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THE RISE AND DECLINE OF NATIONS: ECONOMIC GROWTH, AND SOCIAL RIGIDITIES PDF, EPUB, EBOOK

Mancur Olson | 288 pages | 02 May 2011 | Yale University Press | 9780300030792 | English | New Haven, Not really. Not enough to declare the question of economic growth solved and develop deep-digging policy solutions based on the theory. Two problems me: 1 The measurement of economic growth itself is a poor proxy for national well-being. Consider that it does not capture, for example, environmental degradation. Seems much more complicated than this. Still, the ideas in the book are absolutely worth understanding and keeping in mind - as rarely will there be a policy question that does not involve collective action, and the inequalities and inefficiencies inherent in collusive advocacy. Jan 14, Erica rated it it was ok Shelves: grad-school. I had to read this book for school and it was one of my least-favorite books I have read in a long time. The first chapters of the book that set up his argument were okay, but the chapters on why his argument was right and especially the last chapter on macroeconomic theory did not interest me much. I also did not really like the author's writing style of "talking" to the reader and inserting himself in the first person. He did not do this often, but I thought it was unnecessary when he did it I had to read this book for school and it was one of my least-favorite books I have read in a long time. He did not do this often, but I thought it was unnecessary when he did it. View all 3 comments. Dec 29, J. George rated it liked it Shelves: books. I'm one of the laymen engineering by training who tried to read this for personal comprehension. It's a tough slog, since the obviously brilliant author meanders around the subject and embeds the pearls of wisdom inside a broad treatment. I would have thought that Yale University would have chained a good editor to Olson's ankle, as the reader has to at least this reader had to go back and forth to keep up with the reasoning and context. An would have been valuable to say the l I'm one of the laymen engineering by training who tried to read this for personal comprehension. An index would have been valuable to say the least! The basic take-away is pretty basic; anything that stifles availability of labor or product occurs more frequently over time in stable , and has an effect over time of reducing the growth potential of the society. He admits that pure laissez faire is likely to end up with most of the riches in the hands of the few, and his method to avoid that outcome was not clear to me. Those are interesting observations. Much of the intellectual challenge of the concept he offers is included in "figure 1," which is not titled, and is on page of my paperback copy. I'd love to attend a one hour seminar to understand that better, but after several "goes at it," with several cups of coffee over several mornings, I made decent and would give myself a C on groking it. Not quite sure what to do with this, other than to say it's a timely book given the "dog whistles" and overt policy changes of nationalism, , and barely hidden white pride that are only vaguely hidden behind Trump's statements and policies. History might show that we are on the cusp of some very dangerous developments. Sep 30, Paul Sand rated it it was ok. Sep 30, Yifan Evan Xu Hsu rated it it was amazing. This book is more than an exegesis of economic concerns in the s. It deals with a philosophical question of the nature of Western economies: when the is perfectly free where everyone in the acts in accordance with his or her best , why do depression and still occur? In this book, the culprits are the wide-spread special interest groups opposing the mainstream economic policies and seeking their own collective economic sanctuaries. By answering the qu This book is more than an exegesis of economic concerns in the s. By answering the question, the book unveils the relationship between national economies and influence of interest groups. It argues that countless interest groups introduces chaos to economy by restraining free movement of human and capital , causing decline in efficiency, slowing down technical and triggering the problem of ungovernability. Without any doubts, these problems would only occur in an open access society where formation of private organzitions is unrestricte, and thus can be seen as inevitable consequences of binding Capitalism and modern . However, the necessity of social interest groups as a cause does not imply that it is the only cause. The book diverts readers' attention from other equally probable factors of economic downturn despite the existence of a perfect market economy. There are three most commonly viewed factors. One often discussed in later works is the "". Technological innovations would make a certain portion of work force obsolete. Such unemployment results from the gap between the rate of and the rate of public adaptation to work with these innovations. The other factor would be public's deminishing motivation to work. In Capitalistic society, human motivation to work often derives from their inner insecurity due to lack of , but when the majority of work force becomes middle class, accumulation of wealth reduces public's insecurity and thus thwarts their motivation. The last one is the inevitable economic circles associated with circles of 's policies. Central bank's infliction on commercial credit lending usually causes depression; whereas ease of credit tends to forge economic . The circle of , therefore, is a factor of economic wellbeing and often the most crucial one. In fact, one can argue that with central bank's intervention, the market isn't perfectly free. Turbulence caused by social interest groups, therefore, is clearly one facet of economcy downturn, but these groups are not sufficient to cause depression not to mention the decline of a nation. That having been said, let's move attention back to the book. Author's analysis of interest groups shows that when society absent from war and other major crisis, individuals with common interests tend to coalesce to seek priviledges. Such coalitions of special interests and consequent among them sabotage economy's potential of speedy growth. In countries who just recovered from disorder, like postwar Germany and , coalition of special interest is depressed and their economies experienced the fastest growth. In the US where labor unions prevail, a clear negative correlation was found between labor union growth and local economies' growth. The book also discusses how distributional coalition puts burden on governmental regulations and relies on heavy historical instances and illustrations to prove author's points. Finally, it suggests that the Western pluralist political structure is incapable to heal wounds inflicted by coalitions and their competitions. Overall, the book persuaded me to see eye-to-eye with author about the delimma : upheaval of storms made all ships to sail in the same direction at a high speed, whereas ships seeking their own directions in peaceful water slow down the entire fleet. The former is a Keynesian triumph, and the later is a laissez-faire tradegy. was a first class thinker and an held in high esteem. His "The Logic of Collective Action" is rightly regarded as a classic not hype in this case. This book is another fascinating product from Olson's mind. It is not a classic at the level of the book just mentioned, but this volume did have an effect on thinking and research. The thesis is relatively straightforward. The longer any society experiences political stability and economic success, one natural consequence is t Mancur Olson was a first class thinker and an economist held in high esteem. The longer any society experiences political stability and economic success, one natural consequence is the development of an expanded and more active interest group system. The end result? The interest groups work to build preferences into the country's legislative and administrative structures, with deleterious results on economic growth and vibrancy. Inefficiencies burgeon and economies stagnate. The thesis, thus stated, is surely plausible. We hear routinely of how interest groups prevent change and lobby hard for protection of their position. Thus stated, Olson's book develops this thesis nicely and provides some historical examples and other evidence to support the perspective. Since publication of the book, a number of emprircal studies have been carried out to test Oldon's thesis--with mixed results. However, sometimes a book is more important for the thinking that it stimulates rather than for simple tests of the author's arguments. In some senses, I think that this book had a substantial impact in its day on thinking about the consequences of interest groups from a "big picture" perspective. Worth reading for the thinking that will result! From my perspective? A bit simplistic. May 10, Jan Notzon rated it it was amazing. In The Rise and Decline of Nations, Mancur Olson posits a quite credible theory of why nations grow, stagnate or decline. As I understand it, as nations age they acquire more and more what Olson calls "distributional organizations," unions, unions, manufacturing associations, professional associations, etc. Although he admits that there are multiple other forces at work. He supports the theory very well, showing how it explains the r In The Rise and Decline of Nations, Mancur Olson posits a quite credible theory of why nations grow, stagnate or decline. He supports the theory very well, showing how it explains the rapid growth of Britain in the late 16th and through the early 19th century and then its decline , the rapid growth of the U. He also makes a very good case for his theory explaining the rapid growth of Germany and Japan after WWII, the Caste system in India, in South , developing nations, third world nations, etc. Only the last chapter is not an easy read for those non- among us like me! But a fascinating theory and book. Jun 21, Andrew Holt rated it liked it. The most interesting chapter was the early one where he summarizes his Logic of Collective Action. Jan 17, Joe rated it liked it. The author makes a number of interesting insights that explain much about how the country reached the current malaise, including how special interest organizations emerge over time and how their efforts frustrate economic growth, make law and regulation more complex, and make political life more divisive from their efforts to redistribute income. He asserts that over time such groups influence leads societies to become ungovernable. The author rigorously supports the insignts he makes throughout The author makes a number of interesting insights that explain much about how the country reached the current malaise, including how special interest organizations emerge over time and how their efforts frustrate economic growth, make law and regulation more complex, and make political life more divisive from their efforts to redistribute income. The author rigorously supports the insignts he makes throughout the book--at times spending an overwhelming amount of time explaining to the read his scientific method to reach the insights in the book and the statistical methods he uses to support his claims. While it was important for him to explain both, I could have done with less of a statistics method and still been able to judge the validity of his insights. Sep 07, Nicholas rated it really liked it. A great book. Mar 08, Joe Thacker rated it it was ok. Too much chaff and needlessly longwinded, so I wanted to give it one star, but I learned a few new insights in this book so I was forced to give two stars. Jun 26, Chris rated it it was amazing Shelves: development. Olson's explanation of the rise and decline of nations is spot on. Furthermore, it applies to all groups, from the smallest social group to the largest corporation. May 06, ! Apr 01, Frank Thun rated it it was amazing. Build on the logic of collective action, applied to history and forecasting. Jul 15, Neil rated it liked it. Good book but a little too academic for my tastes. Nov 28, Jacques Mebius rated it it was amazing. This is about growing the pie versus getting a bigger piece of the pie. Jan 27, Josh Tatum marked it as to-read Shelves: history , politics. Mitch Daniels "Five Books". Jul 09, Chris marked it as to-read. Dry but still fascinating. Sep 27, Dan rated it really liked it Shelves: political-economy. Great, often overlooked book using relatively basic incentive-based arguments to explain the rise and decline of nations. Important book that explains how nations are eventually swallowed by their own growing governments and by the special interests who together gradually take control of the economy. View 1 comment. Molly rated it liked it Dec 30, Robin rated it liked it Jul 19, Garrett rated it it was ok Mar 16, Kallah Hatcherian rated it it was amazing Sep 28, Nightocelot rated it it was amazing Dec 03, There are no discussion topics on this book yet. Readers also enjoyed. About Mancur Olson. Mancur Olson. American economist and social scientist who, at the time of his death, worked at the University of Maryland, College Park. Among other areas, he made contributions to on the role of private , taxation, public , collective action and contract rights in . Olson focused on the logical basis of interest group membership and participation. The re American economist and social scientist who, at the time of his death, worked at the University of Maryland, College Park. The reigning political theories of his day granted groups an almost primordial status. Some appealed to a natural human instinct for herding, others ascribed the formation of groups that are rooted in kinship to the process of modernization. Olson offered a radically different account of the logical basis of organized collective action. He specifically distinguishes between large and small groups, the latter of which can act simply on a shared objective. Large groups, however, will not form or work towards a shared objective unless individual members are sufficiently motivated. In , he expanded the scope of his earlier work in an attempt to explain The Rise and Decline of Nations. In some respects he is more universal in his outlook than the other two as Mancur Olson. The years since World War II have seen rapid shifts in the relative positions of different countries and regions. Leading political economist Mancur Olson offers a new and compelling theory to explain these shifts in fortune and then tests his theory against evidence from many periods of history and many parts of the world. A convincing book that could make a big difference in the way we think about modern economic problems.

Olson is obviously on to something. By the stern tests of empirical science that Mr. Olson insists must be applied, the jury is out. Olson may lament the tendency to ad hoc explanations of growth by other economists, but his own survey of whole nations comes perilously close to the same thing: Booming Europe has a common market, while stagnation-prone Australia and New Zealand don't; Switzerland has guest workers; Germany has national labor bargaining. In the case of the United States, Mr. Olson tries for statistical rigor. But his analysis, based on comparisions between states, isn't going to impress an econometrician. The equations yielded by this method look like science, but they reveal little that the nonscientific eye does not see: The Sun Belt, which has a younger economy and doesn't have unions, is growing faster than the old, unionized Frost Belt. The South, ''cleansed'' of entrenched interest groups by defeat in the Civil War, is growing faster than the victorious North. Olson's rather academic application of his overall theory to explaining how unemployment can persist even when most workers would prefer reduced to joblessness. This is a classic puzzle, the very heart of the intellectual conflict between and its critics. But viewed as an example of group behavior, it seems fairly simple. As Mr. Olson explains in some detail, groups - in this case unions -can't manage any change quickly unless all members agree that the change is desirable. Hence wages adjust rapidly when the adjustment is up but slowly when the necessary adjustment is down. Do Mr. Olson's insights have practical significance? One way to reduce the damage small groups are doing to the economy is to create countervailing forces. If unions and trade associations exacerbate and unemployment, Government can fight back with informal and guidelines or formal tax policies that penalize wage and price increases. If groups find it easier to be effective at the local level, Government can fight back by centralizing decision making at the Federal level. By these tests, the Reagan Administration, which was elected to fight decline, seems doomed to accelerate it. Wage and price guidelines are out; the ''New Federalism,'' a celebration of decentralized government, is in. At very least Mr. Olson offers a clever new paradigm for evaluating . The Rise and Decline of Nations promises to be a subject of productive interdisciplinary argument for years to come. Keohane, Journal of Economic Literature"I urgently recommend it to all economists and to a great many non-economists. Kammerer Award for the best book on U. Mancur Olson. The years since World War II have seen rapid shifts in the relative positions of different countries and regions. Leading political economist Mancur Olson offers a new and compelling theory to explain these shifts in fortune and then tests his theory against evidence from many periods of history and many parts of the world. A convincing book that could make a big difference in the way we think about modern economic problems. Keohane, Journal of Economic Literature "I urgently recommend it to all economists and to a great many non-economists. Kammerer Award for the best book on U. Comparative Politics: Theory and Methods B. Beyond the Welfare State? Its main thesis is simplicity itself - that societies over time accumulate interest groups like ships' hulls accumulate barnacles, and over time these groups become more interested in rerouting the benefits of progress to themselves than investing in the future. Think labor unions, manufacturer's groups, advocacy organizations, even charities. He builds on It's pretty rare that you find a book, particularly in a well-trodden field like economics, that manages to feel both original and important. He builds on his earlier work, The Logic of Collective Action, in identifying why special interests form, some barriers to their formation and success, and how they persist and operate once formed. It seems both inarguable and almost obvious, in the way of the best economic logic, but in much the same way that an idea as seemingly non-controversial today as division of labor had to be explained over hundreds of pages way back in the day by , so Olson has to spend his time laying out all the background detail on how groups decide to grab their slice of the economic pie rather than investing in bakeries and making more pies, instead of just condensing his arguments to bullet points and getting on with it. One of the things that endeared this book to me is that it neatly complements the existing schools of economic thought - you can still be a die-hard Friedmanite or Keynesian while still accepting his regressions on the effects of interest groups on growth rates. Additionally, he doesn't take an ideological stance on whether these groups are good or bad; special interests are simply advocating for whatever is special to them, and rare is the reader who won't agree that at least some special interest groups are doing some good overall. The ultimate implications of his book as I understand them are not so good for the US: once a society becomes encrusted to a point with groups dedicated to redirecting towards their members e. Social Security and Medicare for the AARP, farm and energy subsidies for the folks in flyover states, the military- in its entirety , it becomes almost impossible to dislodge them without some kind of shock to the political system equivalent to a revolution or a defeat in a war the temporary lack of interest groups is his major explanation for the rapid growth of the seemingly ruined Axis nations after World War 2. So after political shocks, countries can experience years or decades of "catch-up" growth until coalitions start forming to argue for special treatment, and ironically fast-growing societies can sow the seeds of their own stagnation by betting that it's cheaper to buy off these coalitions rather than fight them, until lo and behold they grind to a halt. The United States has been blessed with an unusually stable political system relative to most other advanced nations, and stability is the perfect breeding ground for parasites, so even the recent , as traumatic as it is for average people, has made little impact on Capitol Hill where the real action and lobbying and horse-trading have continued practically uninterrupted. This all has real consequences: if you look at a graph of American GDP growth by decade, each one is inevitably less than the one before, with the sole exception of the 90s as the entered their working prime. Lacking that irreproducible demographic bonus, and barring future technological miracles the "New Economy" of internet companies doesn't look like it's going too well , America can look forward to ever-slower growth in spite of all its other advantages like plentiful immigration and its world- class universities, simply because there are so many interest groups trying to grab goodies for themselves. This is of course on top of other challenges like , the steady evaporation of the middle class, and transnationalized businesses that don't really care about the average chump who can't afford their stuff anyway, and so it's kind of tough to see where we can go from here. However, I'm not really sure his ending arguments about the way that flexible operate in an era of stagflation - supposedly the climax of the book and the strongest formulation of his alternative to Keynes - is very accurate, at least with respect to the : unemployment has doubled across the board in every industry, in every state, for every educational level, which is something that's tough to explain as the result of distributional coalitions and constrained movement between the "flexprice" versus "fixprice" sectors. Also, a lot of his regression tests seem to have broken down completely in the intervening years this book was published in , like the relationship between state-level unionization and unemployment, which obviously considerably weakens his theory. I still think Keynes has the best foundational framework for thinking through the mechanics of . Still, it's an interesting book, even inarguably "true" in parts, and so I think it's a valuable addition to everyone's mental economics toolbox, especially the parts emphasizing how historically dependent a lot of economic theories are. Unfortunately his is too, but that's pretty much unavoidable. Economics is often nothing more than philosophy with a veneer of psychology, rather than the physics with a veneer of politics it pretends to be. I remember liking it quite a bit too, and being convince of the argument - that developed nations tended to start growing slower and stagnating due to the special interests getting more and more political power and legislation passing that prevented competition, faster growth and development. The author is seen as one of the key players in the development of 17 Oct. The author is seen as one of the key players in the development of the field of "" economics and highly admired, justifiably so. The things that knocked down my rating of the book were: 1. If he had explored these ideas seriously, he would not have made such a nasty and ill-informed statement about laissez-faire. So I recommend the book and it's sound thesis highly. But beware. Updated in a minor way: View 2 comments. Aug 08, Ian Robertson rated it it was amazing. The second of three major works by the late University of Maryland economist Mancur Olson, The Rise and Decline of Nations builds on the theories of his first work, The Logic of Collective Action: Public Goods and the Theory of Groups, and applies them to macroeconomic issues, in particular: stagflation, unemployment, and business cycles. Olson writes for a general audience, with both the economic theory and the examples presented in plain English and well explained. The final chapter delves a b The second of three major works by the late University of Maryland economist Mancur Olson, The Rise and Decline of Nations builds on the theories of his first work, The Logic of Collective Action: Public Goods and the Theory of Groups, and applies them to macroeconomic issues, in particular: stagflation, unemployment, and business cycles. The final chapter delves a bit deeper into economic theory, but will still be within the grasp of non-economists. For centuries, if not millennia, people have been fascinated by the rise and fall of nations. Many have written about the issue in various ways: Edward Gibbon opted for an historical case study in The Decline and Fall of the Roman Empire; Jared Diamond took a broad, -based geographic approach in his bestselling Guns, Germs and ; while in Capital in the Twenty-first Century used an economic approach to note that extreme divergences in wealth have historically led to civil unrest, revolution, and the collapse of regimes. Olson uses a bottom-up approach, drawing on his earlier work in Logic to propose that the incentive and ability of groups to self-organize within a society has a growing impact over time on economic efficiency and growth. From this, he draws nine implications: 1. Stable societies with unchanged boundaries tend to accumulate more collusions and organizations for collective action over time. Members of "small" groups have disproportionate organizational power for collective action, and this disproportion diminishes but does not disappear over time in stable societies. On balance, special-interest organizations and collusions reduce efficiency and in the societies in which they operate and make political life more divisive. Encompassing organizations have some incentive to make the society in which they operate more prosperous, and an incentive to redistribute income to their members with as little excess burden as possible, and to cease such redistribution unless the amount redistributed is substantial in relation to the of the redistribution. Distributional coalitions make decisions more slowly than the individuals and firms of which they are comprised, tend to have crowded agendas and bargaining tables, and more often fix prices than quantities. Distributional coalitions slow down a society's capacity to adopt new technologies and to reallocate resources in response to changing conditions, and thereby reduce the rate of economic growth. Distributional coalitions, once big enough to succeed, are exclusive, and seek to limit the diversity of incomes and values of their membership. The accumulation of distributional coalitions increases the complexity of regulation, the role of government, and the complexity of understandings, and changes the direction of social evolution. The explanatory variable, contends Olson, is the societal and labour rigidities, in part caused by special interest groups and imperfect information. The book was written in , when stagflation was presumed economically impossible. The Curve predicted a trade-off between unemployment and inflation, not both together. Jul 05, Adam Orford rated it liked it. Five-star ideas and two-star writing. Olson is brilliant but this book is a terrible slog - meandering, verbose, unstructured, unfocused. The main takeaway of this book is that special interest groups are a drag on national economies. But its ve Five-star ideas and two-star writing. But its very appeal justifies a deep skepticism - beware sciency-looking explanations of things you already agree with, especially when they are based on regressions. To his credit, Olson acknowledges this and sets himself a high bar and writes about the challenge at length! And then he tackles the very small data set of very dissimilar national examples and US states and runs a lot of regressions and voila, presents evidence that does support his point. But does the evidence prove his point? Not really. Not enough to declare the question of economic growth solved and develop deep-digging policy solutions based on the theory. Two problems interest me: 1 The measurement of economic growth itself is a poor proxy for national well- being. Consider that it does not capture, for example, environmental degradation. Seems much more complicated than this. Still, the ideas in the book are absolutely worth understanding and keeping in mind - as rarely will there be a policy question that does not involve collective action, and the inequalities and inefficiencies inherent in collusive advocacy. Jan 14, Erica rated it it was ok Shelves: grad-school. I had to read this book for school and it was one of my least-favorite books I have read in a long time. The first chapters of the book that set up his argument were okay, but the chapters on why his argument was right and especially the last chapter on macroeconomic theory did not interest me much. I also did not really like the author's writing style of "talking" to the reader and inserting himself in the first person. He did not do this often, but I thought it was unnecessary when he did it I had to read this book for school and it was one of my least-favorite books I have read in a long time. He did not do this often, but I thought it was unnecessary when he did it. View all 3 comments. Dec 29, J. George rated it liked it Shelves: books. I'm one of the laymen engineering by training who tried to read this for personal comprehension. It's a tough slog, since the obviously brilliant author meanders around the subject and embeds the pearls of wisdom inside a broad treatment. I would have thought that Yale University would have chained a good editor to Olson's ankle, as the reader has to at least this reader had to go back and forth to keep up with the reasoning and context. An index would have been valuable to say the l I'm one of the laymen engineering by training who tried to read this for personal comprehension. An index would have been valuable to say the least! The basic take-away is pretty basic; anything that stifles availability of labor or product occurs more frequently over time in stable economies, and has an effect over time of reducing the growth potential of the society. He admits that pure laissez faire capitalism is likely to end up with most of the riches in the hands of the few, and his method to avoid that outcome was not clear to me. Those are interesting observations. Much of the intellectual challenge of the concept he offers is included in "figure 1," which is not titled, and is on page of my paperback copy. I'd love to attend a one hour seminar to understand that better, but after several "goes at it," with several cups of coffee over several mornings, I made decent progress and would give myself a C on groking it. Not quite sure what to do with this, other than to say it's a timely book given the "dog whistles" and overt policy changes of nationalism, protectionism, and barely hidden white pride that are only vaguely hidden behind Trump's statements and policies. History might show that we are on the cusp of some very dangerous developments. Sep 30, Paul Sand rated it it was ok. Sep 30, Yifan Evan Xu Hsu rated it it was amazing. This book is more than an exegesis of economic concerns in the s. It deals with a philosophical question of the nature of Western economies: when the market is perfectly free where everyone in the economy acts in accordance with his or her best interests, why do depression and unemployment still occur? In this book, the culprits are the wide-spread special interest groups opposing the mainstream economic policies and seeking their own collective economic sanctuaries. Castes, he argues, are interest groups that succeed by defending their homogeneity and group consciousness by imposing rigid rules of privilege and intermarriage. How to halt this economic equivalent of atherosclerosis? One way, according to Mr. Olson, is to enlarge economic jurisdictions, making it harder for small groups to organize: Hence the virtue of the American Constitution, which guarantees free commerce between states, and the remarkable success of the European Common Market, which overrides parochial national efforts to regulate trade and business. Another way is to smother special interests in ''encompassing'' groups. New York's crane operators can safely ignore the effect of their higher wages on the cost of living; Germany's labor coalition, which bargains on behalf of many different groups of industrial workers, cannot. Still another method is practiced by the Swiss, whose reliance on transient foreign ''guest workers'' blocks labor-union power. Olson is obviously on to something. By the stern tests of empirical science that Mr. Olson insists must be applied, the jury is out. Olson may lament the tendency to ad hoc explanations of growth by other economists, but his own survey of whole nations comes perilously close to the same thing: Booming Europe has a common market, while stagnation-prone Australia and New Zealand don't; Switzerland has guest workers; Germany has national labor bargaining. In the case of the United States, Mr. Olson tries for statistical rigor. But his analysis, based on comparisions between states, isn't going to impress an econometrician. The equations yielded by this method look like science, but they reveal little that the nonscientific eye does not see: The Sun Belt, which has a younger economy and doesn't have unions, is growing faster than the old, unionized Frost Belt. The South, ''cleansed'' of entrenched interest groups by defeat in the Civil War, is growing faster than the victorious North. Olson's rather academic application of his overall theory to explaining how unemployment can persist even when most workers would prefer reduced wages to joblessness. This is a classic puzzle, the very heart of the intellectual conflict between Keynesian economics and its critics. But viewed as an example of group behavior, it seems fairly simple. As Mr. Olson explains in some detail, groups - in this case unions -can't manage any change quickly unless all members agree that the change is desirable. Hence wages adjust rapidly when the adjustment is up but slowly when the necessary adjustment is down. Do Mr. Olson's insights have practical significance?

Along the way, he tosses out nuggets of analysis from his basic theory to explain everything from the caste system of India to South African racial laws to the location of industry in 17th-century England. How much of this audacious effort will stand the scrutiny of specialists is not clear. But Mr. Olson has written a convincing little book that could make a big difference in the way we think about modern economic problems. Explaining growth, or the lack of it, is the meat and potatoes of policy-oriented economics. But in spite of all the research they have done on technical innovation, and individual enterprise, Mr. Olson argues, economists shy away from the real questions. For example, Japan's success in adapting American technology to consumer products might go far in explaining why the Japanese economy grew so rapidly in the 's. Yet it doesn't explain why that growth slowed in the 's or why Taiwan and Singapore now seem to be beating Japan at its own game. When pressed, economists seek refuge in stories about labor unions or relative wages or the work ethic - or they go for a coffee break. But such ad hoc- ery generates untestable theories at best and at worst misleading nonsense, Mr. Olson says. What is needed is a theory comprehensive enough to explain growth and decline in many places and times, yet simple enough to be testable. Enter Mr. Olson's theory, a paradox with a point. It might seem obvious that if everyone in a group -be it Austrians or paraplegics or Marx's bourgeoisie - understands the common interest, each member of the group will work toward the common goal. But the obvious isn't true, Mr. Olson says: Unless the group has a way to compel socially enlightened behavior, individuals will usually have a strong incentive to ''let George do it. What does littering have to do with the fall of nations? Some interest groups are easier to keep in line than others and therefore are more likely to succeed in attaining their goals. The winners are usually small, homogeneous groups that find it relatively easy to apply formal or informal sanctions against any member who wanders off on his own and in which each member perceives a great gain to be obtainable from unity. Thus beer cans decorate highways, which are everyone's turf, but not living room floors. Thus construction crane operators strike for six-figure incomes while the A. Thus a few thousand owners of private planes soak up vast government subsidies while millions of rail commuters ride in dilapidated cars. Updated in a minor way: View 2 comments. Aug 08, Ian Robertson rated it it was amazing. The second of three major works by the late University of Maryland economist Mancur Olson, The Rise and Decline of Nations builds on the theories of his first work, The Logic of Collective Action: Public Goods and the Theory of Groups, and applies them to macroeconomic issues, in particular: stagflation, unemployment, and business cycles. Olson writes for a general audience, with both the economic theory and the examples presented in plain English and well explained. The final chapter delves a b The second of three major works by the late University of Maryland economist Mancur Olson, The Rise and Decline of Nations builds on the theories of his first work, The Logic of Collective Action: Public Goods and the Theory of Groups, and applies them to macroeconomic issues, in particular: stagflation, unemployment, and business cycles. The final chapter delves a bit deeper into economic theory, but will still be within the grasp of non-economists. For centuries, if not millennia, people have been fascinated by the rise and fall of nations. Many have written about the issue in various ways: Edward Gibbon opted for an historical case study in The Decline and Fall of the Roman Empire; Jared Diamond took a broad, resource-based geographic approach in his bestselling Guns, Germs and Steel; while Thomas Piketty in Capital in the Twenty-first Century used an economic approach to note that extreme divergences in wealth have historically led to civil unrest, revolution, and the collapse of regimes. Olson uses a bottom-up approach, drawing on his earlier work in Logic to propose that the incentive and ability of groups to self-organize within a society has a growing impact over time on economic efficiency and growth. From this, he draws nine implications: 1. Stable societies with unchanged boundaries tend to accumulate more collusions and organizations for collective action over time. Members of "small" groups have disproportionate organizational power for collective action, and this disproportion diminishes but does not disappear over time in stable societies. On balance, special-interest organizations and collusions reduce efficiency and aggregate income in the societies in which they operate and make political life more divisive. Encompassing organizations have some incentive to make the society in which they operate more prosperous, and an incentive to redistribute income to their members with as little excess burden as possible, and to cease such redistribution unless the amount redistributed is substantial in relation to the social cost of the redistribution. Distributional coalitions make decisions more slowly than the individuals and firms of which they are comprised, tend to have crowded agendas and bargaining tables, and more often fix prices than quantities. Distributional coalitions slow down a society's capacity to adopt new technologies and to reallocate resources in response to changing conditions, and thereby reduce the rate of economic growth. Distributional coalitions, once big enough to succeed, are exclusive, and seek to limit the diversity of incomes and values of their membership. The accumulation of distributional coalitions increases the complexity of regulation, the role of government, and the complexity of understandings, and changes the direction of social evolution. The explanatory variable, contends Olson, is the societal and labour rigidities, in part caused by special interest groups and imperfect information. The book was written in , when stagflation was presumed economically impossible. The Philips Curve predicted a trade-off between unemployment and inflation, not both together. Jul 05, Adam Orford rated it liked it. Five-star ideas and two- star writing. Olson is brilliant but this book is a terrible slog - meandering, verbose, unstructured, unfocused. The main takeaway of this book is that special interest groups are a drag on national economies. But its ve Five-star ideas and two-star writing. But its very appeal justifies a deep skepticism - beware sciency-looking explanations of things you already agree with, especially when they are based on regressions. To his credit, Olson acknowledges this and sets himself a high bar and writes about the challenge at length! And then he tackles the very small data set of very dissimilar national examples and US states and runs a lot of regressions and voila, presents evidence that does support his point. But does the evidence prove his point? Not really. Not enough to declare the question of economic growth solved and develop deep-digging policy solutions based on the theory. Two problems interest me: 1 The measurement of economic growth itself is a poor proxy for national well-being. Consider that it does not capture, for example, environmental degradation. Seems much more complicated than this. Still, the ideas in the book are absolutely worth understanding and keeping in mind - as rarely will there be a policy question that does not involve collective action, and the inequalities and inefficiencies inherent in collusive advocacy. Jan 14, Erica rated it it was ok Shelves: grad-school. I had to read this book for school and it was one of my least-favorite books I have read in a long time. The first chapters of the book that set up his argument were okay, but the chapters on why his argument was right and especially the last chapter on macroeconomic theory did not interest me much. I also did not really like the author's writing style of "talking" to the reader and inserting himself in the first person. He did not do this often, but I thought it was unnecessary when he did it I had to read this book for school and it was one of my least-favorite books I have read in a long time. He did not do this often, but I thought it was unnecessary when he did it. View all 3 comments. Dec 29, J. George rated it liked it Shelves: books. I'm one of the laymen engineering by training who tried to read this for personal comprehension. It's a tough slog, since the obviously brilliant author meanders around the subject and embeds the pearls of wisdom inside a broad treatment. I would have thought that Yale University would have chained a good editor to Olson's ankle, as the reader has to at least this reader had to go back and forth to keep up with the reasoning and context. An index would have been valuable to say the l I'm one of the laymen engineering by training who tried to read this for personal comprehension. An index would have been valuable to say the least! The basic take-away is pretty basic; anything that stifles availability of labor or product occurs more frequently over time in stable economies, and has an effect over time of reducing the growth potential of the society. He admits that pure laissez faire capitalism is likely to end up with most of the riches in the hands of the few, and his method to avoid that outcome was not clear to me. Those are interesting observations. Much of the intellectual challenge of the concept he offers is included in "figure 1," which is not titled, and is on page of my paperback copy. I'd love to attend a one hour seminar to understand that better, but after several "goes at it," with several cups of coffee over several mornings, I made decent progress and would give myself a C on groking it. Not quite sure what to do with this, other than to say it's a timely book given the "dog whistles" and overt policy changes of nationalism, protectionism, and barely hidden white pride that are only vaguely hidden behind Trump's statements and policies. History might show that we are on the cusp of some very dangerous developments. Sep 30, Paul Sand rated it it was ok. Sep 30, Yifan Evan Xu Hsu rated it it was amazing. This book is more than an exegesis of economic concerns in the s. It deals with a philosophical question of the nature of Western economies: when the market is perfectly free where everyone in the economy acts in accordance with his or her best interests, why do depression and unemployment still occur? In this book, the culprits are the wide-spread special interest groups opposing the mainstream economic policies and seeking their own collective economic sanctuaries. By answering the qu This book is more than an exegesis of economic concerns in the s. By answering the question, the book unveils the relationship between national economies and influence of interest groups. It argues that countless interest groups introduces chaos to economy by restraining free movement of human and capital resources, causing decline in production efficiency, slowing down technical innovations and triggering the problem of ungovernability. Without any doubts, these problems would only occur in an open access society where formation of private organzitions is unrestricte, and thus can be seen as inevitable consequences of binding Capitalism and modern democracy. However, the necessity of social interest groups as a cause does not imply that it is the only cause. The book diverts readers' attention from other equally probable factors of economic downturn despite the existence of a perfect market economy. There are three most commonly viewed factors. One often discussed in later works is the "creative destruction". Technological innovations would make a certain portion of work force obsolete. Such unemployment results from the gap between the rate of innovation and the rate of public adaptation to work with these innovations. The other factor would be public's deminishing motivation to work. In Capitalistic society, human motivation to work often derives from their inner insecurity due to lack of wealth, but when the majority of work force becomes middle class, accumulation of wealth reduces public's insecurity and thus thwarts their motivation. The last one is the inevitable economic circles associated with circles of central bank's policies. Central bank's infliction on commercial credit lending usually causes depression; whereas ease of credit tends to forge economic prosperity. The circle of monetary policy, therefore, is a factor of economic wellbeing and often the most crucial one. In fact, one can argue that with central bank's intervention, the market isn't perfectly free. Turbulence caused by social interest groups, therefore, is clearly one facet of economcy downturn, but these groups are not sufficient to cause depression not to mention the decline of a nation. That having been said, let's move attention back to the book. Author's analysis of interest groups shows that when society absent from war and other major crisis, individuals with common interests tend to coalesce to seek priviledges. Such coalitions of special interests and consequent competition among them sabotage economy's potential of speedy growth. In countries who just recovered from disorder, like postwar Germany and Japan, coalition of special interest is depressed and their economies experienced the fastest growth. In the US where labor unions prevail, a clear negative correlation was found between labor union growth and local economies' growth. The book also discusses how distributional coalition puts burden on governmental regulations and relies on heavy historical instances and illustrations to prove author's points. Finally, it suggests that the Western pluralist political structure is incapable to heal wounds inflicted by coalitions and their competitions. Overall, the book persuaded me to see eye-to-eye with author about the delimma : upheaval of storms made all ships to sail in the same direction at a high speed, whereas ships seeking their own directions in peaceful water slow down the entire fleet. The former is a Keynesian triumph, and the later is a laissez-faire tradegy. Mancur Olson was a first class thinker and an economist held in high esteem. Mancur Olson along with and Michael Porter may well be one of the key figures of late 20th century economics. In some respects he is more universal in his outlook than the other two as Mancur Olson.

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