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Modern Robbers: Special Interest Groups And Braking The Economic Growth

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Author Info

  • Konstanin Yanovsky

    (Gaidar Institute for Economic Policy)

  • Dmitry Cherney

    (RANEPA)

  • Artem Shadrin

    (RF Ministry Economic Development)

Abstract

Small well-motivated groups, including state officials, public and community activists, politicians etc proved their capacity to impose burden on economy. The power to do so in modern Market Democracies could be reached without “unsheathing the sword”. Old fashioned redistribution experts - roving bandits are crowded out by modern ones. The most common way is to use the whole of the state apparatus as a “sword,” and to resort for cover to care for the needy and protection of the vulnerable, the ill-informed, the weak, the sick, or the “unwise” economic agents from all kinds of possible dangers. The longer list of the categories of persons in need of protection because of their “weakness,” "underprivileged statute in the past" etc, the easier it becomes to justify regulatory interference, the growth of the state apparatus, the increase in state insurance programming, and other budgetary expenses. Classical liberal epoch's legislator presumed the economic agent is reasonable, rational and responsible. This assumption had been gradually substituting for the last century, by the implicit assumption of citizen's' limited capacity. The mechanism of the impact upon economic growth achieved by means of special interests groups’ expansion has been described by M. Olson. “Protection” takes place by means of market entry barriers placed in the way of agents or by means of various controls and regulations. One who imposes heavy Regulatory burden in the emerging markets, in transitional economies with weak property protection makes running fair business almost unaffordable.

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File URL: http://www.iep.ru/files/RePEc/gai/ppaper/141Yanovsky.pdf
File Function: Revised version, 2013
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Bibliographic Info

Paper provided by Gaidar Institute for Economic Policy in its series Published Papers with number 141.

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Length: 51 pages
Date of creation: 2013
Date of revision: 2013
Handle: RePEc:gai:ppaper:141

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Keywords: special interest groups; personal capacity assumptions; excessive regulation; regulations' reproduction;

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  1. Sergey Zhavoronkov & V. Mau & D. Chernyi & Konstantin Moshe Yanovskiy, 2002. "The Deregulation of the Russian Economy," Problems of Economic Transition, M.E. Sharpe, Inc., vol. 45(5), pages 5-66, September.
  2. Stigler, George J, 1970. "Director's Law of Public Income Redistribution," Journal of Law and Economics, University of Chicago Press, vol. 13(1), pages 1-10, April.
  3. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
  4. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169.
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