Brooks channels Olson

NYT op-ed columnist David Brooks has a great article out today that applies Mancur Olson's insights to current problems in international relations. Olson wrote three brilliant and influential books - The Logic of Collective Action, The Rise and Decline of Nations and Power and Prosperity - that applied game theory and economic methodology more generally to social science questions. One of Olson's most important insights is that otherwise puzzling phenomena can be explained if we distinguish actors who have "encompassing interests" from those who have "narrow interests". Why is it, for example, that people overwhelmingly prefer autocracy to anarchy and lawlessness? Autocrats ('stationary bandits' as Olson calls them), after all, engage in regular theft (i.e. taxation), whereas 'roving bandits' (criminal bands that thrive under anarchy) engage only in irregular theft (i.e. raiding). The answer, as Olson showed brilliantly in Power and Prosperity, is that stationary bandits have an encompassing interest in the society they rule, whereas roving bandits have only a narrow stake. As a result, the rational autocrat only steals ('taxes') part of people's possessions and, amazingly, even invest in public goods, whereas roving bandits have no incentive to restrain themselves or produce public goods. Similar logic explains how special interest politics works: farm lobbies, for example, get all of the benefits of subsidies and tariff protection (direct income transfers, higher prices for their goods), but carry only a small part of the costs (higher taxes and food prices). Add Olson's insight from The Rise and Decline of Nations that small groups are far easier to organize than large groups (because of lower transaction costs) and can thus more readily influence policy, and we can see why many countries have protectionist agricultural policies despite the fact that they are deeply irrational overall.

Brooks takes these general insights and explains why the international community has repeatedly failed to implement policies that are overall in everyone's interest (like trade liberalization). Contrasting the current situation to the immediate post-war period, Brooks argues:

Today power is dispersed. There is no permanent bipartisan governing class in Washington. Globally, power has gone multipolar, with the rise of China, India, Brazil and the rest.

This dispersion should, in theory, be a good thing, but in practice, multipolarity means that more groups have effective veto power over collective action. In practice, this new pluralistic world has given rise to globosclerosis, an inability to solve problem after problem.

...

Groups with a strong narrow interest are able to block larger groups with a diffuse but generalized interest. The narrow Chinese interest in Sudanese oil blocks the world’s general interest in preventing genocide. Iran’s narrow interest in nuclear weapons trumps the world’s general interest in preventing a Middle East arms race. Diplomacy goes asymmetric and the small defeat the large.

The current situation is indeed a 'tyranny of the minority' (in Olson's felicitous phrase) and a tragedy of the commons results as collective action on issues as diverse as global warming, trade liberalization, global security, environmental protection, space exploration and the protection of human rights falters.

So what to do? I agree with Brooks that John McCain's idea of a "League of Democracies" is a good start. Anomalies like 'rogue democracies' aside, liberal democracies (as defined by, say, Freedom House) have a lot of interests in common and, on Olson's logic, a subset of countries is much more likely to engage in successful collective action. Even if such a group is formed, however, vast problems will persist and national interests will be far from identical. I suspect, on current trends, that intergovernmental global governance will grow increasingly difficult, and thus supranational global governance will become increasingly necessary. But, of course, supranational institutions are exceedingly difficult to create and a global government is conceivable only in the very long run. The prospects for global collective action looks bleak for the foreseeable future.

(Brooks, by the way, has explicitly acknowledged he has been influenced by Olson, so I'm not reading too much into his column).