Structure vs. Belief

 | 

Many libertarians embrace public choice theory as a sophisticated, intellectually rigorous political analysis that is consistent with libertarian ideas. This does not mean that libertarians should accept it uncritically.

Public choice theory looks at politics through a lens that treats politicians as selfish actors striving to maximize their power and self-interest, not as people chiefly motivated by the public good. Public choice theory has identified several structural defects in the American political process that lead politicians to destroy liberty as a byproduct of their self-interest. One such defect is the dispersion of interests problem, the fact that a rent-seeking law imposing taxes to help a special interest group has a highly concentrated interest group to lobby for it, whereas the interest to lobby against it is dispersed over the entirety of the taxpayers. Individual taxpayers aren’t sufficiently aware of the tax to be highly interested in fighting it.

Another defect is the fact that politicians usually get noticed by the media for what they do, and not for what they don’t do, so election campaigns tend to reward politicians for being active, which leads to bigger government. Because of the fame that attaches to moralistic crusades, the structure of democracy also rewards legislatures for passing new criminal laws, which leads to overcriminalization.

It is the beliefs of the people that caused the decline of liberty and the rise of big government in post-New Deal America.

But despite public choice theory’s analytical value and libertarian leanings, I would argue that it is mistaken about the fundamental cause of statist laws. As an alternative to public choice theory I would present the rule of intended consequences: the reason for the existence of any given law in a republican democracy is the voters’ belief that the law is good and performs a just purpose; the unintended consequences of a law are usually not the primary reason for that law’s existence. This rule holds that the best way to get an unjust law repealed is to persuade the voters that the law is unjust, so that voter pressure will lead the politicians to repeal it.

For example, the reason why gambling is illegal is that mainstream American voters have inherited a Puritan conservative Christian morality dating back to the colonial era, and they feel that gambling is evil and should be illegal. The Indian casino owners and the casinos in Las Vegas and the state lotteries all benefit from the anti-gambling laws. And they all have lobbying power. But despite the lobby whose interest is favored by criminalization, the primary reason for the anti-gambling laws is the feelings of the voters, not the lobbying of the special interests who benefit from the law. If the voting public did not believe that gambling should be illegal, then it would be legalized.

I doubt that any amount of lobbying or special interest funding could keep gambling from being legalized if the politicians thought that the voters strongly favored its legalization. Legislators who fought the tide of public opinion would simply be voted out and replaced by legislators who would obey the public will. Gay marriage and Prohibition are two other examples showing that the law tends to change when the beliefs of the voters change. The rise of gay marriage laws and both the start and end of Prohibition illustrate the fact that politicians will adopt policies that were once unpopular if they see that the mainstream beliefs of the public have changed.

I would characterize the debate between public choice theory vs. the intended consequences rule as a quarrel between structure and belief. Public choice theorists think that the structure of a republican democracy disadvantages liberty and favors the growth of government. In contrast, I think it is the beliefs of the people that caused the decline of liberty and the rise of big government in post-New Deal America. The rise of socialist sympathy in the Democratic Party in the 1930s coincided with the seepage of socialist theories from the late 19th century into the consciousness of the American public. The expansion of our government has followed Americans’ abandonment of the libertarianism of the American Revolution and their acceptance of modern liberal dogma.

If I am correct, then the key to restoring liberty is not to alter the institutional structures of the nation. Instead, the key is to persuade the voting public to believe in liberty, to transform the people’s moral sentiments so that they feel that statist laws are unjust. This challenge may seem difficult to meet, but altering beliefs would be easier than the task presented by public choice theory, which would be nothing short of fundamentally altering the structure of American government. Public choice could probably succeed only through a series of libertarian constitutional amendments, which seems unlikely. The war of ideas and persuasion is the right path for libertarians to focus on.




Share This

Comments

Dave

Reminded of Bryan Caplan's "The Myth of the Rational Voter" — Caplan cites research that indicates that the public basically gets what it wants, and rent-seeking and corruption happens at the margins. He explains bad policy as the result of popular biases regarding markets, foreigners, jobs, and pessimism.

Jon Harrison

How then to explain, for example, LBJ running on a promise of no American boys fighting in the jungles of Vietnam, and winning the biggest landslide up to that time, only to launch his war within weeks of inauguration? The public voted for one thing, and got the opposite.

"He explains bad policies . . ." Well, bad policy to one person can be good to another. We usually declare a policy bad or good based on our personal preferences and biases. There is almost complete lack of objectivity in discussing public policy, whether opinion comes from left, right, or center. Bad policy to me can be your nirvana. Now, we might get an overwhelming majority of our fellow citizens to agree that inflation (for example) is bad. But such dovetailing of minds on a mass scale is rare. Bad policy isn't bad simply because Caplan or you or I say it's bad. In these matters standards are virtually impossible to achieve.

Jon Harrison

Interesting article on an important theoretical (and indeed practical) topic. Let me nitpick a couple points:

1) I don't know that gambling is a good example to pick to make your point about the rule of intended consequences. Gambling is very popular with lots of Americans -- it just depends on the form of gambling we are talking about. Lotteries and sports betting are very popular throughout the United States. Opposition to casinos stems not from moral objections per se, but rather the environment a gambling establishment creates (or can create) in an area where people live and raise their families. Personally, I have absolutely no objection to gambling. However, the last thing I want is a casino built down the street or across town or even in the next town over. I know many people who feel this way. My home state, Massachusetts, is the original home of Puritanism in America. It's also the most lottery-loving place in the nation. And Bay Staters I know love to drive down to Foxwoods and gamble. But they don't want a Foxwoods in their town. I'm sure there is section of the American population that objects to gambling on moral grounds. But I'm pretty sure it's confined mainly to Bible-thumpers in the heartland and the religious establishment, i.e, the hierarchies. Casinos are not popping up everywhere because of NIMBY, rather than any abhorrence of gambling on the part of average Americans.

2) I was puzzled by the term "rent-seeking law." Is that some fancy-pants law or civics term that I've somehow failed to encounter over the years? Clarify, please.

As I said, these are nitpicks. I do like the essay a lot. An interesting topic and well-written.

Jon Harrison

I decided to take the time to look up "rent-seeking" on my own. I even read Tullocks' paper "The Fundamentals of Rent-Seeking" (1998). Said article opens with this sentence:

Prior to 1967, twentieth century neoclassical economists (myself included) taught students that the social cost of monopoly and special privilege was the deadweight loss triangle which shows the loss of consumers' surplus to those excluded from the market by the rise in price above the competitive level.

Oh. Actually the paper became rather less opaque as one read on. Most interesting was Tullocks' admission that prior to his 1967 insight about rent-seeking, he had been teaching his students "specious nonsense" on the subject of monopoly. What all this reinforces is the barely concealed truth that economics is merely a branch of psychology, that is, not a true science at all. Economists in the 20th century devised various formulae and equations that supposedly describe economic behavior and effects. They were attempting to put themselves on a level with physicists, chemists, etc. They sought to make their profession into an exact science. But what economists are actually studying is human behavior, which cannot be reduced to formulae and equations. The sorry record of economic predictions in my lifetime only reinforces the idea that economics is no science. It may rise above the level of pure mumbo-jumbo, but so do some other pseudo-sciences.

Tullocks' view of rent-seeking seems reasonable, but I'm not sure it tells the whole story as he believes it does. Who can say, given the inherent unpredictability of human behavior?

Anyway, good article by Hasan.

Visitor

To recap:

1) You know so little of economics that you'd never heard of rent-seeking (and find the sentence from Tullock you quote "opaque").

2) You are nevertheless qualified to decree that economics is no science, and may not even rise above the level of pure mumbo-jumbo.

Or to put it another way, "I am ignorant of even the most basic terms these 'economists' use, but I'm a great expert on the content of their entire field."

That goes a long way towards explaining many of the inane positions you've taken. Facts be damned, you have your beliefs!

Jon Harrison

Let me add briefly to the one-word response I gave you.

I have never ever stated, pretended, or implied that I've studied economics in an academic environment. To the extent that I have opinions on matters economic, they are based on observations of real life situations and my experiences in life, including some 30 years in the business world. That Liberty and other publications have chosen to publish my views is obviously up to them. Apparently this grates on you, which bothers me not at all.

I do, however, thank you for commenting. Positive or negative, feedback is always welcome.

I'll just add in closing that I stand very firmly behind the idea that economics is no exact science, and hardly a science at all. The vast number of errors committed by economists of all stripes, particularly under complex modern conditions, speaks volumes about the "science" of economics.

Visitor

Specify a significant error -- just one!! -- from anything published in a peer-reviewed econ journal in the past 20 years.*

Or, if you prefer, specify a "real" science -- one whose practitioners are close to infallible.

*I'm not claiming there are no errors. I'm claiming you don't know of any, nor do you have even an inkling how the error rate in economics compares to the error rate in chemistry, physics, medicine, or any sub-category within those fields.

It grates on me when people make assertions about things they do not understand. You do that regularly. I don't lose any sleep over it, but yes, it grates on me.

Jon Harrison

I don't read economics journals. Why in God's name would I put myself through that? When I refer to economists' errors, I mean the repeated mistakes in policy and predictions made by economists working in both the public and private sectors. Anyone who reads history or follows the news can point to one mistake after another. Purely academic economists are of no interest to anybody except themselves. And peer review doesn't mean all that much in the social sciences, which are ruled largely by fashion and groupthink rather than facts and reliable, repeatable experiment. I have read Kuhn, so I know the "hard" sciences are prone to similar problems. But c'mon. The hard sciences have actually created a foundation of knowledge upon which tangible achievements have been built. The wool-spinners of the economics profession, on the other hand, have achieved nothing comparable in the real world.

On the academic side, I suppose McCloskey is the foremost critic of the profession. It seems that her criticisms have stood the test of time.

Your appeal to peer-reviewed articles is totally disconnected from my point, which I repeat refers to intervention by economists in real-life situations. What we have here, I think, is an academic (a professor of economics?) appealing to the body of theoretical knowledge built up by his confreres, as opposed to the very thin achievements of economists in the real world. I'm only interested in what actually happens in the economy and in people's live. I really don't know what else to say to you to make my point clear.

I feel compelled to add that I have little respect for those who hide behind the "Visitor" label. If you have something to say publicly, you should have the guts to put your name on it.

Visitor

You're trying to weasel away from your initial claim, to which I responded. That claim: "... economics is ... not a true science at all.... economics is no science. It may rise above the level of pure mumbo-jumbo, but so do some other pseudo-sciences."

I'm not going to bother arguing against your current position. I will merely emphasize that 1) it's not even close to your original position and 2) since you've admitted to not knowing even the terminology taught in an econ 101 class you're hardly qualified to judge.

Furthermore (sticking to your original assertion), the Nobel committee recognizes economics. It does not recognize chiropractic, acupuncture, homeopathy, or divination. I don't claim this is conclusive, but I do think it's enough to give you good reason to take your head out of its warm intestinal enclosure and at least consider the possibility that you are mistaken.

The fact that I choose not to divulge my name has no bearing on the soundness of my argument. Since your respect is worth nothing to me, I lose nothing by keeping it to myself. And what do "guts" have to do with it? For an adult, nothing.

Jon Harrison

I didn't say your anonymity has any bearing on your argument. It has no bearing whatsoever on the merits of what you say. I said it was gutless.

I'm not trying to weasel out of anything. I was trying to explain to you what I meant. I didn't claim that my view is accepted by the Nobel committee or, for that matter, anybody else. But, objectively speaking, it's sad but true that economists have been wrong, and disastrously so, in both predictions and interventions in public policy and the private economy. Is this because they're all idiots? No. It's because economics is at bottom trying to predict human behavior, and for the most part it has failed. The list of boneheaded claims and disastrous policies is vast and growing. Everybody knows that whether they care to acknowledge it or not.

Again, from the strictly academic perspective McCloskey's criticisms have apparently not been disputed. I notice you didn't touch that one at all. And apparently she's not the only critic from within.

To repeat, I have never claimed expertise in the finer points of economic theory. Nor have I spent time familiarizing myself with the jargon. If I were a poseur, I would have run to Google to tell me what a "rent-seeking law" was, rather than asking Hasan. It occurred to me, however, that I've often been critical of Hasan's writings, and that he might very well just ignore me. So I decided to look it up.

Since you apparently read my stuff, you should know that of the scores of articles I've published over the years, only 5 or 6 have dealt with economic topics. Generally I write about foreign and military policy, or US politics, with occasional pieces on personal freedom issues like drugs and gay marriage thrown in.

Of those pieces dealing with economic matters, 3 or 4 were published in Liberty and dealt with government spending, the deficit, and the national debt. The positions taken in those articles incorporated standard right-of-center views, and were noncontroversial from a conservative or libertarian point of view (anarchists accepted).

In the fall of 2009, I think it was, I published a piece in Liberty called "The System is Broken." This dealt with the panic of 2008, and placed blame on everyone concerned -- Wall Street and the banks, to be sure, but also the politicians, the regulators, and the average Americans who took out mortgages they couldn't afford, ran up too much debt, etc. The views expresed in that piece may not have jibed with your own, but they were widely held by many other people including economists. I still remember receiving an email forwarded to me by our managing editor, in which a longtime reader of Liberty called the article the best the magazine had ever published.

The only other article I've written specifically on economic matters was one that attempted to tie together the various crises plaguing economies across the northern hemisphere, with a thesis that another explosion like 1848 or 1968 might be on the horizon. This particular piece was chosen for inclusion in one of McGraw-Hill's college textbooks, make of that what you will.

Anyway, the strictly economic portions of these articles reflected ideas already put forward by others. They were not "inane" or even out of the mainstream.

In comments here at Liberty I have often argued for "free and fair" trade. My view here is certainly not accepted by most libertarians. But it's a view widely held on the Left and by some conservatives. It may be a controversial viewpoint, but it's not some special brainwave of my own.

No matter how much it may grate on you, I remain completely convinced that an objective view of the economics profession shows that it has failed again and again to demonstrate rigor in analysis or usefulness in application. The historical record is replete with the mistakes economists have made, often with disastrous consequences for the rest of society. That you find it hard or impossible to face these facts is your problem, not mine.

I'm not going to devote further time to arguing my point here, though I will read your reply if you make one. I still think you should have the guts to identify yourself, however. I'm not going to come and blow down Porky's house if you do.

© Copyright 2013 Liberty Foundation. All rights reserved.



Opinions expressed in Liberty are those of the authors and not necessarily those of the Liberty Foundation.

All letters to the editor are assumed to be for publication unless otherwise indicated.