Arnold Kling  

Meeting the Enemy

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What leads to bad economic policy? Bryan Caplan writes,


On the conventional view—widely accepted by economists, pundits, and the man in the street—the public demands policies in its own best interest, but the political system ignores their wishes. Bastiat and Mises dispute both parts of this story. They assert that democratic competition effectively drives politicians to do what the people want, but to their collective misfortune, many popular beliefs about economics are systematically mistaken.

Caplan uses survey research to show that the public does in fact favor the policies that lead to government spending, regulation, and protectionism. See also my essay on Economics vs. Populism.

For Discussion. The conventional wisdom as Caplan describes it blames special interests for bad policies. The Mises-Bastiat view blames public beliefs. Are those explanations mutually exclusive?


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CATEGORIES: Austrian Economics



COMMENTS (11 to date)
Gautam writes:

I don't think they are mutually exclusive, the special interests are subsets of the general public, and would harbour atleast some of the beleifs that the public does, though possibly through the added filter of its own interests.

Eric Krieg writes:

Rush Limbaugh always says that, in a democracy, the people generally get what they want.

This has to be tempered with the knowledge that we increasingly live in a country under the rule of lawyers, not the rule of law. The court system keeps usurping more and more legislative functions, thus diminishing democracy.

Lawrance George Lux writes:

Public beliefs are always driven by the self-interest of the Social grouping deriving such beliefs. They are not exclusive as answer to your above question. Special Interests develop from the same source as Public beliefs. The paramount element is Self-Interest. Good policy is supported, when it is in the self-interest of the controlling segments of society. Bad policy is equally supported for the same reason. lgl

Brad Hutchings writes:

Actually, Bastiat, in _The Law_ speaks a great deal to special interest politics in his discussion about "plunder".

-Brad

David Thomson writes:

“It is evident, then, that the proper purpose of law is to use the power of its collective force to stop this fatal tendency to plunder instead of to work. All the measures of the law should protect property and punish plunder.”

Frederick Bastiat

http://www.lexrex.com/informed/otherdocuments/thelaw/law03.htm

Thorley Winston writes:

>


IMNHO there is scant difference between a "public interest group" and a "special interest group" except that the former usually ends up being more destructive to life, liberty, and property in the end.

Monte writes:

Bad policy is the fruit of government protection sought by free enterprise. Special interests are simply the fertilizer that helps it grow.

Eric's point about judicial activism undermining democracy is a good one.

Bernard Yomtov writes:

Both ideas are oversimplified to the point of uselessness.

First of all the distinction between "special interests" and groups of people is hardly clear. Second, to the extent it is clear, the "special interests" almost always follow a strategy that includes trying to convince the voters that the policies they want are in the general interest. So some voters come to believe this (sometimes it's even true) and government policies reflect both influences.

Finally, this assumes that "bad" policies are clearly identifiable as such. But two people may agree on the consequences of a given policy, yet disagree as to whether the policy is good or bad.

Monte writes:

Bernard,

“…the "special interests" almost always follow a strategy that includes trying to convince the voters that the policies they want are in the general interest.”

The problem is that special interests focus their efforts almost exclusively on influencing how politicians vote. Politicians are the ones who must convince us they’re serving the general interest. Special interest groups (feminists, labor unions, environmentalists, etc.) understand they’re not likely to garnish much support from a public that may be impacted by their policies. PR and soft money (PAC tools of trade) have passed more policies than any electorate could ever hope to.

“Finally, this assumes that "bad" policies are clearly identifiable as such. But two people may agree on the consequences of a given policy, yet disagree as to whether the policy is good or bad.”

It seems to me that good and bad policies can be easily distinguished by examining whether or not they provide greater prosperity for all. Most politicians understand both intuitively and substantively what good policies are. What’s important to understand is why good politicians sometimes stand up for and defend bad policies.

Bernard Yomtov writes:

"It seems to me that good and bad policies can be easily distinguished by examining whether or not they provide greater prosperity for all."

The standard as you state it can virtually never be met, but I assume you really mean "greater prosperity on average." Even if we accept this, far from automatic, there is disagreement as to which policies achieve it.

Monte,

"The problem is that special interests focus their efforts almost exclusively on influencing how politicians vote. "

Yes, that's the objective, but one thing that helps is to convince members of the public of the righteousness of the cause.

" Special interest groups (feminists, labor unions, environmentalists, etc.)"

Gee, couldn't you think of a single conservative special interest group?

"Most politicians understand both intuitively and substantively what good policies are. What’s important to understand is why good politicians sometimes stand up for and defend bad policies."

On the other hand, I don't find this difficult at all. Most politicians are interested in election or re-election. They will generally support policies they thijnk will maximize their chances, either because the positions are popular or because they will attract large contributions.

Monte writes:

Bernard,

“The standard as you state it can virtually never be met, but I assume you really mean "greater prosperity on average." Even if we accept this, far from automatic, there is disagreement as to which policies achieve it.”

What you say is certainly true with respect to most policies. General prosperity might even be more appropriate terminology than “greater prosperity on average.” This seems like a reasonable standard to me, however, there will always be those who reject it. We know from Arrow’s Impossibility Theorem that we can never have a public policy that satisfies every individual preference. Can we agree that policies promoting the general welfare of society offer the best of all possible outcomes?

“…one thing that helps is to convince members of the public of the righteousness of the cause.”

How successful do you suppose special interests like the KKK or ACT UP would be if they relied on public sympathy alone to effect meaningful political change? If I were a member, I’d welcome any public support but place my faith in bribes, PR, and the legal system, which is precisely what special interests tend to do.

“Gee, couldn't you think of a single conservative special interest group?”

Big business, the Christian Coalition, NRA, etc. Apologies and no discrimination intended. The right has its share, but there are so many on the left to choose from.

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