Economia Politica: a captura de renda pelos interesses especiais, de Mancur Olson a Bernie Sanders - Guy Rolnik

Artigo muito interessante sobre a campanha eleitoral nos EUA que refaz o debate sobre os interesses especiais e os rent-seekers, a partir dos ensinamentos de Mancur Olson e George Stigler, levando o debate até Bernie Sanders, o candidato que está provocando uma revolução no financiamento de campanhas eleitorais nos EUA.
Pode até não ser bem sucedido, mas, assim como já fez Barak Obama em 2008, está levando sua campanha para os milhares de americanos que nunca tiveram voz nesses embates eleitorais.
Paulo Roberto de Almeida

Why Politicians Who Take Money from Special Interests Help Rig the Economy

Those in power determine the rules of the game

By Guy Rolnik
Economics, April 18, 2016
http://evonomics.com/why-politicians-who-take-money-from-special-interests-help-rig-the-economy/ 

Last month, The George J. Stigler Center at the University of Chicago Booth School of Business launched the Capture Index that looks at the concentration of donations to the presidential candidates. As an economist, I tend to believe in what we call “revealed preferences.” Donations from industries are a better measure of their interest than the candidates promises and rhetoric.
When we look at the numbers, we see very clearly that presidential candidates are not different from most congressmen and women: they are happy to take significant amounts of money from industries whose business models are based on favorable regulation, usually regulation that limits competition and helps the incumbents. It is safe to predict that this concentration of donations from what we call “rent-seeking” industries will only get worse as the presidential race continues—because once the special interest groups identify the winners or the candidates that may be a “threat” to the establishment or the status quo, they will coalesce around a few candidates and inject more and more money into their campaigns.

This is where Bernie Sanders comes into play. You may not subscribe to many of Sanders’s ideas—particularly, those on limiting trade. But one thing is certain: he is really beginning a political and economical revolution. According to our research, Sanders is the only candidate in this race, and actually in the last few decades, who is not taking money from special interest groups. Sanders managed through grassroots movements to raise close to 100 million dollars from the “dispersed public”: that is, taxpayers, consumers, and investors that usually cannot organize and get representation in democracy because they are a large, heterogeneous group that cannot overcome the free rider problem. Sanders is defeating the model that has ruled politics for many years.
The economics of regulatory capture
Professor George Stigler, the Nobel Laureate (1982) who in some ways invented the idea of “regulatory capture,” and Professor Mancur Olson, who developed some of the most important ideas of “public choice,” are not around anymore. If they were alive today, they would probably be surprised to learn that the first politician in recent U.S. history to take their advice seriously and challenge them is a self-described socialist.

In “The Logic of Collective Action” (1965), Mancur Olson taught us that, over time, most capitalist democracies develop “distributional coalitions,” aka special interest groups, which organize to get the government to provide them with special subsidies, laws, and protection from competition. The dispersed public, be it taxpayers or consumers that are footing the bill, will fail to overcome the free rider problem and lose in the democratic battle with those coalitions. As Olson states in a later book, this is what explains the decline, or sclerosis, of economies.
Stigler, in his “Theory of Economic Regulation” (1972), explained that regulation, which is presumably put in place to protect the public, will eventually be acquired, or “captured,” by the very companies, industries, or their trade unions that are supposed to be “regulated.”
The sprawling Lobbyist industry, revolving doors, money in politics—all those ideas that are today part of the public discourse are tools and symptoms of the ideas Stigler, Olson, and many of their students and colleagues developed in their “public choice” literature.
When you consider how clean, simple, and neat the ideas of Olson and Stigler are—why special interest groups will always carry the day in the battle with the dispersed public—it is easy to develop a cynical and pessimistic view of the world. Only special interest groups will have the incentives to organize, lobby, and win in the democratic process. The public, rationally ignorant and free riding by nature, will always pay the bill.
Olson and Stigler predicted that special interest groups carry the day because they can organize and lobby. They can do this because they can raise a significant amount of resources to push their agenda. These predictions turned out to be very accurate most of the time. The best way to see that is in the vast and growing amount of money being spent by special interest groups on lobbying and campaign contributions, as well as the rents extracted in many industries that get de facto protection from competition. The dispersed public was not relevant to this game.
There are reasons that most of the economic policy debate in the presidential race is framed in the right/left or democrat/republican division. It is easy to put policy, politicians, and economists into familiar “boxes”: conservative and liberal being the obvious ones here. Not only that, but many people also want to be part of a “camp,” because it helps them form an identity and get support and protection for their beliefs and ideology.
Ideology is important, but if we take a look at most industries, markets, and the expenditure of the government, we should ask ourselves whether it is “ideology” or a simpler idea: the rules of the game are determined by the sheer power of the vested interests. Energy, agriculture, healthcare, finance, insurance, defense—there is a reason why they spend billions of dollars on lobbying at the federal, state, and congress levels. They are the people influencing the rules of the game and shaping the discourse and narrative in these industries.
It is time to introduce an old idea that doesn’t get enough time, a perspective that is stripped from this usual discourse and labels. One overarching, important idea, which may be bigger than conservative or liberal economic questions, is that of the capture of democracies and regulations by special interests.
In comes Bernie Sanders. A self-described socialist. He wants to expand government and push the US towards a more Northern European model. He brings into the discourse yet again the debate of small or big government, private or public healthcare and education. But these are old ideas: the real message and idea that Sanders brings is much more interesting and revolutionary.
Until 2016. For the first time in recent history, we have a politician who is able to raise serious, big money—the kind of money that can finance a big campaign—from the dispersed public.
Whoever believes in a market economy assumes that players are “price takers” or “regulation takers”: they cannot influence the prices and the rules of the game. If we want to move into a more competitive market system, we should support the political revolution of Bernie Sanders, specifically the way he raises money. We must acknowledge that as long as it is totally within the norms, values, and beliefs of our society that politicians and regulators can take money from special interest groups, our chances of increasing the legitimacy of market ideas are diminishing.

2016 March 18
Originally published at the  Pro Market Blog, “From Mancur Olson to Bernie Sanders”.

Podem os EUA (ja nem digo o Brasil) ser uma Dinamarca? Bernie Sanders computou os custos? - Steven Pearlstein (WP)

Os nossos keynesianos de botequim apontam para as maravilhas dos escandinavos para dizer que se pode, sim, ter altas taxas e excelentes serviços coletivos fornecidos pelo Estado. Eu, mesmo quando era um keynesiano moderado, nunca achei que o Brasil pudesse se converter facilmente num país escandinavo, a começar que não tínhamos a moderação demográfica, as tradições democráticas, a ausência de corrupção e, sobretudo, a alta educação (e produtividade) dos escandinavos.
Mas, o candidato Bernie Sander acha que sim, que os EUA poderiam ser uma espécie de Dinamarca. Ele só esqueceu de informar sobre os custos de um United States of Scandinavia, e, mais ainda, quem iria pagar...
Mas a principal razão evidenciada por um especialista consultado para esta matéria de Steven Pearlstein é que os EUA não são um país homogêneo como a Dinamarca. Bem, o que pensar do Brasil então?
Paulo Roberto de Almeida

Wonkbook: Can Bernie Sanders turn the United States into Denmark?
By Steven Pearlstein
The Washington Post, March 14, 2016

Government-provided health insurance. Free college tuition. A $15 minimum wage. Stronger unions. High gas taxes. Guaranteed parental leave.  It sounds as though Bernie Sanders wants to turn America into Denmark or Sweden.

“And what’s wrong with that?” the Democratic presidential candidate replied when ABC’s George Stephanopoulos asked that question.

Indeed, a number of countries with bigger governments, higher taxes and more income equality than the United States are as prosperous, healthy and happy — in some cases, more so. Cross-country studies have found that big government is not a guarantee of a country’s economic success, but neither is it a barrier. Even here at home, the pollsters at Gallup found that most Democrats — and a near majority of all Americans — would be open to voting for a socialist.

According to economists, however, the question is not whether it is theoretically possible for Americans to adopt Scandinavian policies and still be prosperous. The issue is whether Americans would be willing to accept the tradeoffs that go along with such a system — higher taxes and unemployment rates, open trade, slower growth, more income redistribution — and whether Sanders has overestimated the benefits and underestimated the costs of adopting it.

“There’s nothing wrong with it other than that Americans are not Danes,” said Princeton’s Alan Blinder, a top economic adviser to President Bill Clinton.

“The number one reason why these policies are feasible in Denmark is that the country is extremely homogenous,” explained Jacob Kierkegaard, a Dane who is a senior fellow at the Peterson Institute of International Economics in Washington.  “The perception among the electorate is that the government will provide for me and for people who, in a linguistic, cultural and ethnic sense, are just like me.” And because Danes view themselves as 'shareholders' in the state, he said, government is viewed as benign and trustworthy.”
“That situation is not present, nor has ever been present, in the United States,” Kierkegaard said.

Luigi Zingales, an Italian economist now at the University of Chicago, contrasts high-tax, high-trust socialist countries such as Denmark and Sweden with high-tax, low-trust countries where populations are ethnically and culturally diverse, politics are fractious and government is incompetent and corrupt. In terms of social trust, he said, the Americans are somewhere in between.
“The danger for the United States is that it would wind up looking more like Italy and Greece than Denmark and Sweden,” Zingales said.
Attitudes toward globalization is another difference. Free trade is so widely accepted in Scandinavia that it even has strong support from organized labor. “Their unions recognize that for their workers to have a job, companies need to export to grow and be successful,” Kierkegaard said. By contrast, Sanders has made common cause with American unions in proposing to roll back every trade treaty signed since the North American Free Trade Agreement (NAFTA) in the 1990s.
The world, in fact, may be better off when different countries adopt different economic systems, argue Daron Acemoglu, Thierry Verdier and James Robinson in a widely noted paper, “Can’t We All Be More Like Scandanavians?”
The United States, with its more “cutthroat” form capitalism, they argue, plays a unique role in the global economy because it generates a disproportionate share of innovative new technologies and business practices that are quickly adopted by other countries. If Americans were to embrace Denmark’s  “cuddly” form of capitalism, they fear, there would be less of that disruptive innovation and both Americans and Danes would be worse off. A robust global economy requires the co-existence of both systems trading with each other.
Although economists are sympathetic to the direction of many of the individual policies that make up Sandernomics, even those who lean liberal worry they go too far.
The best example is the single-payer health plan that would effectively replace today’s private and public insurance programs with comprehensive medical, dental and optical services with no co-payments or deductibles for all Americans.  Every other advanced country does it that way, at significantly lower cost and better health outcomes. Why, Sanders asks, can’t we do the same?

An analysis done for the Sanders campaign by Gerald Friedman, a University of Massachusetts economist, concluded that the single-payer plan would shave $1 trillion off what would otherwise be $6 trillion in national health spending by 2026, a decade after enactment—even after extending coverage to tens of millions of Americans who now are uninsured or underinsured.
The reduction, he calculates would come primarily from eliminating most of the billing and administrative expenses at doctors offices, hospitals, pharmacies and insurance companies—an immediate savings of 12 percent.  Additional savings would come from government bargaining and controls that reduce – and slow the growth of -- prices for drugs and medical services.
The average family, Friedman estimated, would save nearly $6,000 a year, even after paying a new 8.4 payroll tax to the government instead of premiums and co-payments to insurance companies.  At the same time, employers who offer insurance would save more than $9,000 per employee.
But Kenneth Thorpe, a widely respected health economist at Emory University, argues that Friedman overestimated the administrative savings and reduction in drug prices that the government could negotiate on generic drugs and home health care, both fast-growing segments.  And he said that Friedman badly underestimated the additional demand for medical services induced by the total elimination of co-payments and deductibles, creating the health care equivalent of an all-you-can-eat buffet.
Thorpe is no stranger to single-payer health plans.  His cost analyses lead Sanders’ own state of Vermont to scrap its plans for a statewide single-payer system. Sanders’ plan, he calculated, would require another trillion dollars a year in new taxes on top of the $1.3 billion that Sanders had proposed to fund the system.
Beyond the financial challenges are the political ones. Health economists predict the Sanders plan would reduce incomes for doctors, hospital administrators and drug company shareholders, much as happens in other countries. Warren Gunnels, Sanders’ policy director, acknowledged as much but argued that Canadian and British doctors and nurses still lived “very comfortably.”

Keeping a tighter rein on health spending could also result in fewer tests and procedures if they fail to meet strict cost-benefit guidelines, or longer wait times for non-urgent care, which are also common in other countries.  Gunnels said that kind of rationing will be minimal and, in any case, is preferable to the kind of rationing of health care that  now leaves 60 million Americans uninsured or underinsured.
Economists have also questioned Sanders plan for free tuition at all public colleges and universities.
Ron Ehrenberg, a Cornell University expert on higher education, notes that because of existing federal and state assistance, low- and moderate-income students already pay little or no tuition. Much of the tuition benefit, he predicts, will go to students from middle- and upper-income families.
“I’m not sure this is a wise thing,” Ehrenberg said.  “It won’t affect the ability of lower income students to get higher education.”
Others predict that the plan could strain the capacity of public institutions as large numbers of students shift from private to public colleges.  They also warn that the extra demand probably would ive up the annual cost of the program well beyond the $75 billion Sanders has projected. A recent study by the bipartisan Tax Policy Center found that the financial transaction tax which Sanders relies on to pay for the tuition-free initiative could raise, at most, $50 billion a year. Setting the tax as high as Sanders proposes, they warn, would simply cause investors and speculators to make fewer trades, or drive the trading offshore.
A cornerstone of Sandernomics is a promise to raise the national minimum wage to $15 an hour — enough to lift any full-time worker out of poverty.  Other proposals — pay equity for women, stricter overtime enforcement and rules making it easier for workers to unionize—are also meant to push up working-class wages.  These regulatory changes would increase average wages by 8 percent within a decade, according to Friedman at UMass.

Liberal economists auxh A Princeton’s Alan Krueger, former chief economist in the Obama White House, have long thought that, in modest doses, such policies can largely pay for themselves because of the reduced turnover and increased worker productivity that result from higher pay.  But even Krueger has been reluctant to push the minimum wage as high as $15, calling it a “risk not worth taking.”
In his speeches, Sanders suggests the higher incomes at the bottom will be paid for in the form of lower incomes for shareholders and executives who have captured all of the benefit of economic growth in recent decades. But even Friedman estimates that about half of the cost of these wage-boosting policies will eventually be passed on to workers, in the form of higher prices for what they buy, smaller pay raises or higher unemployment as firms replace workers with new technology.
Certainly the most aggressive aspect of Sandernomics is the senator’s plan to collect an additional $1.6 trillion a year in taxes—the equivalent of 7 percent of GDP.  Although all households would pay higher taxes, 40 percent of the extra taxes would come from households in the top 1 percent —those with annual incomes above $500,000, according to a Tax Policy Center analysis.  Those households would see their overall federal tax bite rise from 34 percent to 55 percent.
Sanders argues that it is misleading to look at the tax increase he proposes without also considering the money households would not have to spend on health insurance premiums and co-payments as a result of his plan.  A study by the liberal-leaning Citizens for Tax Justice found that 95 percent of American households—those with incomes below $225,000—would have more money to spend on everything other than taxes and health care.
But Sanders makes no apologies for the dramatic tax increase he wants to impose on “the billionaire class,” whose after-tax income would fall 40 percent, according to the Tax Policy Center.
For households with annual incomes above $10 million, the combined income and payroll tax bite on the last dollar of salary income— what economists call the marginal rate—would be 77 percent (after adding in the employer share of payroll taxes, as most economists would do). That compares to 43 percent today. For investment income—typically the bulk of income for wealthy households—the marginal rate would be 64 percent, compared to 24 percent today. None of those numbers includes state and city income taxes, which in some places could add another 10 percentage points to the tax bite.
Even households with incomes as low as $250,000 would face a marginal rate of 62 percent for earned income and 50 percent for investment income, significantly above today’s levels.
For years, mainstream economists have argued that governments could raise top marginal rates on salary income as high as 60 percent, and investment income to 30 percent, without causing high-income households to change their economic behavior. But with combined state and federal marginal rates reaching 70 or even 80 percent, they warn, it is likely that some business executives, hedge fund managers and well-paid professionals—or their spouses—will decide to hang it up and head for the beach.  For sure they will hire armies of lawyers and accountants to help them convert salary income to lower-taxed investment income—and then move investment income offshore, where it is not subject to any U.S. tax.
“You will just never be able to tax [investment income] that highly,” warns Princeton’s Blinder, as European countries discovered years ago.  Today, European tax rates on investment income are now half of what Sanders proposes.
And it’s not just rich people who would be affected by Sanders’S tax increases at the top. “Almost any economist would say that those taxes on investment will have a negative impact on economic growth,” said Len Burman, director of the Tax Policy Center.  “It raises the costs for business of making new investment, so they will invest less.  And it makes investors less inclined to own [stocks].”
Indeed, it would be surprising if Sanders’s plan for steep increase in taxes on investment income, corporate profit and financial transactions did not cause stock prices to fall significantly, reducing household wealth and, with it, consumer spending.
Sanders thinks this is nonsense. By redistributing spendable income to the poor and middle class and increasing government investment for infrastructure and education, he promises that Sandernomics would supercharge economic growth.  According to Friedman’s analysis, it would add 25 million jobs over a decade, increase the income of the average household by more than $20,000 and drive the unemployment rate down to 3.8 percent.
Even Democratic economists, however, are skeptical of such claims.
Christina Romer, another former adviser to President Obama, with her husband, David, released a paper last week concluding that there just weren’t enough unemployed workers and unused capacity left in the economy to make it possible for the economy to grow 5 percent each year for a decade, as Sanders imagines. The more likely result, they said, would be dramatically higher inflation, not growth.
“A realistic examination of the impact of the Sanders policies on the economy’s productive capacity suggest[s] those effects are likely to be small at best, and possibly negative,” wrote the Romers, both professor at the University of California at Berkeley.  The higher inflation would prompt the Federal Reserve to raise interest rates, further depressing business investment, they warned.  And by providing free tuition to students and guaranteed health care to everyone, it was unlikely, they concluded, that Sanders would succeed in greatly expanding the workforce.
Some economists, such as Jamie Galbraith of the University of Texas, think the Romers are working from an outdated economic model.
At a time when there is slow economic growth because of a glut of savings and too few opportunities for private investment, shifting money to well-targeted public investments such as infrastructure and education would surely increase growth, Galbraith said.
Moreover, in the newly globalized economy, there is a greatly reduced inflation risk. If wages are pushed high enough, Galbraith says, there are plenty of students, retirees, stay-at home parents, under-employed freelancers and Mexican immigrants who could be lured back into the American workforce.
That, however, is not what generally happens in Denmark and Sweden.  In those countries, higher wages, free tuition and universal health care come in an economic package that generally also includes modest growth, higher unemployment, limited immigration and significantly higher middle-class taxes. The problem with the Sanders program, say its critics, is that it promises all the good parts of the Scandinavian model without any of the bad parts — all dessert, no spinach.
As Denmark’s Kierkegaard sees it, in the modern world, existing social, economic, political and cultural institutions are so complex and interdependent that it’s not possible to bring about radical change in one area without changing everything else.  And even if Sanders did manage to pull off all those changes, he said, the process would generate disruption and uncertainty that would slow the economy for years.
“Revolutions in advanced economies are extraordinarily costly,” he said. “That’s why incremental change is preferred.”

Steven Pearlstein is a business and economics columnist who writes about local, national and international topics.