Interest group is a group of
individuals who come together to pursue some of shared interest; usually wanting
to influence government policy. Interest is the thread holding the group
together. “There is no group without its interests “(Bentley A 1949). This
shared interest can be ideological, economical, religious, political etc.
According to Mancur Olson (1965) ideological motives alone are not sufficient to
bring the continuing effort of large masses of people. He quotes Max Weber as
saying that “in a market economy the interest in the maximization of income is
necessarily the deriving force of all economic activity”. (Weber pp.319-320)
Hence this paper is concerned with interest groups organized with significant
economic interest.
Government itself is a kind of interest group or at least a mix of different
interest groups. “Governments consist of multitude of actors; politicians, who
must seek political support from various groups, the bureaucrats, technocrats
and so on.” (Krueger 1990) Every one of these interest groups is constantly
trying to further its interest. Politicians have an interest in re-election.
Bureaucrats have an interest in expanding their pays and perks. Especially in
second and third wave democracies this struggle is more naked. In these
countries some interest groups are even more powerful than the state. The
interest of the state is subservient to the interest of the group. The case of
military establishment in Pakistan is one such example. (Askari H 2000) No
government would dare to ignore the ‘advice’ of such an interest group. In this
context not hearing to interest groups is no option. The basic concern for
policy makers is how to find a balance between conflicting interests. Nature of
political system and institutions also affects government- interest group
relationship. (Thomas 2001) However the paper assumes that the government is a
neutral body representing the public good. Hence the paper deals only with
groups pursuing their economic interest from outside the government.
Interest groups exist to further the cause of their members. They spend time and
resources in demanding that government do something. It guides resources to
non-productive activities. Sectional interests are earned at cost of public
good. Hence interest group activity is not believed to be good for growth
process. (Olson 1982)
Interest group activity slows down decision making and raises the cost of policy
formulation. It erects entry barriers and complicates the role of government. It
reduces the society’s capacity to adopt. Trade Unions support their members even
for wrong reasons. It reduces the powers of the technocrats to formulate policy
even for future and creates incentives which do not induce maximal efficiency.
One important feature of interest groups is that they proliferate very rapidly.
Rita McWilliams identifies more than 2000 interest groups in America. As the
number of players who seek redistribution of gains of growth increase, the rate
of growth declines mainly due to their non-productive activities. Whenever a
government policy has clearly identifiable beneficiaries or victims, those
groups will tend to organize in support of or in opposition to the policy. These
pressures often shape economic programmes and policies in ways that are not
consist with the ideal resource allocation and goals initially envisaged. For
example the infant industry argument is invoked for protecting domestic industry
from foreign competition. It gives monopolistic power to domestic entrepreneurs.
Once a system of protection against imports is in place, protected producers
generally lobby to protect, and then raise the benefits, comparing this
protection to other protection levels. Likewise unprotected groups lobby for
protection on the ground that their case is as strong as of protected one’s. Car
industry in Pakistan is good example of infant industry protection. Once the
protection gets in place every government is hostage to it. Owners being
powerful lobby group reap the benefit of rent seeking opportunity once created.
This does not mean that government should exist to wipe out the interest groups.
‘government must be designed to control and channel faction rather than prevent
it.” (Madison J) Struggle and demand of interest groups is not always negative.
Interest groups have immediate incentive to do the spade work necessary for
intelligent policy inputs. Conflicting interest groups can be a good source to
bring forth pros and cons of matter. In furthering the cause of their members
the interest groups often further the cause of other members of the society. For
example the pay rise won by trade a union is also beneficial for members of
other unions. Struggle of interest groups has been able to get trade barriers
removed which is helping billions of consumers round the world. WTO is prime
example of Trans National Corporations’ successful effort to get trade barriers
removed. In American context Citizens for Tax Justice (CTJ) is prime example of
good interest groups. The good work by the group was instrumental in bringing
about major reform in United States Federal Tax Code. In Britain successful
struggle by Anti-Corn Law League benefited millions.
The agenda of the interests groups can be both positive and negative. There is
no harm in listening to their point of view. “An early communication with the
key interest groups may be appropriate”. (O.S.T guidelines 2000, p.7) But as
government is supposed to be the guardian of general public interests, it should
evaluate the demands of the interest groups on the merits of their affect on
general public good. Public good should be the sole criterion for public policy
decisions.
References
Askari HR 2000, ‘Military, state and society in Pakistan’, McMillan, Houdmills,
England.
Bentley A 1949, ‘The process of government’,
Principia Press, p.211
Guidelines 2000: Scientific advice and policy making, Office of Science and
Technology, ww.ost.gov.uk
Viewed on 21/04/2006
Krueger, AO 1990, ‘Government failures in development’, The Journal of Economic
Perspective, vol.4, no.3, pp.9-23.
Madison J as quoted in ‘The production backers”, AP American Government.
McWilliams R, ‘The best and worst of interest groups; from lifting up the poor
to shaking down the elderly”, Look Smart, Washington monthly.
Olson M 1986, ‘The rise and fall of nations’, Yale.
Olson M 1965, ‘The logic of collective action ‘, Harvard University Press.
Thomas, CS 2001(eds.), ‘Political parties & interest groups- shaping democratic
governance’, Lynne Reinner, 1800, 30th street, Boulder.
Weber M as quoted in Olson M 1965, ‘The logic of collective action ‘, Harvard
University Press.
Bibliography
Bourke M J, ‘The policy formulation process’
www.tomw.net,au
Smith RI & Weller P 1976, ‘Public servants, interest groups and policy making’
Department of political science, Australian National University, Australia.