Ending 'BIG SIS'
(the Special Interest State)
and Renewing the
American Republic

by James V. DeLong

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TABLE OF CONTENTS
 
NOTE ON STYLE AND REFERENCES
 
I. INTRODUCTION TO BIG SIS
"A Republic, if you can keep it"
"A dreadful image of a spreading rot"
"The claim of a government to . . . obedience and loyalty"
Preview of this book and what to do next Monday morning
   
2. HOW WE GOT HERE: THE RISE OF BIG SIS
"Some common impulse of passion, or of interest"
The Constitution, the constitution, and political legitimacy
"Fear of corruption verging on paranoia": the Old Republic
The Old Republic in the Post-Civil War era
The need for law
Networks, platforms, and the nationalization of industry
The Old Republic as of 1929: battered but upright
The Great Depression, the New Deal, and the onrush of Big SIS
Big SIS triumphant: the Great Society and after
Completing the structure
  Civil Rights
  Environmentalism
  The Regulatory State
  Positive feedback
Tom Paine, where are you?
 
3.WHERE WE ARE: BIG SIS TODAY
Mapping the territory
Following the money
  Direct expenditures
  Tax expenditures (special tax breaks) and collection costs
  Loans, guarantees, and manipulation of interest rates
  Regulatory costs
  Laws
  Adding it up
Distorting other institutions
"This isn't fair dealing"
The inexorable logic of Big SIS
 
5.DIAGNOSIS AND PROGNOSIS: BIG SIS TOMORROW
The zombies are at the gate
The ratchet
The public's rational ignorance
The interests' knowledge and rapacity
Noise in the system
Compassion traps
Moral claims
The Regulatory State rampant
The Ruling Class as a special interest
Campaign finance
Political legitimacy revisited
Down the slippery slope
 
6.AN ALTERNATIVE TO BIG SIS: RENEWING THE REBUBLIC
Fast forward back to first principles
Not a democracy, a republic
The positive use of self-interest
Repeat over and over: "collective action problem"
An immediate agenda
  Education & advocacy
  Elections
  Slaughter the sacred cows
  Pressure your own special interest representatives
  Businesses and producers must get in the right game
  Reclaim respect for civic virtue
  Control the Regulatory State
  Legal education and reform
  Real campaign finance reform
  Health care
  Back to the future on nominating presidential Candidates
Coda
 
7. ENDNOTES
 
8. REFERENCES
 
ACKNOWLEDGEMENTS
 
ABOUT THE AUTHOR
 
 
EXCERPTS FROM ENDING BIG SIS:

The Founders' view of factions

[The Founders] were aware that the existence of factions cannot be prevented, and their goal was to establish a structure of government that would . . . corrosive effects. (p.2)
++++
Like architects analyzing the lines of force necessary to prevent the collapse of a building, the Founders focused on making the forces of factional passion neutralize each other, thus keeping the republic standing. (p.2)
++++
The thesis of this book is simple. It is that U.S. politics has gone astray by losing this fundamental insight of the Founders. Rather than maintain a government designed to
prevent and control the power of faction, we have allowed a wide variety of factions to capture parts of the government and then use the government's powers to spend, to tax, to legislate, and to regulate for their own purposes. (p.2)
++++
[Opponents of protecting economic liberties] cling to the failed political and legal dogmas of the Progressive Era, the New Deal, and the Great Society. They emulate the royal House of Bourbon after the French Revolution: "They have learned nothing and forgotten nothing." (p.189-90)

Private institutions

The leverage exerted by Big SIS affects decisions far beyond the money that it commandeers directly. It distorts the incentive structures throughout society, and sends investors and workers skittering off in unproductive directions. (p.91)
++++
The genius of a republic is its blend of limited government and autonomous private institutions that most emphatically do not mimic the government's response to special-interest pressures. (p.175)
++++
The Progressive Movement hoped to reduce the influence of special interests on government. What it actually accomplished was the reverse . . . it contaminated every other institution with a Big SIS focus on special interest politics. . . . [The only] is pleasing only to those with a taste for bitter irony. (p.100)

A democratic republic

Elections alone are not a sufficient condition for effective democracy. . . . they are part of a bigger package that includes limited government, respect and protection for minority views and populations, accountability of government officials, an independent judiciary, rule of law and the application of the law to the government and its officials, security of property rights, and protection of honest investment against either direct seizure or seizure by regulation. (p.174)
++++
A working democratic republic also requires a large private civil society and a primarily free-market economy, both insulated from special-interest-dominated government meddling. Otherwise, private institutions will inevitably turn into Little SISes. (p.174)

Big SIS as a ratchet

Big SIS [is a ratchet that allows] motion in one direction only - toward greater government activism -- and then locks. . . . [O]nce a special interest gains a subsidy, regulation, or advantage of any sort, it gains the benefits of the stasis built into our governing mechanisms by the Constitution. (p.112)
++++
Re-visit any recent State-of-the-Union speech, and you realize that the potential reach of Big SIS is limited only by failures of the human imagination to dream up new ways to control the behavior of others or grab resources for one's own faction. (p.160)

Rational ignorance

To spend large chunks of one's life to "become informed" would be of small benefit, especially given the low quality and high bias of most reportage and commentary. Thus, for any individual citizen, even one with a deep sense of civic responsibility, the rational approach is to remain slightly informed and rely on intermediaries. (p.115)
++++
In surveying the landscape of government, you find everywhere this pattern of broad, vague laws implemented by detailed regulations that impose murky costs on the private sector, with little attention to rational assessments of costs, benefits, or effectiveness. (p.119)
++++
As more rules are created, and as complexity and opacity grow, it becomes more difficult to be "well-informed". The rational response is not to increase one's efforts but to cut them back, becoming even less diligent in seeking knowledge. As the public grows more ignorant, the vulnerability of the system to propaganda and lies grow apace. (p.119)

Rapacity of special interests

As Mancur Olson noted, the interest gets the benefits while the costs are borne by society at large, so there is "no constraint on the social cost such an organization will find it expedient to impose on society in the course of obtaining a larger share of the social output for itself." (p.120)
++++
Special-interest greed takes many forms. While everyone is familiar with the concept of capture of agencies by those with an economic interest, ideology equals money as a motivator. (p.121)
++++
The representatives earn their money by being unreasonable, and justify themselves by a professional ethic that binds them to demand things for their clients that no decent person would demand for herself. (p.121)
++++
Game theorists call the phenomenon "the last period problem". An impending end to a state of affairs or a contest increases the incentives for greedy behavior because there is no incentive for long-term husbandry. (p.124)
++++
[T]he strongest clients of the True Green agencies would regard shutting down most industry as a worthy sacrifice to Gaia. Thus, the costs these agencies are willing to inflict on the world are limited only by outside political pressures, not by any internal gyroscope. (p.146)
++++
The power motive is as strong as the profit motive and is usually more destructive. (p.178)

Political legitimacy

[I]if loss of legitimacy goes far enough, when a crisis comes then the polity shatters, and the source of power become sheer force.  (p.158)
++++
The participants in Washington power games do not think in terms of political legitimacy. . . . [T]hey . . . do not see that legitimacy is a special kind of commons, a reservoir of general political authority that no sensible government or society fritters away. . . . Few of their representatives even understand the concept. (p.162)
++++
[W]e have a Ruling Class that cannot possibly meet the expectations that it creates, that has a tenuous connection to the productive capacities of the society, but that clings avidly to its privileges because it has no line of retreat except downward mobility. It is difficult to think of a better prescription for loss of legitimacy. (p.165)
++++
Brinton points to a dire consequence of a government’s loss of legitimacy: in a crisis, people do not step up to defend it. [Thus] a surprisingly small group, if organized, can take control. Lenin said that the Bolsheviks did not seize power in 1917; they found it lying in the gutter and picked it up.  
You can be sure that groups on the hard left, and maybe on the right, are familiar with this history and are working toward the day when American power will fall into the gutter. (p.168)
++++

Government competence

[An important] check on special-interest abuses disappeared when [the courts] agreed that the government needed a free hand to micromanage economic affairs, because micromanagement requires fine distinctions among categories of citizens, distinctions which then lend themselves to favoritism and abuse. (p.188)
++++
[T]the government has proven its total inability to manage anything, so its need for the untrammeled power required for micromanagement should be rejected. Reasonable generality in legislation is absolutely necessary to liberty.  (p.188)
++++
Pretty much wherever government has asserted the old Progressive/New Deal/Great Society need for total control of some segment of the society or economy, the ground has been sown with salt. (p.164)

The moral crisis

We are at a point of constitutional crisis, and this is all to the good. Only in such times does the public pay enough attention to assert its true long-term interest. (p.192)
++++
[W]hile the workaday pressures of a society may depend on self-interest, the great tides of history are moral and spiritual, and these can sweep away many structures once thought solid. As the Tea Party movement shows, our classic ability for justified moral outrage is asserting itself again. (p.192)

The Ruling Class

The [Ruling Class] embraces a different ethic, one skeptical of individual merit and free will. It tends toward a fuzzy conclusion that all wealth derives from the amorphous collective efforts of society, that there is no particular merit in producing wealth and that the immediate producers have no moral claim to it. Therefore, its allocation should be determined by society, which, of course, must act through its representatives in the government, who turn out to be (surprise!) members of the Ruling Class.  (p.148)
++++
The Ruling Class itself is a great bulwark of Big SIS. Whatever the particular role occupied by one of its members, Big SIS is the iron rice bowl, and protecting it turns the Ruling Class into a special interest all its own. (p.151)
++++
The past few years have not been kind to the claim of the Ruling Class that it possesses the Mandate of Heaven, as one policy after another has been exposed as nonsense and rapacity—housing; financial regulation; sellouts to government employee unions; expansions of tort liability; energy regulation; and the government takeover of the medical system. (p.164)

Regulation
A major paradox of contemporary government is that the rising concern about government expenditures contributes to the explosion in the volume and cost of regulation, as the factions shift their focus away from the budget and toward softer regulatory targets. (p.82)

How Big SIS undermines good legislation

Unfortunately, the legislators have adopted the same "there is no truth" approach to the world and see every vote as for or against some collection of interests rather than in terms of good or bad policy. (p.129)
++++
[L]aws that help the producers be productive should be at the top of the legislative to-do list. Big SIS obliterates our collective ability to tell the difference between good and bad. (p.128)
++++
Big SIS has destroyed the ability of producers to advocate good policies and that business cannot be counted as a champion of free markets. Firms argue their own short-term advantage and shun any serious analysis of effects on the free market because they fear that it might damage their advocacy next year, when their management might want some free-market-destroying special favor. (p.128)

Compassion traps

The more sensitive we are the more we get to control people’s behavior and redistribute their resources, and the more we can make health care and other systems respond to the politics of special interests rather than customer demand or market reality. (p.133)
++++
Even when we recognize them, though, compassion traps are hard to resist because at the point of decision there are no good choices, especially when the “for the children” card is played. (p.133)
++++
Compassion traps put us on the horns of a dilemma. It is difficult to distinguish between the genuinely unlucky and their honest and compassionate representatives, and the sociopathic and their often equally sociopathic representatives. (p.132)

The Courts & the legal profession

Before Chevron, a significant function of the courts of appeals was to police the bargains reached by contending interests during the legislative process. . . . Chevron diluted it, with complicated consequences. . . . Agency power was increased. So was the value to interests of capturing an agency’s personnel, because the original understandings backstopping a law could be reversed
in the future by the agency. (p.142)
++++
Reading contemporary opinions on government power is like making an archaeological dig into the intellectual ruins of the political thinking of the 1930s, if not the 1910s. (p.186)
++++
[T]he experience of the twentieth century . . . shows that removing all checks on government power does not result in wise rule by disinterested mandarins. It produces . . .  “an unstructured, undisciplined, exploitive interest group free-for-all”. (p.189)
++++
Supreme Court cases, especially, are striking in that the Court is unfamiliar with such terms as “special interest state”, “collective action”, and “Public Choice” when its main business should consist of dealing with the issues wrapped up in these concepts. (p.186-87)

Collective action

One way to understand Big SIS is to realize that we fired the escrow agents, and so we have condemned ourselves to lawless collisions of raw self-interest. (p.180)

Another powerful factor on the positive side of the ledger is that narrow short-term self-interest is not the only kind of self interest. . . . any fool can see that Big SIS cannot continue indefinitely, and that collapse and stasis benefit no one. . . . The lesson is that we need not reject self-interest. We can embrace it avidly, only it should be of the intelligent, long-term variety, not a short-sighted grab-a-subsidy-today mentality. (p.177-78)
++++
[A]ddressing collective action dilemmas is the fundamental point of creating a government.
A vital part of a successful democratic republic is that the institutions solve the collective-action problems. They must guarantee that all will exercise restraint in pursuit of self-interest, and they must also have built-in protections against efforts by people to corrupt them in individual cases. (p.179)

Coalitions

Log-rolling creates a dangerous gap in the Founders’ system of defenses against factions and special interest laws, and a puzzling one. [T]he constitutional structure contains no effective check, and the Federalist 51 discussion of the point seems almost—dare one say it?—naïve. (p.32)
++++
Perhaps the Founders knew that the only serious defense to evil outcomes from log-rolling lies in limits on the overall reach of government. If government power is unlimited, then the possibilities for log-rolling coalitions of looters will become overwhelming. (p.32)
++++
[T]he explosion of [government] programs increases the opportunities for that special type of log-rolling called “Bootleggers and Baptists” . . . alliances between interest groups with opposed values but with a common interest in a particular law. . . . (p.74-75)

Income distribution

Partisans of Big SIS invoke inequities of income distribution to argue for yet more government intervention. When the inequities are actually caused by Big SIS, intervention becomes a perpetual motion machine. Increasing crony capitalism, discouraging hiring, and hobbling investment exacerbates inequality, which is then used to justify more intervention.(p.96)
++++
[B]eware of statists bearing tricky numbers. Their real purpose is to set up systems whereby they are paid to redistribute the income, and you can be sure that the salaries they collect to perform this function will put them at the top of the distribution curve. (p.94)

Campaign finance

So, welcome to the bizarre world of campaign finance reform, where one important goal is to exclude anyone who lacks corrupt motives. (p.153)
++++
Although the limits [on contributions] make an incumbent’s life unpleasant, they make a challenger’s life almost impossible. (p.154)

5/24


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