If there is a case for the interest-group model of democracy, it is that interest groups, taken together, offer a rough proxy for society. Individual citizens form themselves into shifting political coalitions, the sum of which expresses the range of opinion in society at large. The politician's job is to weigh these competing interests, and by a judicious balancing of their demands locate policy somewhere near society's centre of gravity.

The difficulty with this model is that not every interest group is represented in proportion to its numbers, let alone its moral claim. Where the costs of a given change in policy are typically distributed across the population, the benefits are concentrated on a small minority. Members of the latter group will be acutely aware of what each stands to win (or lose) from the change and so will have every incentive to organize and agitate on their own behalf. Those among the majority stand to win or lose too little individually to make it worth their while.

So even where the costs to society far outweigh the benefits, the dynamics of interest-group politics ensure that the policy is enacted: in effect, the tyranny of the minority. It is not only democratic principle that is thus violated. For in the jungle of interest-group politics, survival of the fittest is the only consideration, surmounting those of either equity or efficiency.

Thus public policy routinely sacrifices consumer interests to those of producers - business and labour - from subsidies to tariffs to quotas to statutory monopolies. The same analysis explains why regulation so often works in the interests of the regulated, and why public services are so often run in the interests of public employees.

So, too, the interests of those already inside a market, whether as buyers or sellers, are regularly preferred to those outside. Those with jobs, for example, enjoy a range of mandatory benefits and legal protections that so raise the cost of hiring those without as to effectively bar them from the labour market. Those with apartments, made scarce by rent controls, likewise prosper at the direct expense of those who would like one - who are generally less well-off to begin with.

Yet in a market economy it is consumers who should rule producers; the social purpose of production is, in the end, not profits or jobs, but consumption. It is new entrants, likewise, who bring competition and dynamism to markets, not entrenched oligopolies. And surely those who don't have jobs or apartments should be attended to before those who have. The groups with government's ear, in other words, are inevitably the very last it should be listening to.

Worst treated of all are those interests that could not possibly be represented even if one tried. Most of the growth and all of the jobs in the next decade will be created by companies and industries that do not exist yet. Who represents them? Who knows which workers across the economy will not be hired because consumers have $6-billion less to spend, thanks to the taxes they paid to employ other workers digging sewers? The first group is just as real as the second. Yet it has no lobby group, nor could it.

The result is a system defined by privilege: the use of the state to distort economic activity for the benefit of the well-connected. It is a system of legal entitlement no less arbitrary in its way than feudalism. And just as feudalism had its defenders, so does its contemporary equivalent - the difference being that the modern-day advocate unfailingly cloaks his defence in a concern for the very public interest such policies subvert.

There's no simple way out of this. What we can do is to assign government a few essential tasks, to be performed according to a few very simple, hard-to- change rules; and to make markets, rather than politics, the primary mechanism through which society's productive resources are allocated. Far from an abdication of the state's role as arbiter of fairness, this is the vital precondition of its attainment.

For, having forsworn privilege, we might safely entrust the state with the task of redistributing income and wealth, as it should be done - openly, by explicit transfer from rich to poor, rather than by haphazard attempts to fiddle markets for whatever interest-group has the best phone- bank.