Question

Jean-Baptiste Colbert was the Minister of Finance under King Louis XIV of France. He famously observed, "The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing." How does his comment relate to the special-interest effect?

Short answer

The government serves the special interest groups by providing services using the funds collected through taxation, which spreads the cost of such services across the entire economy. In this way, each person bears a small quantity of the higher cost, and overall nobody finds it oppressive.

Step-by-step solution

Meaning of Baptiste's observation

The government many times misuses the taxation authority. It procures money to fund its programs (some serving only the interest of a few powerful people) through taxes collected from its citizens. The money burden is spread in such a way that it creates the least disturbance or rebellion among the individuals.

Suppose the government imposes a water tax at $5 per month on each household. The cost seems negligible to the families, so they do not mind paying $5 per month. However, this would amount to a total of millions to the government. The government can use it according to its interest.

Therefore, the individuals (collectively public) are the goose from whom the largest possible amount of feathers, that is, the taxes are obtained with the smallest possible sound of hissing.

Relation with  the special-interest effect

Small groups with special interest collab with the government to gain some support fort a particular program or project, creating a special-interest effect. The benefit of the project may confine largely to the particular group, but the burden of cost is shifted to the entire economy, mostly through taxes or negative externalities.

As the tax is spread evenly over the large population, taxpayers do not create a buzz to resist the tax, and the special interest is served. As the entire economy suffers the tax deduction from their income without any resistance, the small groups receive the project's maximum benefit (feathers). The larger population bearing fragmented cost does not oppose.