I don't know whether it comes across to our readers, but co-blogger Bryan Caplan is an important scholar. His latest book, for which he is still mulling a title, is a major work. I like the title Majority Fools, which could be taken to mean that voters are irrational (as Caplan argues) and also that people who have faith in the wisdom of democratic majorities are also somewhat foolish.
One of Caplan's main points is that people have a much stronger incentive to behave rationally as economic agents than as voters. If I make a bad consumption decision or labor market choice, then I feel the consequences. So I will tend to notice my mistakes, learn from them, and correct them. On the other hand, if I vote unwisely, this is unlikely to affect me, primarily because my vote almost never matters.
Thus, rational political beliefs, such as an appreciation of the benefits of free trade, are a "public good," likely to be in short supply. If people derive any pleasure at all from holding onto irrational beliefs, then there is essentially zero offsetting pain from being mistaken. So irrational beliefs are likely to persist, even though in the aggregate everyone living in a democracy may be worse off as a result.
Another of Caplan's points is that irrational beliefs about economic issues are widespread, particularly among people who are not well educated. He documents this using survey evidence, comparing the beliefs of economists and non-economists.
I think that Caplan would say, and I would agree, that we are lucky that the political process is not more responsive than it is. If politicians really listened to the average voter, we probably would have worse policies than we have today. That is not to say that politicians are wise, only that they may be less foolish than we deserve.
For Caplan, the "wisdom of crowds" only applies in market settings, where people have the incentive to make rational choices. When it comes to voting, we have majority fools.
Conventional wisdom says that democratic choices are good ones. Caplan, correctly in my view, says otherwise.
Conventional wisdom says that when there are market imperfections, government should step in, implicitly assuming that government is carried out by welfare-maximizing omniscient technocrats. Caplan, correctly in my view, suggests that we should worry about government, because ultimately it is driven by irrational voters.
Conventional wisdom says that economists should bend over backwards not to over-state the benefits of markets. Caplan, correctly in my view, says that voters' natural biases against markets are so strong that economists must be clear and forceful in describing the benefits of markets. Trying to be "even-handed" will lead people to say, "Well, economists can't seem to make a clear case that markets are good, so I'll just go on believing that markets are bad."
All that said, I have two major criticisms of Caplan's book, which I will present in subsequent posts.