David R. Henderson  

A Gap in Public Choice?

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Sometimes Politicians' Own Thoughts and Interests Matter for Understanding Policy

Even though public choice has not taken the economics profession by storm, there's a kind of crude public choice that is popular among libertarians and libertarian-leaning people who are skeptical of government. Moreover, I have heard even some public choice scholars express this view. When the government does something destructive, say many such people, one should "churchez la monnaie." That is, one should look for who stands to benefit. So far, there's nothing wrong with that kind of thinking. Looking at who stands to gain is a necessary first step in understanding why the policy came about. One might well find a particular lobby pushed for a policy that no politician was thinking much about and that members of this lobby stand to benefit from.

The problem comes when one restricts oneself to such explanations and refuses to look at other possibilities. I remember years ago an economist friend arguing with a public choice economist about the late Edward Kennedy. Both disliked the particular policies he was promoting that they were discussing. That wasn't the issue. Rather, the issue was what motivated Ted Kennedy. This public choice scholar insisted that Kennedy was pushing particular policies because those policies would make Kennedy wealthier. My economist friend, and I, doubted and doubt this.

Another example. I was in a discussion on Facebook last week in which I said that George W. Bush's invasion of Iraq in 2003 had little to do with oil. The FB "friend" replied, "What was it about? Weapons of Mass Destruction? LOL." "No," I said, and when I tried to argue that both Bush and Cheney had their own motives, independent of oil companies and independent of the defense industries including Halliburton, I got nowhere. This guy was locked into the idea that economic interests narrowly defined explain everything.

In early 1979, a libertarian group in Rochester, New York that I was involved with invited the late William H. Meckling to give a talk about the draft. Senator Sam Nunn and others were pushing to revive the draft. In Q&A, a member of the audience asked Bill what interest groups were pushing for the draft. Bill paused and then said, "Congress." In context, he meant some members of Congress, notably Senator Nunn. I had never heard such an answer, but when I worked in Washington from 1982 to 1984, I came to Meckling's view that Congress and the President are, to some extent, independent entities that push for policies they favor, and that interest group explanations often don't work well. They often do work well, but there are a fair number of issues on which various politicians are simply pushing their own agenda.

I'm guessing that there's some public choice literature that takes the Meckling view seriously, but I don't know it. Zac Gochenour and I published an article suggesting that Presidents sometimes get into wars in order to be thought of as great. But that's just one example. Does anyone have some cites on this?


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CATEGORIES: Public Choice Theory




COMMENTS (18 to date)
Mark Bahner writes:
Zac Gochenour and I published an article suggesting that Presidents sometimes get into wars in order to be thought of as great. But that's just one example. Does anyone have some cites on this?

I have no cites on this, but it seems really remarkable to me how few people seem to include Saddam Hussein's attempted assassination of G.H.W. Bush as a significant reason for G.W. Bush's desire to invade Iraq.

foosion writes:

churchez la monnaie

"Cui bono" is the more traditional phrasing.

The political system appears to be responsive to the best off and no one else.

Ilya Somin writes:

Yale political scientist Samuel DeCanio (himself a libertarian) has written a series of articles arguing that policy elites (Including Congress and the president) have a great deal of autonomy - in part because of widespread political ignorance among voters.

GM writes:

This article by Dani Rodrik:

http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.28.1.189

Alexandre Padilla writes:

I have difficulties to see where is the gap in Public Choice on this specific issue. Arguing that some scholars have a narrow definition of what drives a specific president's decision doesn't mean that all Public Choice scholars think this way. More importantly, as Ilya Somin mentions above politicians do often push for a specific policy because voters are rationally ignorant or, if you believe Bryan Caplan has a point, are rationally irrational and exhibit biases against markets in general and if it helps them get elected or reelected, they will push for it. Also we shouldn't forget that for some politicians there is a life after politics and, therefore, their decisions might be guided by long term goals.

I can't assume too much about why the Congress or Senator Nunn was for the draft. It could be as simple as when you are in the draft you don't count as unemployed and maybe unemployment was relatively high among young not college educated workers and that was a way to avoid them counting toward unemployment numbers.

There is research about the important factors that drive reelection. You can find among them inflation and disposable income; maybe unemployment matters.

Anyway, the point is that I don't think Public Choice scholars argue that interest groups drive politics even if it appears that a lot is driven by such groups. What basic Public Choice would argue is that politicians and policy-makers are not as public-interested as we think they are. Their motivation is self-interested and sometimes their self-interest might coincide with the public interest.

Aleksandar Maksimovic writes:

http://slavisatasic.com/wp-content/uploads/2014/01/modern-growth.pdf

Check out this paper from Independent Review 'The Modern Growth of Government Springs More from Ideas Than from Vested Interests'.

Lee Waaks writes:

@David Henderson:

You are correct that it is not always about who benefits. Ideology and/or ignorance plays a much bigger role. Bryan Caplan believes he has helped to patch a hole in Public Choice with his "voter irrationality" thesis but I believe he lost his debate with Jeffrey Friedman (CATO Unbound). Friedman made the obvious point that ignorance is quite widespread, not just among the masses. For example, Lenin was clearly motivated by ideological factors (and this is not negated by his desire for power). Although he was very intelligent, he was quite ignorant of economics. Freidman also uses the example of alleged "irrational" Swedish support for aid to Third World countries. But whom in Sweden, he asks, has read Peter Bauer? If they are ignorant of Bauer's work, they are clearly not irrational for not knowing of it. So if there is a hole in Public Choice, it can be patched with a voter/ruling elite ignorance thesis.

Mike Hammock writes:

David, I think you're looking for the literature on the role of ideology. I'm not sure what the current state of this literature is, but the last time I looked (years ago), the view among those who had looked into it was that ideology plays a significant (and underappreciated) role in policy.

Here's an old and short Rubin paper that summarizes some of the (older) literature:
http://economics.emory.edu/home/documents/workingpapers/rubin_98_05_paper.pdf

John Goodman writes:

There are four separate issues here:

1. Good public choice theory thinks in terms of an equilibrium and in equilibrium, politicians don't matter. There is one set of policies that can win out against all other policies in the political competition.

2. However, just as economic markets can be out of equilibrium, so can political markets. And this can happen for all sorts of reasons. When you are out of equilibrium politicians can exercise choice. Also, just as entrepreneurs can exploit market opportunities, political entrepreneurs can exploit opportunities in politics.

3. None of this has anything to do with what motivates politicians. However, I have always thought that competition is likely to produce politicians who really believe in the equilibrium platform. You don't have to think politicians are evil to believe in public choice. Most of them really believe what they say.

4. Finally, opposition to the volunteer army arises because it's more expensive than the draft. Opposition comes from all the special interests who have other ways they would like to see the money spent.

Tom West writes:

It always surprises me when people discount the large variety of motives for action in either government or business.

After all, has anyone ever worked for any organization of more than three people where *everyone* was motivated primarily by money and/or power?

Sure money/power motivates some, but any philosophy that assumes that money motivates *all* fails the first time a person picks up a wallet on the ground and spends time and effort to find the owner.

Culture, ideology, and self-perception are at least as important (if not significantly more) as money/power where significant decisions are at stake, whether it's government or business.

wd40 writes:

There is a plausible argument that a volunteer army makes it easier to launch and continue wars because most voters do not have to worry that they or their children might be drafted and possibly be killed in action. Higher taxes to pay for a voluntary army does not have as dramatic an affect on one's willingness to engage in political action. Furthermore, those from the upper half of the income and education distribution who have relatively more clout in the political process are much less likely to have children who volunteer to be in the armed forces. So a draft army makes the cost of war more real to these politically powerful voters. Those who believe that these costs are not adequately measured by these voters when there is a volunteer military may prefer to have a draft. Would we have gone to war against Iraq or continued the wars in Iraq and Afghanistan for so long if there was a draft? This may explain Nunn's position. However, if this argument is correct, it may create a puzzle for Libertarians who neither like the draft nor foreign adventurism.

David R. Henderson writes:

@wd40,
I think your argument has only surface plausibility. Chad Seagren and I wrote about that in “Would Conscription Reduce Support for War?” It’s in Defense and Security Analysis, which, unfortunately is gated. It’s also at SSRN, but we did some major improvements on the piece in response to various referees’ and other economists’ comments between the SSRN publication and the journal publication.

Here’s the abstract:

An increasingly popular justification for conscription is that it would increase the probability that the "children" of politically powerful people would serve in the military, thus giving them an incentive to lobby against war. However, this argument neglects the fact that avoiding war for a nation is a public good and is, therefore, subject to the classic free-rider problem. Under-provision of anti-war agitation from those seeking to avoid the draft is exacerbated by the fact that seeking a deferment provides an alternative with a superior private payoff. Empirical findings since WWII are consistent with our thesis.

Moreover, before my turn came to testify on the draft before Senator Nunn in May 1979, I sat through over 3 hours of watching interaction between Nunn and other witnesses. He didn’t once mention your argument. Remember that this was in 1979, not long after the U.S. government lost in Vietnam and more hawkish politicians were worrying about whether the U.S. had the will to fight. So the odds that he was thinking the way you’re thinking are close to zero.

Zeke5123 writes:

@ Prof Somin:

I thought one argument for public choice is that irrationality favors the minority interest, thereby allowing them to press their agenda more heavily?

Granted, I know another argument is how even amongst rational voters, you have problems with salience and potentially prisoner's dilemmas. Nonetheless, it seems somewhat obvious to me that voters who don't pay attention/don't understand (even if that behavior is rational per your arguments, which I generally agree with) make it easier for concentrated minorities to shape policy, either through lobbying or via getting their guy elected in the first place.

So, if that is the case, what role does the irrationality of the voter play in this public choice tradegy?

AS writes:

Someone almost always benefits. In the case of legislation without a clear interest group backer, the beneficiary could be a coalition of voters who receive psychic benefits from knowing that legislation they like the sound of has passed. The politician who passes such legislation receives popular support and hence political power. Case example: minimum wage. We know from basic economic theory that minimum wage actually hurts the alleged beneficiaries (low-skill workers). But the true beneficiaries are the voters who believe in the nobility of minimum wage and who get satisfaction from seeing it passed.

In a sense this is completely arbitrary. We need a better theory of voter beliefs.

Gene Callahan writes:

Alex, I see that crude kind of equation of self interest with seeking financial game in public choice papers all the time.

David R. Henderson writes:

Thanks to Ilya Somin, GM, Aleksandar Maksimovic, Lee Waaks, and Mike Hammock for the leads.
@John Goodman,
On 1, I think your idea of equilibrium is too tight. I think there’s more looseness in the joints than you do. Of course, you might call this looseness "political disequilibrium.”
On 2 and 3, good points, even though, as I say in my comment on your #1 above, your point on #3 is a little too determinate.
On 4, that’s wrong if you include all costs. One of the neatest things economists ever showed is that the all-volunteer force is cheaper than the draft. It’s just that much of the cost of the draft is on the draftee and is hidden, rather than being in the government budget and being out in the open.

ScottA writes:

The Rubin piece cited earlier summarizes some of the ideology matters stuff nicely. Poole and Rosenthal are a good strike against a myopic focus on economic interest; they find (among other things) that ideology doesn't vary much over time. If legislators were out for purely material gain, they might vacillate (they could be bought off, which we'd see in the data).

Additional: Hans Noel on ideology, media and party activists; literature on translating public opinion into legislator opinion (e.g. Lupia and McCubbins 1996 [I think]). Basic summary of that is that media/thought-leader type personalities serve a key mediating role.

AS writes:

Legislators can be bought off, under some constraints. That is why PACs donate to legislators who serve on commissions that regulate their industry. Legislators serve a combination of special interest groups, voters, and their party whip.

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