If you’ve spent much time with a public choice economist, you’ve likely heard about “concentrated benefits and dispersed costs.”
The idea is that many indefensible government programs, subsidies, and tax breaks survive year after year because the few who derived the “concentrated benefits” from these goodies are very vocal about maintaining them. It’s in their interest to do whatever they can to maintain these handouts or special deals.
Meanwhile, the costs are so widely dispersed that the average taxpayer has little incentive to do much to fight the bad ideas.
The latest Bloomberg Businessweek offers a good example of this phenomenon:
U.S. lawmakers in both parties are seriously weighing proposals that could shave from $4 trillion to $6 trillion from the U.S. budget over the next decade. For America’s lobbying class, that’s the equivalent of a Category 5 storm warning. So the pinstripe brigade representing interest groups as diverse as ethanol producers, defense contractors, and hospital chains has descended on the nation’s capital in recent weeks to ensure their tax breaks and subsidies are spared. Some 2,000 real estate agents parachuted into Washington the week of May 8 to defend the tax deduction homeowners receive on mortgage interest. Thousands of farmers who want to forestall cuts in agriculture subsidies have also been buttonholing their representatives. “I can’t remember anything close to this,” says Howard Marlowe, president of the American League of Lobbyists in Alexandria, Va., who during three decades as a Washington lobbyist has seen his share of budget battles.
