Introduction

Modern democracies are trapped in a collective dilemma. In many cases, government policies are biased in favor of special interests at the expense of the general public, and they are often inefficient in the sense that the total losses imposed on the majority exceed the total gains enjoyed by the minority. While special interests form a minority on any one policy dimension, just about every citizen is a member - whether active or not - of some special interest group on some policy dimension! indeed, many citizens are members of more than one special interest group. Each citizen prefers being favored by government policy even at the expense of inefficiencies imposed on the society at large, but relative to the status quo involving inefficient government policies on all dimensions, each citizen would be better off if government did not cater to special interests at all.

The persistence of this problem, labeled “demosclerosis” by Jonathan Rauch (1994), is puzzling. Voters clamor for government to streamline and reduce the scope of its redistributive activities. But any serious attempt to implement the expressed wish of the general public requires cutting the pet programs of special interests, and any politician who would do so can count on being dead on arrival at the polls. Yet in the aggregate special interests are the general public. It is thus hard to avoid the conclusion that demosclerosis is due to some kind of voter illusion.