A Call to Action: Responding to Government Being Neither Well-Meaning Nor Focused on the Public Interest
In the book entitled Government Failure: A Primer in Public Choice, Arthur Seldon writes:
Many economics writers and teachers still present economic systems of exchange between private individuals or firms as “imperfect” and requiring “correction” by government. Most teachers of politics, politicians, and political journalists still present government as well-meaning and able to remove such “imperfections.”
In spite of this view of government, Seldon notes:
Economic systems based on exchange between individuals and on selling and buying between firms usually correct themselves in time if they are free to adapt themselves to changing conditions of supply and demand. Government “cures” usually do more harm than good in the long run because of three stubborn and too-long neglected excesses of government: their “cures” are begun too soon, they do too much, and they are continued for too long.
So, the question arises regarding whether American citizens should continue to assume the actions of government are well-meaning and focused primarily on the public interest. The answer is no.
Why this claim? Just think about it. Most American citizens have personal stories about how various public sector players (politicians, bureaucrats, lobbyists, and other parties with an economic stake in government actions like corporations and unions) act in their own self interest and not in the public interest. In fact, the bottom of this posting contains numerous previous postings which provide examples of such behavior.
The balance of this posting will elaborate on public choice theory, which explains why we cannot assume government is either well-meaning or focused primarily on the public interest. The posting then concludes with specific recommendations in a Call to Action.
Gordon Tullock, writing in the same book, explains the evolution of public choice theory:
Public choice is a scientific analysis of government behavior and, in particular, the behavior of individuals with respect to government. Strictly speaking, it has no policy implications…
Until the days of Adam Smith, most social discussion was essentially moral…
David Hume was the first to make significant cracks in this monolithic approach. He took the rather obvious view that most people pursued their own interest in their behavior rather than a broadly based public interest…Adam Smith developed modern economics by assuming that individuals were very largely self-interested and by working out the consequences of that assumption in the realm of economics…
From the time of Plato…[t]here was no formal theory of how government works outside such moral and ethical foundations.
Throughout the 19th and well into the 20th century, economists assumed that individuals were primarily concerned with their own interest and worked out the consequences of that assumption. In contrast, during this same period political science largely assumed that political actors are mainly concerned with the public interest. Thus individuals who enter a supermarket and purchase items of their choice are assumed, when they enter the voting booth, to vote not for the politicians and laws that will benefit themselves, but for politicians and laws that will benefit the nation as a whole. People in the supermarket mainly buy the food and other goods that are, granted the price, found to benefit themselves and their families. However, when individuals become politicians, a transformation is assumed to occur so that a broader perspective guides them to make morally correct decisions rather than follow the course of behavior that pleases the interest groups that supported them or the policies that may lead to reelection.
Economists changed this bifurcated view of human behavior by developing the theory of public choice…
This bifurcation of the individual psyche is particularly impressive when it is remembered that the economic system based upon self-interest assumptions can be demonstrated to produce a result not totally out of accord with the classical ideas of the public interest…
We must accept that in government, as in any form of commerce, people will pursue their private interests, and they will achieve goals reasonably closely related to those of company stockholders or of citizens only if it is in their private interest to do so. The primacy of private interest is not inconsistent with the observation that most people, in addition to pursuing their private interests, have some charitable instincts, some tendency to help others and to engage in various morally correct activities.
However, the evidence seems fairly strong that motives other than the pursuit of private interests are not ones on which we can depend for the achievement of long-continued efficient performance…
Jane Shaw, in her article entitled Public Choice Theory, offers a more detailed explanation of how there is such a mismatch between our expectations of government and the actual performance by government:
Public choice theory…emerged in the fifties and received widespread public attention in 1986, when James Buchanan, one of its two leading architects…was awarded the Nobel Prize in economics…
…Economists who study behavior in the private marketplace assume that people are motivated mainly by self-interest…Public choice economists make the same assumption�that although people acting in the political marketplace have some concern for others, their main motive, whether they are voters, politicians, lobbyists, or bureaucrats, is self-interest. In Buchanan’s words the theory “replaces… romantic and illusory… notions about the workings of governments [with]… notions that embody more skepticism.”
In the past many economists have argued that the way to rein in “market failures” such as monopolies is to introduce government action. But public choice economists point out that there also is such a thing as “government failure.”…
One of the chief underpinnings of public choice theory is the lack of incentives for voters to monitor government effectively…the voter is largely ignorant of political issues and that this ignorance is rational. Even though the result of an election may be very important, an individual’s vote rarely decides an election. Thus, the direct impact of casting a well-informed vote is almost nil; the voter has virtually no chance to determine the outcome of the election. So spending time following the issues is not personally worthwhile for the voter…
Public choice economists point out that this incentive to be ignorant is rare in the private sector…he or she pays only for the [purchased item] chosen. If the choice is wise, the buyer will benefit; if it is unwise, the buyer will suffer directly. Voting lacks that kind of direct result…Except for a few highly publicized issues, they do not pay a lot of attention to what legislative bodies do, and even when they do pay attention, they have little incentive to gain the background knowledge and analytic skill needed to understand the issues.
Public choice economists also examine the actions of legislators. Although legislators are expected to pursue the “public interest,” they make decisions on how to use other people’s resources, not their own. Furthermore, these resources must be provided by taxpayers and by those hurt by regulations whether they want to provide them or not…Efficient decisions, however, will neither save their own money nor give them any proportion of the wealth they save for citizens. There is no direct reward for fighting powerful interest groups in order to confer benefits on a public that is not even aware of the benefits or of who conferred them. Thus, the incentives for good management in the public interest are weak. In contrast, interest groups are organized by people with very strong gains to be made from governmental action. They provide politicians with campaign funds and campaign workers. In return they receive at least the “ear” of the politician and often gain support for their goals.
In other words, because legislators have the power to tax and to extract resources in other coercive ways, and because voters monitor their behavior poorly, legislators behave in ways that are costly to citizens. One technique analyzed by public choice is log rolling, or vote trading. An urban legislator votes to subsidize a rural water project in order to win another legislator’s vote for a city housing subsidy. The two projects may be part of a single spending bill. Through such log rolling both legislators get what they want. And even though neither project uses resources efficiently, local voters know that their representative got something for them. They may not know that they are paying a pro-rata share of a bundle of inefficient projects! And the total expenditures may well be more than individual taxpayers would be willing to authorize if they were fully aware of what is going on.
…bureaucrats in government…incentives explain why many regulatory agencies appear to be “captured” by special interests…Capture occurs because bureaucrats do not have a profit goal to guide their behavior. Instead, they usually are in government because they have a goal or mission. They rely on Congress for their budgets, and often the people who will benefit from their mission can influence Congress to provide more funds. Thus interest groups…become important to them. Such interrelationships can lead to bureaucrats being captured by interest groups.
Although public choice economists have focused mostly on analyzing government failure, they also have suggested ways to correct problems. For example, they argue that if government action is required, it should take place at the local level whenever possible. Because there are many local governments, and because people “vote with their feet,” there is competition among local governments, as well as some experimentation. To streamline bureaucracies, Gordon Tullock and William Niskanen have recommended allowing several bureaus to supply the same service on the grounds that the resulting competition will improve efficiency…
…The emergence of public choice economics reflects dissatisfaction with the implicit assumption, held by Keynesians, among others, that government effectively corrects market failures…
From the previously mentioned book, Tullock continues by explaining how public choice theory impacts public policy expectations and the broad question of what role should be played by government:
But the different attitude toward government that arises from public choice does have major effects on our views of what policies government should undertake or can carry out. In particular, it makes us much less ambitious about relying on government to provide certain services…
A deep-seated feeling that government is imperfect carries with it two consequences. The first is that imperfections in the market process do not necessarily call for government intervention; the second is a desire to see if we cannot do something about government processes that might conceivably improve their efficiency.
Public choice students are more likely than students of older approaches to political matters to be in favor of shifting reliance from the government sector to the market sector. However, we must not make a mistake that is the converse of the one criticized above: that the government performs certain functions poorly does not, in and of itself, prove that the market would do better…
A final area where knowledge of public choice has an effect on people’s views about policy concerns the behavior of government officials. The student of public choice is unlikely to believe that government officials are overly concerned with the public interest. Because they operate in an area where information is very poor (and the proof that the voters’ information on political issues would be poor was one of the first achievements of the public choice theory), deception is much more likely to be a worthwhile tactic than it is in the marketplace. Therefore, one would anticipate much more dishonesty in government. Indeed, granted that government officials are the only people who can check on the dishonesty of government officials, the problem of curing dishonesty in government involves an infinite regression. Private businesspeople, who deal with better-informed consumers than do politicians, are also subject to surveillance by public officials who, dishonest though some may be, very commonly have no personal motive to protect a particular private businessperson. The amount of dishonesty that has turned up in private business in spite of these inspections gives a rough idea of the almost complete uniformity of dishonesty in politics.
Having little confidence in politicians and depending upon the electoral process to discipline them, in so far as they are disciplined, is the appropriate attitude and it leads to some feelings of cynicism about election campaigns…
…the…attitude toward the professional bureaucracy is equally cool but technically more complex. The view that the individual bureaucrat is not attempting to maximize the public interest very vigorously but is attempting to maximize his or her own utility just as vigorously as you and I has been held for a very long time by most people in the backs of their minds. But bringing it into formal theory is a public choice accomplishment. So far this revelation has not had much impact on any real-world government…One particular conclusion is the feeling that monopolistic government bureaus are undesirable…
Much traditional reasoning has turned on totally unrealistic ideas about the efficiency of government…much previous analysis has implicitly assumed that perfection was obtained in the government sector. The public choice students know that it is not, and that insight affects their policy views.
In a policy piece entitled Uncompetitive Elections and the American Political System, Patrick Basham and Dennis Polhill of the Cato Institute write about an increasingly significant structural problem with American politics that only magnifies the problems defined by public choice theory:
American representative government suffers from the handicap of a largely uncompetitive political system…
Current redistricting practices and campaign finance regulations, in tandem with publicly financed careerism, have significantly negative consequences for the health of the political system. This study analyzes several of the major instruments of campaign finance regulation, such as contribution limits, public financing, and the ban on soft money, in terms of their relationship to political competition. Simply put, campaign finance regulation and public financing have not improved political competition.
In the past, campaign finance restrictions and taxpayer-subsidized elections have generated unintended consequences. The most recent regulatory round is no exception to that rule. This study also looks at other reforms, namely, term limits and improvements to the redistricting process, in light of their comparatively successful record regarding political competition.
Changes in the manner in which districts are designed, campaigns are funded, and politicians are tenured require immediate implementation. In short, elected officials should be disconnected from campaign and election rule making and regulation. There will not be an improvement in political competition until the incumbent fox ends his tenure as guardian of the democratic henhouse.
The pervasive belief that government can solve any imperfection in our society has led to an ever increasing presence of government in our society. That has magnified another problem which Ilya Somin of the Cato Institue discusses in his policy piece entitled When Ignorance Isn’t Bliss: How Political Ignorance Threatens Democracy:
Democracy demands an informed electorate. Voters who lack adequate knowledge about politics will find it difficult to control public policy. Inadequate voter knowledge prevents government from reflecting the will of the people in any meaningful way. Such ignorance also raises doubts about democracy as a means of serving the interests of a majority. Voters who lack sufficient knowledge may be manipulated by elites. They may also demand policies that contravene their own interests…
The size of modern government is often so great that it is impossible for voters–even the most knowledgeable among them–to be adequately informed about its operations. Smaller government may actually be more democratic than that which we have now: voters would be more likely to exercise informed control over policy. Voter ignorance also suggests the value of decentralized federalism. In a decentralized federal system, citizens may “vote with their feet” by moving out of jurisdictions with policies they dislike and into those that have more favorable ones. Because each person decides whether or not to move, there is a much greater incentive to acquire relevant information with “foot voting” than with traditional voting at the polls.
So what are citizens across America supposed to do in response to this largely pessimistic view? The blunt answer is that is an uphill battle where the probability of success for victories which restore our historical freedoms are far from certain.
Where to begin? Here are some specifics we can incorporate into this Call to Action:
- Let’s continue to resist turning to government to fix all societal problems, recognizing Government’s Misguided Incentives. For example, we need to be conscious of the difference between Coerced Charity vs. Voluntary Charity and how the behaviorial incentives arising from coerced charity are not positive.
- No less important, we must ask those pushing for an ever-increasing role for government, What Does “Social Justice” Mean?
- When there is an appropriate role for government, let’s push to have it be at the local level where citizens can better control and change its behaviors.
- We need a TABOR (taxpayers’ bill of rights) implemented in each state and at the federal level, such as what was implemented in Colorado (read here, here, and here), in order to place limits on government actions – while recognizing that those limits will be under constant attack like they have been in Colorado.
- We need to increase government accountability by using the Internet to make the actions of government as transparently obvious to citizens as possible and educate them on more reasons why government cannot effectively solve most problems.
- That means, among other things, fighting the FEC proposed limits on blogging.
- We need competitive elections so there is a real threat that moderates incumbent politicians’ behavior. That means stopping the gerrymandering which is nothing but an incumbent protection racket.
- We need less campaign finance reform of the type passed recently by legislators and more that allows true opposition to be funded.
- We need term limits across the country so public service is an interim contribution to our society, not a career. Term limits will lessen the politician behavior problems highlighted by public choice theory because satisfying interest groups in order to win reelection will become far less important.
- We need to be Rediscovering Proper Judicial Reasoning, stopping judicial activism and returning the legislating function to the legislature.
- We need competitive alternatives to government services in order to reduce the power of the unelected, unaccountable government bureaucracy.
- Finally, we need to constantly reread Lawrence Reed’s Seven Principles of Sound Public Policy as we evaluate actions proposed by government.
There is also a moral basis for this Call to Action and it is based on principles embodied in our Declaration of Independence.
There are endless examples of how actions by government or by parties interested in manipulating government actions do not even come close to matching the erroneous view that government is solely focused on the public interest. Here are some examples which have been written about on this blogsite:
The Kelo Decision: When Private Property Rights are Eroded, Our Freedom is Diminished
Government Meddling Creates Marketplace Distortions, Increasing Long-Term Costs
How Government Makes Us Pay Higher Gasoline Prices
Bankrupt Public Pensions: A Time Bomb That Will Explode
Bankrupt Public Pensions, Part II
RI Pension Problems
How Public Pensions Make People Well-Off at Taxpayers’ Expense
Pension Fund Politics: How the AFL-CIO Violates Its Fiduciary Responsibilities
Learning More About How Dues Paid To Big Labor Are Spent
Now Here’s a Good Idea
The Deep Performance Problems With American Public Education
RE: Why Teachers’ Unions (Not Teachers!) Are Bad For Education
Reporting False Performance Data Under No Child Left Behind: Why Are We Surprised At Dishonest Behavior By The Educational Bureaucracy?
Social Security Reform Debate: Hypocrisy, Misinformation & Why Change is Necessary
Separation of Powers I: Unprincipled, Undemocratic Behavior
Separation of Powers II: They Just Don’t Get It
Separation of Powers III: Wake Up, Speaker Murphy!
Separation of Powers IV
“Citizens for Representative Government’s” Deceitful Manipulation of the Constitutional Convention Vote
How Speaker Murphy’s Changing of the Rules of the House Reduces Your Freedom
RI House Leaders Show No Respect for Rule of Law
Will Financial Disclosure Requirements Be Dropped?
Pigs at the Public Trough
Pigs at the Public Trough, Revisited
The Highway Bill: Another Example of Unacceptable Government Spending
Big Government Corrupts, Regardless of Party
More on the Misguided Incentives in the Public Sector