| Government and Markets: Toward a New Theory of Regulation
The Paranoid Style in the Study of American Politics
What drives policy making in a democracy? The conventional view is that political actors, like economic actors, pursue their self interest, and that special interest groups dominate the policy making process by satisfying policy makers' need for money and other forms of political support. Indeed, many scholars regard this economic theory of regulation as a general theory of politics. George Stigler himself claimed that "temporary accidents aside," exceptions "simply will not arise: our extensive experience with the general theory in economics gives us the confidence that this is so." In this chapter, we suggest that exceptions—including major ones—may in fact arise. We focus on three historical cases in which special interests apparently gave way to the general interest in the policy making process: the enactment of Medicare in 1965, in which the powerful doctors' lobby failed in its bid to stop the legislation; the Voting Rights Act of 1965, which passed overwhelmingly despite the absence of any economically powerful interest group behind it; and the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund), which became law over the strenuous objections of the powerful chemical industry lobby. In all three of these cases (and especially in the latter two), the proposed legislation became unstoppable in the aftermath of a relevant horror story—e.g., Love Canal, in the case of Superfund—that received extensive coverage in the press. Although one could argue that we focus only on high-profile cases, and that capture theory applies more cleanly to policies that slip under the public's radar screen, we have never seen the economic theory of regulation advertised as "a theory of minor legislative events." Ultimately, the challenge for scholars will be to identify the conditions under which special interests dominate (or capture) public policy and the conditions under which they do not. Although such a task lies far beyond the scope of this chapter, the three cases surveyed here suggest at least one potentially important dynamic: that in the presence of a free press, real-life horror stories with bearing on policy issues may serve to blunt the power of special interests by informing and catalyzing public opinion.
Power and Influence;