Bryan Caplan  

Rule By Fools Is the Rule

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A Little Hope for Hong Kong... Big Brains and Free Samples...

Brad DeLong keeps asking "Why Oh Why Are We Ruled by These Fools?" (see here, here, and here for starters). This makes me wonder whether he'd ask the same question if he came across the following passage from Jeffrey Cohen's Presidential Responsiveness and Public Policy-making:

As his biographer Reeves pithily observes about Kennedy (and all other presidents), "Kennedy had come to office in the great tradition of American presidents, more or less blissfully ignorant of economics"... His knowledge of macroeconomics was so severe that he asked his economic advisor, Walter Heller, chair of the Council of Economic Advisors, "Now tell me again how I distinguish between monetary and fiscal policy?" Heller replied, "Monetary policy is 'M' like Martin [William McChesney Martin, chair of the Federal Reserve Board]."... Later, when Martin's term was about to expire, Kennedy asked how he would remember the difference between fiscal and monetary policy without Martin on the Board. Heller had to remind him that another member of the FED was Mitchell, another "M"...

However Brad would react, this passage confirms my suspicion that democratic rule by fools is perfectly normal. Or to be more accurate, in a democracy our rulers are older versions of the popular kids from high school. The only difference is that politicians are champions in the Olympics of popularity contests. They are painfully weak on substance, but have an amazing ability to make people like them. And if they have to choose between being right and being popular, they don't think twice. They're Olympians; their overriding priority is winning.

I flesh out this story in much greater length in my paper "The Logic of Collective Belief," (Rationality and Society 15(2), May 2003, pp.218-42).

A politician who does not have rational expectations about the impact of his policy stances on his career pays a high price, so in this area the standard arguments for rationality (Muth 1961) are compelling: Politicians who systematically misunderstand voters' feelings forego large opportunities for political profit. They have an incentive to learn from mistakes and hire expect advice. Systematic mistakes about what the voters want also open a politician to takeover bids from more rational challengers.

...

However, it does not follow that politicians will be rational about the actual impact of the policies that they implement. They merely need to gauge voters' reaction to their policies; if the voters have irrational expectations about what policies will accomplish, a politician who rationally second-guesses them gets little benefit. In fact, if it is indeed impossible to fool all of the people all of the time, politicians who share the irrational assessments of their constituents may actually be at a competitive advantage compared to rational politicians who cynically pander to the prejudices of the electorate.

Thus, Brad's question isn't so hard to answer. "Why oh why are we ruled by these fools?" We're ruled by fools election after election because the majority habitually prefers affable fools to disagreeable pedants.


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TRACKBACKS (6 to date)
TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/309
The author at New Economist in a related article titled Why we are ruled by fools writes:
    Bryan Caplan at EconLog has an answer to Brad DeLong's constant refrain Why Oh Why Are We Ruled by These Fools? (see for example here and here). It is that:...democratic rule by fools is perfectly normal. Or to be more accurate, in a democracy our rule... [Tracked on July 14, 2005 3:06 PM]
The author at voluntaryXchange in a related article titled My First Principles of Macro Lecture writes:
    Every semester I start my Principles of Macroeconomics class with a mini-lecture about why teaching macroeconomics is so hard. Macroeconomic policies have been practiced for thousands of years - there is a strong element of we've always done it this [Tracked on July 18, 2005 1:35 AM]
COMMENTS (20 to date)
Jacqueline writes:

Yup. The skill set required to get elected is not the same skill set to govern well, and it is rare to find both skill sets in the same person.

jldugger writes:

So then, what can we learn from Gerald Ford, a man who walked into the presidency unelected to the position?

ATM writes:

Occasionally we have fools who are disagreeable pendants (ie Carter).

Roger McKinney writes:

Just goes to show that the people rule. We elect people that we think are like us. They represent us in more ways than just the political. As the anarcho-capitalists argue, we'd be better off with a wise king. But as the founders realized, we can't guarantee that every king will be wise. So we are left with the imperfect system of a republic. If we want the rulers to be wiser in economics, we have to make the voters wiser first. That means finding a way to reach the high school dropuouts, those who never went to college, fans of professional wrestling and those who think Elvis still lives, because they all vote.

What's wrong with DeLong's attitude is that we're not ruled by fools at all. Kennedy probably was, and Carter too, but Nixon and Clinton were highly intelligent (and two polar opposite personalities). Reagan had a degree in economics, and according to Milton Friedman who participated in his monthly economics meetings was highly engaged in policy.

There's no excuse for DeLong, who worked in Clinton's Treasury, not to understand the necessity for politicians to act like politicians.

John P. writes:

I agree with Roger and Patrick, and would add that it's good that the (elected) people who govern us are popularity Olympians, because that at least ensures that we get what we in the aggregate want. What's the better alternative? And I think we've done pretty well notwithstanding our "foolish" governors.

Ted Craig writes:

I'm not sure the system is necessarily flawed. Among the most important traits of a leader are his ability to interact with others and to communicate with the public. Many brillant people are missing these qualities. Just look at Larry Summers. The best scenario is when you have a charismatic leader who surrounds himself with brillant people and heeds their advice.
And intelligence is no guarantee of successful administration. As cited above, Nixon, Carter and Clinton were among our most intelligent presidents and the country was worse off in many ways for their administrations. Eisenhower has often been described as being of mediocre intelligence, but his lasting positive legacy (integration, interstate highways) is far greater.
Finally, look at Enron Corp. Ken Lay's Ph.D. in economics didn't make that company any better run. There's no evidence a President Lay would have been any better for the country.

Jake writes:

"I agree with Roger and Patrick, and would add that it's good that the (elected) people who govern us are popularity Olympians, because that at least ensures that we get what we in the aggregate want."

Satisfying the aggregate is no better in many cases than satisfying the wants of a dictator. If the goal of the aggregate is to supress the rights of a minority then implementing the will of the majority is not just and should not be celebrated. The tyranny of the majority is vulgarly held in dread as the chief oppressor of individual rights in America - and yet it is often applauded as just. (to poorly paraphrase Mill)

The same goes for aggregate support of harmful policies to the aggregate of the population. If a proposed policy piece is inherently damaging, but the majority of VOTERS wants to make law, then the system has failed, regardless of the perceived success of implementing the whim of the majority.

Dan writes:

If close to perfect is impossible, the test of a system is how well it corrects errors. Friedman points out the market test is much better at correcting errors than the best of planners.

Democracy has the same advantage over any other political system. Not only do philosopher kings make mistakes, you have no way of getting rid of them if they refuse to correct their mistakes.

In democracy, at least you can vote the bums out. That is not sufficient to achieve good government, just the least bad government over the longrun.

That is why Churchill called democracy, "the worst political system, execept for any other."

John P. writes:

Jake -- As Dan suggests, the aggregate may not always (or often) want what's best, but what would you prefer instead? Given the free flow of information and relatively high level of education in this country (the U.S.), I would rather have my fellow voters make the ultimate decisions as to who governs than Benedict XVI, Steve Jobs, Richard Posner, the Harvard faculty, the Cato Institute, or whoever else you can think of.

Chris Bolts writes:

What else can be expected of imperfect man? In a perfect world, everyone would understand that most economic policy that is promoted by politicians are those that pander to special interests at the expense of making everyone else worse off. But as mentioned by others, having the right to change the system from one group of special interests to another group of special interests has a corrective power which allows the United States government to remain in balance. However, when one special interest exercises power for an extended period of time, it begins to corrupt and create a large imbalance. Look no further than many countries in the EU and Canada for evidence of this.

[quote]The same goes for aggregate support of harmful policies to the aggregate of the population. If a proposed policy piece is inherently damaging, but the majority of VOTERS wants to make law, then the system has failed, regardless of the perceived success of implementing the whim of the majority.[/quote]

This is the inherent flaw with Gov. Schwarzenegger's constant need to defer to the voters to pass his initiatives. If he believes that the initiatives are right, then he should risk his governorship and pass them. If they are indeed wrong, then the voters will vote him out and theoretically the next governor will come in and correct them. But if he keeps giving the people the power to make policy, then the people will always want to be involved in the policy process.

Jacqueline writes:

"fans of professional wrestling"

Jesse Ventura wasn't that bad, was he? :)

Jon writes:

Bryan's piece seems remarklably like Jim Rogers' arrogant screed. Another counterpoint -- Nixon was not a "popular" person. As an adult he had few if any close friends.

Winston Churchill, a highly regardedleader, suffered repeated academic failures. He also lost re-election after the war.

Efforts by snooty columnist or academics to make sweeping generalizations of business or political leaders are bound to fail; there is no one characteristic (other then determination and persistence) that they share.

Economist must remember that policy is not solely decide by what is "optimal" according to an economic calculation but is a compromise to statisfy conflicting desires of a variety of people.

Brad Hutchings writes:

You're gonna tell me that Dick Cheney and Karl Rove were the popular guys in high school... Or that Cheney is "likeable". I'll buy the premise about W, but not Cheney. No way. There is a seriousness about the guy that is very rare today. I actually met him at a fundraiser in 1994 and he spent several minutes talking to us youths at the event. He has a reserved, subtle sense of humor that complements and reinforces his stern, serious demeanor.

Bryan, I think if you're gonna go with this "popular guys" analogy, you ought to look at leaders of the college political groups. They are popular within their groups, though not necessarily all that popular in the wider college society. To get there, one has to be very involved and likeable within the group. But the party-first types, whether Democrats, Republicans, or big-L Libertarians, are usually big dorks, and it scares me that they will be the ones running for office in the future.

Russell Nelson writes:

Jacqueline writes:

Jesse Ventura wasn't that bad, was he? :)

He supported the Hiawatha Line, a light rail system which went overbudget by about double, hasn't met its passenger targets since the first week, and has screwed up the traffic patterns in downtown Minneapolis.

And I'm a fan of railroads.
-russ

eric writes:

It's precisely the inability of the hyperintelligent to sublimate their ideas to others (either Dilbert bosses or the public) that makes them ineffective. Sure, occasionally you can do and end run around the great unwashed, but usually you need their support. The Katie Courics or Ron Reagans are effective because they are smart enough to generate decent ideas, but not so smart to noticably chaffe when they compromise with the masses.

simon writes:

I am amazed that any one would question the quality of decision making made by Americans ... Wow!!!

Is it not clear that Americans only make rational and value maximizing decisions.

I think before on can even dream of questioning America's ability to elect true leaders we must first find a single bad decision made by a US leader. Once we find, indeed if we evere find one, we can explore if there was not some intervening factor that really altered the outcome.

Quincy writes:

Chris -

Schwarzenegger faces a unique problem in California. He has ideas that the majority of voters support that would never make it through the Democratically-controlled legislature. (A legislature put there by union money and gerrymandering, both of which are addressed on the ballot.)

Ken writes:

We are not ruled by fools, they just aren't academics.

The most important things a President does is pick effective people for the administration, delegate, and correctly gauge rivals and foreign leaders.

If you can do those things with math or economics please send me the spreadsheet. I will adjust a column or so and win the professional poker games.

Our true idiots either collect in the Senate or are manufactured there - a generous grant will let me look into this and report what other grants will be needed.

mtnmarty writes:

I think Caplan only gave us half an answer.

Brad's question was not "Why are we ruled by fools?" but "why, oh why, are we ruled by THESE fools?"

Which I beleive to be a question about the content of our irrational preferences and not just the existence of them.

The evidence, at least regarding the war, does not seem to be that the cost of irrationality decreased (after all real resources are being used in the war).

What we need is a model that makes preferences and beliefs -rational and irrational - endogenous.

A theory that would tell us the precise cause of a change from Clinton-types to Bush types?

The bigger question is "Why, oh why, does our social science predict so poorly?"

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