Arnold Kling  

Different Forms of Government

Roderick Long and the Tiny Gno... Letter of Law, Spirit of Law...

Responding to Bryan, Will Wilkinson writes,

bureaucrats in a technocracy will be motivated to explore ideas, while bureaucrats in a democracy will be motivated to signal and recruit fidelity to the coalition's pre-assigned ideas.

The point is that a country is better off without too much democracy. Instead, let the technocrats proceed on their own.

William Niskanen once wrote an article called, "Autocratic, Democratic, and Optimal Government." It is reprinted in Reflections of a Political Economist. He made some quantitative assumptions about labor supply elasticities and such, and then he assumed that an autocrat maximized tax revenues, a democratic government maximized the post-tax, post-transfer income of the median voter, and that an optimal government maximized average income. The results:

The autocrat captures 34 percent of total output, leaving about 43 percent for the general population....[under democracy] The average net income is increased by about 145 percent...[under optimal government, relative to democracy] The average net income is increased by about 39 percent. Median net income, however, declines about 8 percent.

Of course, Bryan and Will are talking about a different issue than what the government maximizes. They are saying that in a democracy, government is constrained to be stupid, because the technocrats have to follow popular opinion about policy means, regardless of ends. So what you wind up with is something sort of like Niskanen's median voter outcome, only considerably less efficient because of the stupidity constraint.

I would add that there is also a pretty large autocracy constraint, as well. That is, under our democracy, some major interest groups steal from the general population in exactly the way that an autocrat would try to do so. Compared with the autocrat, they steal somewhat inefficiently (ethanol subsidies, financial bailouts) because they have to be somewhat opaque in their methods.

The moral of the story is that what you want is competitive government. If Singapore were situated in Baltimore Harbor and there were free mobility, my prediction is that Maryland's government would improve considerably.

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CATEGORIES: Political Economy

COMMENTS (19 to date)
Greg Ransom writes:

How do we explain the massive stupidity of the macroeconomists in our elite universities? It seems to me the intellectual failure here is from the top down. The elite are organized into a cartel or guild, and they use math games, a fallacious macro ideology, and a tenure process as a certification filter for membership.

It's brain death at the top more than anything that is responsible for the current financial crack up -- via Fed policy and the misuse of fashionable economic "rocket science" used by the Wall Street banks.

Economics is constrained to be stupid by the economists.

It's hard to get around that fact.

>>They are saying that in a democracy, government is constrained to be stupid, because the technocrats have to follow popular opinion about policy means, regardless of ends.

Maniel writes:

The problem I see with government, democracy, and economics is that the attention of the average citizen is diverted to the federal government, where little of value is ever achieved. Rather, taxes are collected and debts are accrued in order to redistribute the money to those interest groups deemed vital to re-election. This robs both focus and funding from state and local governments where, whatever the level of competence, the real work of government - education, road maintenance, fire and police protection, sanitation, parks and recreation, and on and on - is actually done.

Lord writes:

I am not so sure. If Zimbabwe had free mobility, those in power would be sure to rid themselves increasingly of minorities until they were in absolute control of everything and everyone within their boundaries and could continue as long as those in the inner circle could expel those out of it and as long as they have control of their natural resources. Free mobility would serve their ends rather than combat them.

Jacob Oost writes:

Yup, a more competitive government is EXACTLY what we need and I and plenty of other "conservatives" have been saying it for years. That's what term limits and pay limits and deregulation of the party system is all about: discouraging the career politicians from getting in the game, and attracing lots of people from different walks of life who want to serve their country. Rather than watching the pampered ivy league elite line up at the buffet for swanky government positions.

Ray G writes:

What Lord defines is not free mobility. If Zimbabwe had free mobility, they would be at liberty to live here or there. In the case that the government is capable of expelling everyone they dislike, the citizenry no longer has free mobility.

Democracy itself has long been recognized as being limited by the stupidity of the electorate. Blackstone of law history fame has a good quote on the dangers of allowing the property-less and non-merchant the right to vote. Something to the effect that they would be too vulnerable to the talented demagogue.

Technocracy is of course equally limited by arrogance.

That gets to the problem of economists being very, very wrong at times and even then still being respected and quoted as if they're batting a 1000.

I would reword the idea that the technocrats are constrained by the stupidity of the electorate. This implies too much intelligence and good will on the part of the government.

The foolishness of the electorate constrains who is elected - Blackstone's talented demagogue, and his minions - and from there things just get nasty.

Think on this; politicians who do "big" things are remembered for taking a "courageous" stand or making "tough" decisions. But politicians only do what they're allowed to get away with.

Courageous would have been dismantling institutionalized racism in 1910, not in the 50s and 60s after the masses had been sufficiently moved by the tide of freedom, and the media finally taking notice.

In other words, an undergirding of individual freedom made America a place that institutionalized racism could not survive. Once the tide was sufficiently high among the masses, the media got on board, and made the idea popular among the less concerned. Then the politicians suddenly cared.

So yes, the politicians are being constrained, but not in the fashion that it was stated above.

EML writes:

In an autocratic state, opacity is the norm. Transparency is a bonus.

Lord writes:

Zimbabwe would be using the free mobility of surrounding states to its admittedly narrow advantage. Competition would be ineffective as it so often is.

Ray G writes:

No offense Lord, but you're still missing it.

Countries have attempted such practices before, and it did not work out to be even a narrow advantage. Think of Cuba. America has benefitted from those "undesirables" but Cuba still languishes.

JohnO writes:

The Soviet Union had an autocratic government in which the technocrats were given free rein to do what they thought best, unconstrained by any democratic process.

It's always been a mystery to me that "libertarians" see that as a model to emulate. With themselves as the autocrats, of course. Does nobody read Hayek any more? Or even Adam Smith?

John C writes:

Because America today is an "every man for himself" environment, we are living Game Theory Writ Large.

Why shouldn't people vote to enrich themselves at the expense of others? Why shouldn't people try to game the system, to rig it to their benefit?

The reason that Singapore works is because the autocratic leadership imposes its will with a sense of fairness, and the subjects know that punishment for malfeasance is both certain and severe. A Good King can run a nation more efficiently and more to the benefit of his subjects, because he can ignore the ignorant, use compulsion instead of popularity, and do what is right instead of what is popular. A democracy sinks to the least common denominator, because too often the right thing is hard and uncomfortable and requires delaying gratification and perhaps some sacrifice. It's hard to get a majority to vote for this unless there is a crisis. Of course, a Bad King is the worst governor, because he will either be stupid yet industrious or smart and lazy; he will either pursue the wrong course despite all evidence to the contrary or ignore his responsibilities for his indulgences, and the bureaucracy underneath him will be corrupt and self-protecting instead of fair and civic-minded.

The advantage our Founding Fathers had over us is that most of the population believed in a God who would punish them if they were selfish, greedy, or corrupt, and they voted and acted accordingly, at least sufficiently to do the right thing more often than not. Today, our elected leaders invariably do the wrong thing, because it's all about benefitting oneself instead of the country, and politics has become a career that attracts the very people who should never be put in charge of anything.

I don't know how to fix this without it getting very ugly.

chip writes:

" If Singapore were situated in Baltimore Harbor and there were free mobility, my prediction is that Maryland's government would improve considerably."

Is the suggestion here that Singapore doesn't grant free mobility? Because they certainly do.

comatus writes:

No, chip, the joke's on Maryland.

Tom Perkins writes:

"It's always been a mystery to me that "libertarians" see that as a model to emulate."

I am unaware that any libertarians I can see to be such believe it is a model to emulate.

El Presidente writes:

If every government chose the supposed optimal form there would be no comparative advantage amongst them on the basis of government form. Then what? Maybe variety is better than convergence.

Snorri Godhi writes:

First, Niskanen seems to work under the implicit assumption that, in a democracy, the government will enact the will of the people (i.e. of the majority). If he were to take Karl Popper's definition of democracy, his model would not be as simple as it appears to be.

Second, I'd think that growth is more important than income, but from this post it appears that Niskanen did not model growth.

Third, I strongly believe in voting with my feet, and I have done so several times. However, if there were no restrictions on immigration and everybody were willing to vote with their feet, then by the principle of indifference all countries would be equally good places to live. In such a world, the only incentive for governments would be to discourage emigration OR immigration; in other words, governments would strive to be mediocre, rather than competitive.

Kurbla writes:

JohnO, you are right, it is true that anarchocapitalist model is equivalent to the bolshevik model. Anarchocapitalist Koba claims that he governs in his own name, while bolshevik Josif claims he governs people state in the name of the people - and that's it.

Tom Grey writes:

Let's be more clear on the main problem of democracy: voters vote for the delivery of desired, but unearned benefits to various constituents.

Politicians spread the wealth of Other People's Money. Usually for 'free', like a subsidy or grant or emergency help or bailout.

One of the main goals small gov't advocates should be pushing is Loans, not 'aid'.
Everybody who gets a gov't check should be getting a loan, which they have to repay, or a return of a pre-paid premium (i.e. unemployment).

Thus, for the current situation, extra unemployment benefits should be available, but as a gov't loan which should be repaid (perhaps in a progressive, variable repayment schedule).

The only way to reduce the political fight for 'free money' is replace 'free' with 'borrowed'. In terms of help, getting borrowed cash today when it's needed is just as helpful as getting a grant -- but when one knows one must repay the loan sometime, one will find that less is needed.
And while 'tax loan' repayments look like a tax, going to the gov't and enforced by the IRS, because they are repayments of specific cash they're no more a tax than is the car payment for the purchased car.

All bailout cash should be in loans, and most should be to individuals, not big banks.

Lord writes:

No Ray G, you are not getting it. What is advantageous for a country and advantageous for its leaders are not necessarily aligned. Assuming they are is a mistake. Castro seems quite content with Cuba as it is, as does Mugabe, even if he is still working towards where he wants it to be.

D. Watson writes:

One question that hasn't been asked, though, is if maximizing mean income is the proper goal. If we want to maximize _median_ income, the democratic system seems quite good. While this post doesn't indicate what happens to the bottom quartile or give any indication of poverty measures, there is something to be said for a regime which has the lowest percentage of poor people or whose poor people are as well off as possible. And those numbers do seem to indicate that the poorer half are actually poorer under the 'optimal' government....

Now lest anyone construe that a *shudder* socialist waltzed into the room, there is also something to be said for a regime in which the people are as free and independent as possible, but this post hasn't monetized the value of the freedom gained with each successive step (or put both in utility terms). Among the ultimate goals, after all, is that people are as _happy_ as possible, which requires both a minimal amount of this world's goods and services and the freedom to choose and to be. Ensuring opportunities to both (and all the other ingredients) is the greater challenge.

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