Puerto Rico, Becker, and Olson

As the Puerto Rican debt crisis has escalated, groups with vested interests into the future of that economic situation has helped to illustrate one of the most important elements of Becker's model. Because Puerto Rico is a U.S. territory, lobby groups have been called upon in order to influence the outcome of the economic crisis. On one side, the Puerto Rico government is attempting to change legislation by supporting a bill allowing the territory to file for Chapter 9 bankruptcy.  They are doing so by hiring the services of SKD Knickerbocker and Podesta Group. These two lobby groups hope to alter financial policy and give Puerto Rico breathing room from creditors. On the other side, six investment management firms have hired lobbyists Venable and Gibson Dunn to protect the price of the Puerto Rican Electric Power Authority (PREPA) bonds as well as their investors.  Also opposing the bill is the 60 Plus Association, "a seniors advocacy group that casts itself as a conservative alternative to the AARP...backed by a donor network organized by Charles and David Koch." They are attempting to protect "investors who put their trust in Puerto Rico-backed investment."

The question that needs to be addressed is who wins this fight? A perfect example of Becker's model, the equations found could give us some insight into the eventual winner of this lobbying battle. Using the information found in the article, it appears that as far as lobby groups are concerned, their effects will cancel each other out.  If both sides of the argument have hired two large lobbying groups with similar numbers of supporters and opponents with arguably the same budgets, Becker's statement is correct and advocacy groups on opposite sides will negate each other's effects.  That being said, Olson still has a reason to stay up at night. The presence of the 60 Plus Association allows for a latent group to enter the equation with large numbers and less free riders.  If there is no other equally powerful latent group to negate or reduce the effects of this group, it would appear that Olson's fears are realized in this situation and the opposition can quell this bill using the power of the By-Product theory.

Results: On further investigation, it appears that the bill examined above was blocked, but Obama signed another bill to aid Puerto Rico and set up a board to organize debt payments. The opposition was successful in preventing bankruptcy in Puerto Rico. Instead, the Senate and Obama passed a bill that set up an "oversight board" which was mentioned in the first article as an acceptable alternative by those opposing the bill. It appears that Olson and Becker's models were successful in predicting the fate of this bill.