Although I agree with much of what Bryan Caplan has to say in his new book, there are a couple of points that give me problems. One, which has come up before in this blog, is his dismissal of the idea of checks and balances or diffuse political power.
Basically, for Caplan, democracy consists of electing a dictator. The only difference between George Bush and Kim Jong Il is that Bush was voted into office and can be voted out of office. The fact that Bush can be voted out may give him some different incentives, but otherwise he has just as much dictatorial power. Caplan does not come out and state this, but the elected dictator model is implicit in his book.
Caplan says that dictators, elected or otherwise, must deal with the "principal-agent problem" of delegated authority. That is, when they delegate responsibility to subordinates, leaders have to take steps to insure that subordinates carry out their wishes. Otherwise, Caplan acknowledges no checks on Presidential power.
I think that in the United States, power does not flow in such a simple top-down fashion. Once a Supreme Court justice is appointed, that justice no longer is answerable to the President. In fact, the majority of justices serving on the court at any time typically were appointed during previous Administrations.
Congress is not answerable to the President. State and local governments are not answerable to the President. Many government officials enjoy tenure that is not revocable by the President.
I think that separation of powers and political pluralism need to be taken seriously. If we had the sort of elected dictator that is implicit in Caplan's thinking, then I think that government would be much more dangerous than it is.
We are not ruled by the foolish majority, in large part because of the wisdom of our founders. They did not want the President to be an elected dictator, and I think that they were fairly successful in achieving their objectives.
In Caplan's model, to obtain better outcomes economists need to educate people on the value of markets, so that they vote for a better dictator. I think that even more important, people need to be educated about the wisdom of separation of powers, federalism, individual rights, and limited government, so that we resist the notion of an elected dictator altogether.