Reviews | The story construction tells about the U.S. economy is troubling

Olson, an economist, was known for his seminal work on the conditions under which groups would and would not cooperate. Here he made it a theory of why nations often stagnate in opulence and prosper in the aftermath of chaos.

Its main idea is that it is not easy for groups capable of collective action to emerge. But once they emerge, they tend to stay. Thus, suggests Olson, “while organizations and collusions for collective action generally emerge only under favorable circumstances and grow stronger over time, a stable society will see more organization for collective action over time. time”.

The more organized groups you have, Olson thinks, the more distribution fights you will have, the more complex lobbying and regulation you will have, the more negotiations and intergroup negotiations you will have, the more complexity you will have. Or, as he puts it, “special interest organizations and collusion reduce efficiency and aggregate income in the societies in which they operate and make political life more divisive.”

“The Rise and Decline of Nations” is a classic economics text, but that doesn’t mean it’s correct. Japan, for example, has gone from economic poster child to growth laggard. Olson’s argument would seem to imply that the United States, with its geographical protection from invasion and its long history of continuity, would be much more ossified than Germany, but this is not the case. And Olson has no real answer for why so few countries that fall into crisis go on to become wealthy.

But Olson’s biggest failing, in my opinion, is his assumption that groups organize around redistribution. Olson almost completely missed the post-materialist turn in rich country politics. Some groups organize to get a bigger slice of the pie, but many others organize to protect the environment, or to raise safety standards, or to preserve the vibe of their communities, or to express their values. And a lot of that is good. It is a gift of wealth, not a disease of wealth.

But Olson, who died in 1998, is right when he tells us that this donation comes at a cost. And these costs are concentrated in sectors of the economy where the number of groups to be consulted increases. From this perspective, productivity issues in the construction industry do not seem so surprising. It’s relatively easy to build things that only exist in computer code. It is more difficult, but manageable, to manipulate the material within the four walls of a factory. When you build a new building or a subway tunnel or a highway, you have to navigate between neighbors and communities and existing roads and emergency access vehicles and politicians and the beloved views of the park and the possibility of earthquakes and so on. Construction may well be the industry most exposed to Olson’s thesis. And since Olson’s thesis is about wealthy countries in general, it fits the international data as well.

I ran this argument through Zarenski. When I finished, he told me I couldn’t see him on the phone, but he was nodding his head up and down enthusiastically. “There are so many people who want to have a say in a project,” he said. “You must encounter as many parking spaces, per unit. He must be so far out of sight. You have to use this much reclaimed water. You didn’t have 30 people sitting in a courtroom for a license approval 40 years ago.