Modern Robbers: Special Interest Groups and Braking the Economic Growth

51 Pages Posted: 21 Jun 2013

See all articles by Konstantin Yanovskiy

Konstantin Yanovskiy

Shomron Center for Economic Policy Research

Dmitry Cherny

Russian Presidential Academy of National Economy and Public Administration (RANEPA) - Department of Economics

Artyom Shadrin

Ministry of Economic Development of the Russian Federation

Date Written: June 19, 2013

Abstract

Small well-motivated groups, including state officials, public and community activists, politicians, etc., proved their capacity to impose burden on the 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 has 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.

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

JEL Classification: D73, K20, N14, O43

Suggested Citation

Yanovskiy, Konstantin and Cherny, Dmitry and Shadrin, Artyom, Modern Robbers: Special Interest Groups and Braking the Economic Growth (June 19, 2013). Available at SSRN: https://ssrn.com/abstract=2282073 or http://dx.doi.org/10.2139/ssrn.2282073

Konstantin Yanovskiy (Contact Author)

Shomron Center for Economic Policy Research ( email )

Kley Shir 8
Karney Shomron, 44855

Dmitry Cherny

Russian Presidential Academy of National Economy and Public Administration (RANEPA) - Department of Economics ( email )

Russia

Artyom Shadrin

Ministry of Economic Development of the Russian Federation ( email )

1,3 1-ya Tverskaya-Yamskaya
Moscow
Russia

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