Definition and the “other guy’s supporters”
On the August 15, 2009 episode, Bob Zadek offered a definition of the phrase while criticizing the Cash for Clunkers program. He said that “special interest is not precisely defined” and that it “really just means the other guy’s supporters.” He then asked whether the clunker program, which he said benefits a very small segment of society and the economy while harming other segments, was special interest at its most crass Cash For Clunkers is a Dud (2009).
Guest Katherine Mangu-Ward agreed and broadened the point. She said that lacking a cluster of high-paid lobbyists does not mean a group is not a special interest, and that this is sometimes lost in discussion of the subject. She noted a ban on bringing people into the administration who have certain backgrounds classed as special interest, and observed that people with strongly vested interests in certain groups who have never been paid to hang around Capitol Hill and take people out to lunch do not get caught in those bans. She concluded that any legislation targeting a small subset of Americans at the expense of the general taxpaying public could rightly be called special interest Cash For Clunkers is a Dud (2009).
Cash for Clunkers as a case study
Zadek framed the 2009 clunker program as an administration that had campaigned against special interest legislation producing what he called special interest at its worst. He said it benefits a tiny subset of the economy, if it benefits them at all, and harms the rest Cash For Clunkers is a Dud (2009).
The episode also tied the program to individual decision-making and debt. Zadek argued that someone content with an existing car was bribed with free money to buy a new car and probably incur debt, because the $4,500 does not cover the cost of the new car, so the driver must take on a loan and end up with debt instead of a fully paid-for car. He said the problem with the economy was over-leveraged and too much debt, and that people probably at the low end of the economic spectrum were incurring debt because the government encouraged them to Cash For Clunkers is a Dud (2009). Mangu-Ward said that at the beginning of the recession people exhibited rational economic behaviors, saving more, spending less and paying down debt, and that plans like Cash for Clunkers were designed to trick people out of that rational behavior and move them back to taking on debt and spending more Cash For Clunkers is a Dud (2009).
Earlier in the same episode, a caller identified as Richard and Zadek discussed the program’s numbers. Zadek corrected the caller’s figure of a $1 billion initial allocation to $2 billion, and the caller said he had found a number online of 22,000, which he called ridiculously low. Mangu-Ward said that dividing the allocation by 4,500 gives the number of transactions, that each transaction required one clunker, but that how many were officially done in is less clear, because many dealers were sitting on clunkers waiting to be told how to turn them in and worried that once they let the clunkers go they would not have proof of compliance Cash For Clunkers is a Dud (2009).
Seasteading and the accumulation of interests
Patri Friedman, on the September 12, 2009 episode, described what he called a sclerosis in democracies: an accumulation of special interests that slow everything down and seize control of the systems, which he called a robust feature of democracies. He cited the economist Mancur Olson, who studied how Germany and Japan’s economies did after losing World War II and found they did really well because losing the war wiped out the special interests and unions that had seized control of bits of government to entrench themselves and feed off everyone else, and it took a long time for them to re-establish themselves Seasteading (2009).
Friedman extended the argument to European integration, saying that when countries integrated into the EU it took a while for the cartels and unions that had captured, say, France to capture the whole European Union, and for a while growth was better. He said that unless there is a reset that wipes the slate clean, there is more and more buildup of this incrustation of special interests, which he said was seen in the recent financial crisis, when bailing out Wall Street and the car companies let groups that had captured the government cash in. Seasteading, he said, provides a reset because it is a blank canvas with no government and no special interests, and because of the feature of rearranging, a city-state could break in half or into more pieces if people did not like the government, allowing a continuous reset without having to fight a war or revolution or go to a new place Seasteading (2009).
Public-sector unions and the market analogy
The May 21, 2011 episode with Adrian Moore treated public-sector unions as the special interest at the center of municipal pay. Zadek described an involuntary wealth transfer from taxpayers to city and county workers he called overpaid, arguing that private business would perform the same function for less, and that paying a willing worker more than the job requires is paying above market. He said the politics are that unions amass a potent political force and give a lot of money to elected officials to get them elected so they can preserve their own jobs Fire All Government Workers (2011).
Moore framed the mechanism in terms of democracy itself. He said that in a democratic process the idea is taking a little bit of money from a lot of people who are too busy to care and for whom it is too little, to give to a few people who care a lot because for each of them it is a lot of money, and that this is the backbone of the public service system in the United States. He said those few people have tremendous influence with elected officials because they are there every day and attend every city council meeting in mass, while he bet 99% of listeners had never been to a city council meeting, and that municipal workers and other special interests are there every day, which is what drives the train in these situations Fire All Government Workers (2011). Moore also said the private sector pays skilled workers more than government pays skilled workers but pays unskilled workers much less, so government provides unskilled workers with much too high pay Fire All Government Workers (2011).
Free cities and public choice
Mark Lutter, on the August 20, 2016 episode, described free cities as a tool to get around political difficulties and public choice problems, because it tends to be very difficult to change laws or regulations on a national level. By taking land that nobody lives on where there are no special interests, he said, you can have a lot more autonomy and a lot more freedom than you might have if you tried to effect those changes on a national level Mark Lutter on Proprietary Cities (2016). He identified two avenues for free cities, one in the developing world and one in the developed world, and said that in poor countries such as India or Nigeria, which have large urbanizing populations, need new cities, do not have good governance, have low rule of law, and have highly burdensome business regulations Mark Lutter on Proprietary Cities (2016).
Tariffs and the Reagan comparison
On the August 21, 2020 episode, Casey Mulligan said that there are special interests in Washington that get served, and that this goes for all the presidents in between and before Reagan. He named the steel companies as perennially served by special favors and the car companies as served by special favors, and said Ronald Reagan was serving them up just as well as other presidents had You’re Hired! Chief Economic Adviser to Trump on What It’s Really Like to Work in the White House (2020).
Mulligan described Reagan’s instrument as mainly a quota arrangement, telling the Japanese car companies there was a limit on how many cars they could send, which the Japanese companies loved because then they did not compete with each other for space in the American market. He said that after he wrote that chapter and sent it around to some Reagan people, they told him the Japanese companies would come to the White House during the Reagan years and ask for a quota. He said a quota keeps out competition, so the American consumer pays more, and the money goes to the Japanese companies and also to the American companies. Trump, he said, did very few quotas and used tariffs instead, so the consumer pays more and the domestic producer is happy, but at least the money went into the Treasury rather than to the Chinese companies, which he called an improvement You’re Hired! Chief Economic Adviser to Trump on What It’s Really Like to Work in the White House (2020).
Mulligan said Milton Friedman wrote in the Wall Street Journal a few times in the ’80s making that same point, saying Reagan was so bad with quotas that it would be an improvement to have a tariff man. He said there would be no tariffs if the swamp were totally drained, but the swamp is not drained and there are interests that have to be served, and he noted that Mrs. Clinton did not campaign in Michigan where the car companies are. He also described an intellectual property problem: in Reagan’s day the Japanese and other East Asian tigers were not respecting American copyrights and other intellectual properties, Reagan threatened tariffs, and eventually in his second term got trade deals with Japan and Asian tigers to respect those rights, and the same issues have now arisen with China You’re Hired! Chief Economic Adviser to Trump on What It’s Really Like to Work in the White House (2020).
Newsom, no-bid contracts and campaign donors
Kevin Kiley, on the March 21, 2021 episode, described Gavin Newsom’s COVID-19 emergency powers as viewed by Newsom as absolute, giving him a greater capacity to issue rewards to the special interests that put him in office and that Kiley said Newsom thought he would need to run for higher office. Kiley cited a Capital Public Radio investigation showing a pattern in which Newsom used the extraordinary power to award a no-bid contract to give massive contracts to his top campaign donors, with the sequence of a big contribution, then a contract, then another big contribution The Case for Recalling Gavin Newsom (2021).
Kiley called perhaps the most egregious example the $1 billion contract for masks with BYD China, given out in early April of last year behind the back of the legislature, with about $500 million wired in advance. He said the company has a history of forced labor practices, is run by the Chinese Communist Party, and has a history of malfunctioning products, but that its subsidiary in California is a big Newsom contributor whose president has given over $40,000 to him, and that the lobbyist for the company was also involved in a lot of the no-bid contracts Newsom gave out. He said the same story runs through the no-bid contracts, the enforcement of AB 5, the school shutdowns, and who was exempted from business closures, with Newsom’s solicitude for his biggest funders and the most powerful special interests that control the capital guiding the most important policy decisions The Case for Recalling Gavin Newsom (2021).
Across episodes
The topic recurs across all six episodes, and the treatment shifts in emphasis rather than in conclusion. In 2009, Zadek and Mangu-Ward define the term and apply it to a single program, with Mangu-Ward extending it beyond registered lobbyists to any small group benefiting at the general public’s expense Cash For Clunkers is a Dud (2009). Friedman the following month supplies a theory of accumulation and reset, drawing on Mancur Olson and the post-war cases of Germany and Japan Seasteading (2009). Moore in 2011 supplies the participation mechanism, contrasting daily attendance at city council meetings with the ordinary citizenry Fire All Government Workers (2011). Lutter in 2016 restates the public choice framing as the rationale for free cities Mark Lutter on Proprietary Cities (2016). Mulligan in 2020 moves the discussion to trade policy and compares Reagan’s quotas with Trump’s tariffs You’re Hired! Chief Economic Adviser to Trump on What It’s Really Like to Work in the White House (2020), and Kiley in 2021 applies the term to state-level contracting and campaign donors The Case for Recalling Gavin Newsom (2021).
What the sources do not cover
The excerpts do not supply a formal or legal definition of “special interest,” and Zadek explicitly says the phrase is not precisely defined. They do not give the outcome of any litigation over the programs discussed, nor the text or holding of any statute or case. The excerpts also do not state the final cost or participation totals for Cash for Clunkers, and the Lutter excerpt breaks off mid-sentence before describing what these countries do next.