Public choice theory is well known as a theory that attempts to provide something of a unified approach to behavior in the economic and political realms. The theory famously argues that people who pursue their selfish interest in the economic realm do not somehow become perfect altruists in the political realm. Instead, one must take serious account of the selfish interests of politicians who present themselves as selflessly pursuing the public interest. While public choice theory does not assume different preferences or personalities for people in the economic and political realms, it does not reject the possibility that people behave differently…
At the beginning of the campaign for the Republican nomination, many thought that it was a libertarian moment in which even Rand Paul might well emerge victorious. But with tonight’s results from Indiana, the Republican Party seems poised to nominate the most illiberal candidate in its history—someone who wants to restrict trade and civil liberties and has no interest in taming the growth of the state.
Donald Trump has been generally helped by early voting—the practice by which states permit voters to vote in advance—sometimes long in advance—of election day. In Louisiana Ted Cruz lost badly among those who voted early but almost made up the difference on those who voted on the day of the primary.
By election today citizens had more information about Trump. There had been a recent debate where the real estate developer was thought to have done badly and his sharp business practices had been exposed. Moreover, local media summarize the candidates and the state of the race right before election day. Particularly in a world of rational ignorance, where citizens have few incentives to be informed, it is wise to use the rhythms of the election calendar to make voters as richly informed as possible. Otherwise, the structure of elections may systematically favor charlatans– candidates who may make a splash to gain attention, but upon examination have fraudulent policies and deeply flawed characters.
Eugene Kontorovich and I made a general case against early voting, but it is even a worse idea in the primary context. Here is a bit of our argument
I live in Illinois, the worst governed state of the union. And the consequences have been severe. Our fiscal position is the last in the union and we are at the bottom for ease of doing business. Thus, in the current state of taxation and regulation, there is no prospect of climbing out of the fiscal hole. And unless there is radical reform, Illinois is in terminal decline. It does not have California’s climate or New York’s Stock Exchange to break its fall.
There is bipartisan blame to go around. Governors of both parties for decades have been willing to sign legislation to provide unfunded pensions whose bills would come due when they were safely in retirement. Politicians of both parties have all declined to take on public sector unions and other special interest groups that have made the state uncompetitive. But even if fault must be laid at the door of both Democrats and Republicans, there has been one man who has been the power in Illinois politics for three decades and thus must be held most accountable—Michael Madigan, the Democratic speaker of the House for all but two years since 1983.
The accumulation of immense power in one legislative leader is a practical problem for democratic accountability in a system of separation of powers.
As 2014 ends, prognosticators are busy making predictions for 2015. Perhaps the earliest controversy of the new year will concern Uber’s surge pricing on New Year’s Eve. Politicians use such occasions to call for laws to ban the practice of charging higher fares at times of peak demand. But surge pricing confers many benefits for reasons that provide a refresher in how basic economics should make us suspicious of political intervention in markets.
First, surge pricing is more likely to match scarce Uber drivers with riders who value their services most highly. At lower prices, the number of riders would exceed the number of drivers, and some people would be left without a ride, even if they were willing to pay a higher fare.
In my last post, I showed that the younger generation is likely to live longer in a wealthier nation. If the younger generation is likely to be better off, why shouldn’t we transfer resources to the old and forget about reform to Social Security and Medicare? There are three reasons.
First, because of human nature each generation wants the next generation to be better off. It is distinctly odd to redistribute against the preferences of the beneficiaries. Most people have children and others have nieces and nephews. They are committed to these youngsters’ welfare even at the expense of their own. This is clear not only from polling, but from actions. People of any means almost invariably try to leave their children an inheritance rather than party down into old age.
One might ask why nevertheless old people often vote against reform of entitlements. First, most people are rationally ignorant of politics. Polls regularly show that many people do not recognize the amount of money spent on entitlements, thinking instead that foreign aid makes up a greater portion of the budget.
Almost every week brings new word of the crisis in public pensions. Yesterday the news was that New York City pensions are underfunded, make unrealistic assumptions about future investment returns, and are subject to political interference in their management. Consequently, public spending for necessary projects like infrastructure is crowded out and future generations will likely be stuck with a big bill.
Public pensions may provide the best illustration of the truth of a branch of economics known as public choice. Public choice understands that politicians are no more public-spirited than other individuals, but are simply maximizers subject to different constraints.
The argument in The Federalist that the Constitution seeks to control majoritarian excess is well known. It seeks to control the influence of state-level majoritarian factions by nationalizing some policy areas for national rather than state control. And it creates national-level checks and balances, not to be anti-democratic, as so many critics would have it, but as a political version of “count-to-ten-when-you’re-angry-before-saying-anything” strategy to avoid taking action in a fit of passion that we might regret later. So important are these topics that their consideration have tended to overshadow a subsidiary theme developed at length in The Federalist, that of acquiring…