, where the wealth of the nation flows. We were born on the banks of it- and so were most of the mediocre people we grew up with, went to private schools with, sailed and played tennis with. We can slurp from that mighty river to our hearts’ content. And we even take slurping lessons, so we can slurp more efficiently …

We’re born close enough to the river drown ourselves and the next ten generations in wealth, simply using dippers and buckets. But still we hire the experts to teach use the use of aqueducts, dams, reservoirs, siphons, bucket brigades, and the Archimedes’ screw …

“It’s still possible for an American to make a fortune on his own.”

“Sure-provided somebody tells him when he’s young enough that there is a Money River, that there’s nothing fair about it, that he had damn well better forget about hard work and the merit system and honesty and all that crap, and get to where the river is. ‘Go where the rich and the powerful are’, I’d tell him, ‘and learn their ways. They can be flattered and they can be scared. Please them enormously or scare them enormously, and one moonless night they will put their fingers to their lips, warning you not to make a sound. And they will lead you through the dark to the widest, deepest river of wealth ever known to man. You’ll be shown your place on the riverbank, and handed a bucket all your own. Slurp as much as you want, but try to keep the racket of your slurping down. A poor man might hear.”

“You’re the man who stands on a street corner with a roll of toilet paper, and written on each square are the words, ‘I love you’. And each passer-by, no matter who, gets a square all his or her own. I don’t want my square of toilet paper.” “I didn’t realize it was toilet paper.”

Money is dehydrated Utopia.

The Dark Tower series by Stephen King

I enjoyed the Dark Tower series quite a bit. Although it took me a few weeks to read it, it has a much longer history in the crafting. Stephen King wrote the series over decades, starting with the first book published in the 80s, through to a seventh volume published in 2004. 

Overall, it’s a good read. The series tells the story of Roland Deschain, a gunslinger, as he journeys after a mysterious man in black. Along the way he acquires companions: Jake, Eddie, and Susannah. They have adventures, battling a range of enemies, learning from Roland to be gunslingers, as they make their way to the Dark Tower. 

The story feels like a mixture of fantasy stories, Western, and apocalyptic dystopia. They travel between universes, into far-off futures where technology runs amok, and through agricultural communities eking out a living. Throughout, King tells a story that lets us connect with the characters, to fear for them and feel their excitement as they overcome challenges. 

In turn, that carries the series through the gaps in the internal consistency. Part of this has to do with the drafting. Roland starts as a figure wandering across the desert, slaughtering an entire village gone mad when they try to attack him. Later, he becomes a father figure to the band he gathers with him; although to be fair, throughout he is a cold, distant figure; part of the joy of the series is seeing him slowly warm to those around him. 

The other thing that I found difficult was the … bizarre nature of the multiverse the book inhabits. It felt hard, at times, to spot the internal logic or system that overhung everything. At the end of the first book, Roland is given cards that indicate who he’ll find from a series of portals he’ll encounter. He’s given them by his antagonist, the man in black. Why is he given them? How do they connect to anything else? I certainly don’t know. In one of the books, they encounter an enormous castle, a reference to the Wizard of Oz. There is no real event here; they simply wake up, far away from the castle. What happened? I don’t have a clue. 

You’ll see a lot of references to how The Dark Tower series ties in to King’s broader fictional universe. As someone new to King’s writing, this wasn’t something I knew a lot about. It perhaps added to the sense of incoherence that hangs over the broader story. 

For all that, this is a really fun series. It’s well written, and it carries a story delightfully over several thousand pages, with crisp action and warm characters, in a universe that’s fascinating because it is so warped, so beyond simple understanding. Well worth a read. 

Quotes from the fictional parts of the Dark Tower series: 

Eddie looked at him with love and hate and all the aching dearness of one man’s dying hopeless helpless reach for another man’s mind and will and need. 

The idea was intoxicating, all the same: an enclave of civilization in this dangerous, mostly empty world; wise old elf-men who would tell them just what the fuck it was they were supposed to be doing. 

His heart leaped up and although he didn’t know it then, it was how he would remember her most clearly for ever after – lovely Susan, the girl at the window. So do we pass the ghosts that haunts us later in our lives; they sit undramatically by the roadside like poor beggars, and we see them only from the corners of our eyes, if we see them at all. The idea that they have been waiting there for us rarely if ever crosses our minds. Yet they do wait, and when we have passed, they gather up their bundles of memory and fall in behind, treading in our footsteps and catching up, little by little. 

… folk tales are, at best, generally no more than lies set in rhyme. 

These weren’t lies, exactly, but little propaganda capsules that sounded like answers. 

‘Anger is the most useless emotion,’ Henchick intoned, ‘destructive to the mind and hurtful of the heart.’ 

Do any of us, except in our dreams, truly expect to be reunited with our hearts’ deepest loves, even when they leave us only for minutes, and on the most mundane of errands? No, not at all. Each time they go from our sight we in our secret hearts count them as dead. Having been given so much, we reason, how could we expect not be to brought as low as Lucifer for the staggering presumption of our love?

No community is easier to govern than one that rejects the very concept of community … 

They tell tales because they’re afraid of life … 

… the body had a way of forgetting the worst things, she supposed, and without the body’s cooperation, all the brain had were memories like faded snapshots. 

And will I tell you that these three lived happily ever after? I will not, for no one ever does. But there was happiness. And they did live. 

You say you want to follow Roland into the into the Tower; you say that is what you paid your money for, the show you came to see. 

Quotes from forewards and afterwards: 

More than anything else I wanted to get inside my readers’ defences, wanted to rip them and ravish them and change them forever with nothing but story. 

Then I realized that I had one more thing to say, a thing that actually needed to be said. It has to do with my presence in my own book. There’s a smarmy academic term for this – ‘metafiction’. I hate it. I hate the pretentiousness of it. 

Michael Lewis’ ‘Flashboys’

Michael Lewis is a gifted writer. He does a brilliant job of taking a complex aspect of an even more complex financial system, distilling the essence of the story, and telling it by recounting the tale of a plucky group of outsiders upsetting the system, and seeking wealth along the way.

It’s a formula that translated well onto the big screen in The Big Short, and Lewis is successful again in Flashboys. Flashboys is the story of how high frequency traders (HFTs) were able to use their closeness to where trading occurs to advantage themselves, and benefit at the cost of other investors.

Lewis does an excellent job of translating the enormous complexity of market infrastructure, commission systems and buy and sell order types, into the simple narrative that he needs to communicate. Throughout, he follows the story of the founders of what becomes IEX (or the Investors Exchange), an exchange designed specifically to foil HFT. Most of the story is the founders exploring what has gone wrong in the markets; the final acts focus on setting up IEX.

Throughout, Lewis is scathing. More so than I remember him being in earlier books, although perhaps he’s always been this way. Scathing about markets, scathing about the people who manipulate them to take advantage of others.

Another upside of all the research Lewis has done is that he digs out fascinating incidents; like the time exchanges cancelled orders Goldman Sachs had mistakenly made that would have otherwise cost hundreds of millions, or the weird infrastructure puzzle that ends the book.

If you think finance is interesting, then this is a good read, and not too technical.

Quotes

The deep problem with the system was a kind of moral inertia. So long as it served the narrow self-interests of everyone inside it, no one on the inside would ever seek to change it, no matter how corrupt or sinister it became …

Mancur Olson’s ‘The Rise and Decline of Nations’

I’d been meaning to get to The Rise and Decline of Nations for a long time; particularly after I read a meta-review that concluded that the central thesis had held up reasonably well in subsequent academic research. It’s slow going at points, but it was well worth the wait, and the read.

Olson’s central argument is that small groups can organise in such a way as to benefit themselves, but imposing costs on those around them, leaving society as a whole worse off.

As part of his argument, he sets out the mathematical argument underpinning his thinking that smaller groups will have stronger incentives to organise.

The cost (C) of a collective good is a function of the level (T) at which it is provided, i.e. C=f(T). The value of the good to the group, Vg, depends not only on T but also on on the “size” Sg, of the group, which in turn depends on the number in the group and the value they place on the good; Vg=TSg. The value to an individual i of the good is Vi and the “fraction” Fi of the group value that this individual enjoys is Vi/Vg, and this must also equal FiSgT. The net advantage, Ai, that individual i obtains from purchasing an amount of the collective good is given by its value to him minus the cost, i.e., Ai = Vi-C, which changes with the level of T his expenditure obtains, so

dAi/dT = dVi/dT -dC/dT

At a maximum dAi/dT = 0. Because Vi=FiSgT and Fi and Sg are constants

d(FiSgT)/dT – dC/dT = 0

This gives the amount of the collective good that a unilateral maximizer would buy. This point can be given a common-sense meaning. Since the optimum is found when

dA/dT = dVi/dT – dC/dT = 0

and since dVi/dT = Fi(dVg/dT)

Fi(dVg/dT) – dC/dT = 0
Fi(dVg/dT) = dC/dT

Thus the optimal amount of the collective good for an individual to obtain occurs when the rate of gain to the group (dVg/dT) exceeds the rate of increase in cost (dC/dT) by the same multiple by which the group gain exceeds the gain to the individual (dFt = Vg/Vi). In other words, the smaller Ft is, the less the individual will take, and (other things being equal) Fi must of course diminish as entry makes the group larger.

It’s worth noting that the assumption that the cost of a collective good is a function of the level at which it’s provided could be criticised – I imagine it would be possible to find examples where that wasn’t the case. You could also criticise the assumptions about constant Fi, and a few other points.

More broadly, Olson sets out the logical implications, or predictions, that follow from his argument.

1. There will be no countries that attain symmetrical organization of all groups with a common interest and thereby attain optimal outcomes through comprehensive bargaining.
2. Stable societies with unchanged boundaries tend to accumulate more collusions and organizations for collective action over time.
3. Members of “small” groups have disproportionate organizational power for collective action, and this disproportion diminishes but does not disappear over time in stable societies.
4. On balance, special-interest organizations and collusions reduce efficiency and aggregate income in the societies in which they operate and make political life more divisive.
5. Encompassing organisations have some incentive to make the society in which they operate more prosperous, and an incentive to redistribute income to their members with as little excess burden as possible, and to cease such redistribution unless the amount redistributed is substantial in relation to the social cost of the redistribution.
6. Distributional coalitions make decisions more slowly than the individuals and firms of which they are comprised, tend to have crowded agendas and bargaining tables, and more often fix prices than quantities.
7. Distributional coalitions slow down a society’s capacity to adopt new technologies and to reallocate resources in response to changing conditions, and thereby reduce the rate of economic growth.
8. Distributional coalitions, once big enough to succeed, are exclusive and seek to limit the diversity of incomes and values of their membership.
9. The accumulation of distributional coalitions increases the complexity of regulation, the role of government, and the complexity of understandings and changes the direction of social evolution.

In particular, Olson argues:

In the long run, then, multigenerational special-interest groups must tend toward endogamy. This is equally true of the South African whites, the Indian castes, and the European nobility.

Later in the book, Olson takes what I think is a very interesting piece of political economy theory, and applies it to a set of macroeconomic questions that I found far less interesting. That debate wasn’t interesting then, and I suspect recent academic debate has moved well past the questions about macroeconomic growth that were relevant at publication.

For the most part, though, I found this an excellent read. It touches on a very interesting set of questions – how does a society organise itself? and proferred what I thought were interesting ideas, that the costs of organising have an impact on who can organise, and in turn, on how organised groups can impact the distribution of benefits and costs in society. It also did it in a reasonably specific way, lending itself to testing the hypothesis. If you’re interested in political economy, I’d say the first two thirds of this one are well worth a read.

It’s helpful, as well, that most research since then has seemed to confirm his hypothesis.

Quotes

If the consumer or worker contributes a few days and a few dollars to organize a boycott or a union or to lobby for favorable legislation, he or she will have sacrificed time and money. What will this sacrifice obtain? The individual will at best succeed in advancing the cause to a small (often imperceptible) degree. In any case he will only get a minute share of the gain from his action. The very fact that the objective or interest is common to or shared by the group entails that the gain from any sacrifice an individual makes to serve this common purpose is shared with everyone in the group … The paradox, then, is that (in the absence of special arrangements or circumstances to which we shall turn later) large groups, at least if they are composed of rational individuals, will not act in their group interest.

The limited knowledge of public affairs is in turn necessary to explain the effectiveness of lobbying. If all citizens had obtained and digested all pertinent information, they could not be swayed by advertising or other persuasion. With perfectly informed citizens, elected officials would not be subject to the blandishment of lobbyists, since the constituents would then know if their interests were betrayed and defeat the unfaithful representative at the next election. Just as lobbies provide collective goods to special-interest groups, so their effectiveness is explained by the imperfect knowledge of citizens, and this in turn is due mainly to the fact that information and calculation about collective goods is also a collective good.

… the larger the number of individuals or firms that would benefit from a collective good, the smaller the share of the gains from action in the group interest that will accrue to the individual or firm that undertakes the action. Thus, in the absence of selective incentives, the incentive for group action diminishes as group size increases, so that that large groups are less able to act in their common interest than small ones.

In no major country are large groups without access to selective incentives generally organized – the masses of consumers are not in consumers’ organizations, the millions of taxpayers are not in taxpayers’ organizations, the vast number of those with relatively low incomes are not in organizations for the poor, and the sometimes substantial numbers of unemployed have no organized voice.

… there is for practical purposes no constraint on the social cost … an organization will find it expedient to impose on the society in the course of obtaining a larger share of the social output for itself.

The leadership of whatever party is perceived to be in control usually is to some extent concerned about the aggregate national consequences of the policies chosen, since there is some connection between the state of the nation and the election prospects of the party deemed to be in control.

… the power of special-interest groups cannot be defined solely in terms of their organizational strength but should, strictly speaking, be defined in terms of a ratio of their power to that of more encompassing structures such as presidents or political parties.

When ignorance is often a rational strategy for constituents, there is a substantial possibility that an interest group or a political leader will not act in accord with the interest of constituents.

The poor and the unemployed have no selective incentives to enable them to organize, whereas small groups of great firms or wealthy individuals can organize with relative ease. Thus life is not any gentler because of special-interest groups, but it is less productive, especially in the long run.

The trouble is that the current orthodoxies of both Left and Right assume that almost all the redistribution of income that occurs is the redistribution inspired by egalitarian motives, and that goes from the nonpoor to the poor. In reality many, if not most, of the redistributions are inspired by entirely different motives, and most of them have arbitrary rather than egalitarian impacts on the distribution of income – more than a few redistribute income from lower to higher income people. A very large part of the activities of governments, even in the developed democracies, is of no special help to the poor and many of these activities actually harm them. In the United States there are subsidies to the owners of private airplanes and yachts, most of whom are not poor …

There is greater inequality, I hypothesize, in the opportunity to create distributional coalitions than there is in the inherent productive abilities of people …

If the less optimistic theory in this book is right, there will not be competitive markets even if the government does not intervene. The government is by no means the only source of coercion or social pressure in society. There will be cartelization of many markets even if the government does not help.

Equilibrium theory may have something in common with the attachment of nineteenth-century physicists to the concept of an “ether” that was supposed to fill all space and suffuse itself even into material and living bodies.