One of the complaints I have made about interest groups is that they wield too much power. One way of obtaining influence is to be considered a legitimate participant in decision making. But what is legitimate? And how much participation is appropriate. Here is a case that I wrote about several years ago that illustrates the problem interest group politics poses for democracy.
Like most states, Delaware has always wanted to attract as much business as it could. So, in 1981, it passed a comprehensive bank reform act aimed at encouraging out-of-state banks torelocate within its borders. Among its other features, the bill granted banks wide discretion over their credit card operations--including the authority to charge virtually unlimited interest rates and to make variable and even retroactive finance charges--and gave banks that moved to the state generous tax breaks. Based on the building boom that followed, the legislation appears to have been successful: Wilmington, Delaware's largest city, has a new skyline dominated by 20- and 30-story office towers and hotels, and the state's tax coffers have swelled by millions of dollars.
But a law should be judged by more than its results. Motivated by the question, Who governs? one wants to know how legislation is framed and passed and who is involved in the process. A report in New York Times notes these facts:
This experience and others like it raise a number of questions about interest groups, questions that go to the heart of public participation in a democracy. Whether Delaware's bank reform law was a good or bad law is not the point. The point is power: Who has it and who should have it. Critics of interest group politics say it is one thing for bankers to plead their case, to suggest improvements in existing laws or propose new ones, or to argue that unless changes are made they will move elsewhere.
It is quite another matter, however, for them to use their financial resources, their accountants and lawyers, their connections to giant corporations, their prestige, and their threats to relocate in order to draft legislation to their own specifications--practically down to the last semicolon and period--and then to have it passed with a minimum of discussion and debate. Think of the power and audacity, the critics say, of a public official who believes that "a fundamental principle" does not have to be run by "anybody who doesn't agree with it." What happens to popular sovereignty and majority rule when the wishes of an industry loom so large in the legislative process that "you couldn't afford to scare" it away?
This example suggests to skeptics, especially in the power elite camp, that the fault of interest group politics is its tendency to lead to improper and inequitable representation; the best idea does not win, the one backed with the most resources does. Nearly a century aga, Woodrow Wilson called this type of government "survival of the fittest."
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