Arnold Kling  

Transparent Government and Libertarianism

My take on anti-foreign bias... The Jane Galt Health Plan...

Will Wilkinson writes,

[There is ] a big principle-agent/incentive compatibility problem between representatives and the citizens they represent. Politicians want to get re-elected. If they can subsidize interest group A at group B’s expense without group B really noticing due to the hidden transfer, then that will sound like a real winner to a politician. Which is just to say that the incentives politicians face encourage them to violate the very conditions of transparency and public justification that make their coercive powers legitimate. That sounds like a problem to me.

Many on the left oppose transparency of the sort that Wilkinson advocates. They say, for example, that if Social Security or Medicare were understood as transfer programs, then those programs would be unpopular and the indigent elderly would suffer.

Wilkinson's point is that stealth transfers violate democratic principles by allowing political elites to do in the shade what they could not get away with in the sun. I am not sure that he has a viable solution to this problem, or that there is one.

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CATEGORIES: Political Economy

COMMENTS (4 to date)
T.R. Elliott writes:

I completely agree. Open information on what is actually occuring. Transfers should be based upon real need. E.g. social security should be evolved into a needs based program. And then we can even consider creating a parallel funded program. Finally, I think transfers should balance out in some way. Geography may be somewhat arbitrary, but state policies aren't. Therefore I think federal expenditures on states, as much as possible, should balance revenues from those states. Not easily implemented, and in the defense and space programs, spreading out the wealth of development programs creates exactly the opposite problem: all states love 'em and they can't be killed.

Dezakin writes:

Many on the left oppose transparency? One might think that most on the right oppose such transparency as well, given that they are currently in power, and it would go against the all encompasing welfare/warfare state obsession with national security.

Opposition to transparency isn't a left/right phenonomenon and characterizing it as such reveals hidden bias. Its a corrupt statist phenomenon.

AJ writes:

This is why economic understanding is so threatening to statist policies. Most economists do not appreciate the revolutionary nature of their knowledge and tend to make excuses/elaborate rationaizations so they will not be so out of step with the intellectual fads of the day.

Austin writes:

This criticism is apt, since personal self-determinative freedom is essential to our democracy. Yet isn't there a fundamental tension between transparency and a market economy? Thinking back with Adam Smith, he actually posits an "invisible hand" that helps guide the ups and downs of a market economy. Part of the problem is: how can you convince people to participate in the common market with the knowledge that what goes on in the market is not soley in their favor? To solve this problem one has to think what you are participating in is soley for your benefit. So, if everyone participates in the Market from their own purposes, then the "invisible hand" will distribute the wealth in a wider scope then if the particpation was done in a merchantilist way (without charging intrest, for instance).
What this means to me, is that there's a fundamental need for ignorance, or lack of transparency, when participating in the Market. If you must think that what you're doing is mainly benefiting you, you're ignorant of how it relates to the rest of the market. Even if you have some consciousness of the rest of the market, you still cannot clearly see the transaction, merely the effects of your interaction with it.

Therefore this tension translates from the market to the political arena, because our democracy is intimately tied up with the market. In other words, the way to fix this lack of perspecuity is politically. If politicians use something like the social security system as a lever for their platform, give them less incentive to do this. One way might be to extend congressional terms of office (to say, 8 years), and allow one term per congressmen.

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