MUST ANSWER ALL ASSIGNMENTS 1 AND 2. 1 PARAGRAPH FOR EACH QUESTION, YOU HAVE TO WRITE IT IN YOUR OWN WORDS.
(1) After reading Chapter Three of Mancur Olson’s Rise and Decline of Nations, Watch Harlan County USA.
(a) Do the striking Eastover workers like Lois Scott use selective incentives? If so, what are they?
One of the characteristics of Harlan County that some of the labor organizers and strikers mention is that the government in Harlan County does not represent the workers’ interests. For instance, the “gun thug” who shoots Lawrence Jones gets off, the strikers believe that the sheriff treats the “gun thugs” better than they get treated, and the workers don’t respect the state police. Workers outnumber managers, so the democratic form of government seems to work in a counterintuitive way in Harlan County, Kentucky.
(b) How would Olson explain outcomes from democracy like those?
(1) Read this Economist article: http://www.economist.com/node/17849199 and this Japan Daily Press article: http://japandailypress.com/toyota-labor-group-to-push-for-base-wage-increase-in-japan-0540534/
Olson argues that a special interest group will be motivated to favor redistribution of wealth to itself unless the reduction in the value of society’s output is more than 1/P greater than the amount won by the special interest, where P is the proportion of the total economy that the special interest represents (so that if the special interest is 1% of the economy, it will only care about the ill effects of its demands on society as a whole if the ill effects are 100 times or more greater than the benefit it achieves by extracting gains through others through the political system. He adds: “The incentives facing an encompassing special-interest organization are dramatically different from those facing an organization that represents only a narrow segment of society. If an organization represents, say, a third of the income producing capacity of a county, its members will, on average, obtain about a third of the benefit from any effort to make the society more productive.”
(a) What are the implications of this insight for unions in smaller versus larger countries (Sweden versus the US)? In which kind of country are unions likely to be more concerned with society at large than with their members?
(b) What are the implications for Japanese enterprise unions (unions that are associated with a single firm such as the Federation of All Toyota Workers’ Union) versus British craft unions (unions that cover an entire craft in a region or nation like plumbers or mechanics) for their attitudes toward their employers? In a single British plant there are dozens of craft unions, but in a Japanese Toyota plant there is only the single Federation of All Toyota Workers’ Union. Which type of union is likely to result in better cooperation between labor and management?
(c) Why might all-encompassing labor organizations or governments that say they favor labor’s interests, such as the former Soviet Union, fail to act in the interests of of the general public or of labor? Can we say that Olson’s argument is inapplicable to totalitarian or nonpluralistic governments that have a monopoly of power? Why does it break down in that he argues that groups will be more concerned with society as a whole as they control a large proportion?