Scott Sumner  

Democracy: Trust the system, not the leaders

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Incentives and Get Out the Vot... A Community Comes Together...

Like Bryan Caplan, I have a strong distaste for politicians. Especially this year. But I have a more favorable view of democracy than Bryan does.

I see democracy as being superior to all other systems, for standard "wisdom of crowds" reasons. At the same time, democracy often produces flawed outcomes for two reasons:

1. The principal/agent problem leads to special interest politics.

2. Uncertainty about how the world works.

Thus part of the problem is that it's hard for voters to prevent special interest policies that basically all economists oppose---say subsidies to Big Sugar.

In addition, even experts like Bryan Caplan and Paul Krugman often disagree about optimal policies, because they don't agree as to how the world works.

In my view, countries with a long history of democracy, such as the US, Switzerland and Britain, tend to produce pretty good outcomes, in a relative sense. Thus imagine a scale of 0 to 100, with zero being the worst possible government, and 100 being the best. My claim is that countries much lower down on the scale, like North Korea, are usually non-democratic. I also believe that the US is in the top 10%. I.e., bad governance could push us much further down in terms of utility, than further improvements in governance could raise us up. Admittedly that only applies to current residents of the US, and Bryan might reply that lots of potential Americans are denied entry. Even if true, that problem is just as likely to occur in non-democratic countries as in democratic countries.

So I believe people should vote for utilitarian reasons---it makes society better. That's especially true of well-informed people. Yes, my vote won't make much difference, but that's also true if I throw a candy wrapper on the ground in a vast national park, like Yellowstone. It doesn't make much difference. Yet even though my individual action makes little difference, I show solidarity with society by not littering, and by voting. I see not voting as being similar to littering, a tiny anti-social action.

I wonder if Bryan is too sensitive to the 10% of the glass that is still empty, because of the stupidity and corruption of politicians, and not sensitive enough to the miracle of our modern rich and free society, which is a product of the 90% of decisions that they get right and that we never even think about because they are not hot button political issues. Decisions like; "Americans can own their homes." Or "Americans can read pretty much any book they choose." Or "Americans can buy cars from Japan." Etc., etc.

Perhaps a North Korean peasant farmer would have an easier time appreciating the 90% of things we get right.

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COMMENTS (20 to date)
CA writes:

Great post.

Dylan writes:

Thanks for the informing post. I have to say I find it a little perplexing how many libertarian leaning thinkers seem to actively discourage voting, I'm not aware of any other relatively mainstream school of political thought that does that. I don't consider myself even a small "l" libertarian, just a little libertarian leaning, so maybe that's why I find voting in the hopes of moving the needle just a tiny bit in the direction that I think would be better for society a worthwhile endeavor.

Greg G writes:

Excellent post. Especially the part about nations with the longest history of democracy consistently getting the best long term results. That is more than a co-incidence.

Democracy is the best political system for the same reason that capitalism is the best economic system. Both result in more competition than the alternatives.

bill writes:

Another plus for democracy is it reveals the candidate with the most support, thus reducing the likelihood of a violent reaction to any particular administration or policy. And anything that reduces violence is generally a winner.

Shane L writes:

Your post is very close to my own view.

I wonder if a mechanism by which democracy corrects poor policy is that while voters or interest groups may favour bad economic policies, they also favour economic growth and prosperity. Hence governments are willing to annoy voters, rejecting some of their preferred policies, in order to get an overall prosperous economy.

James writes:

"I see democracy as being superior to all other systems"

I suspect you reached this conclusion because you only considered a handful of alternatives and the few you considered were all forms of goverment.

One alternative to democracy that people seem to take for granted is the "payer chooses" system. E.g. since I pay for my food, my car, etc., I get to choose what I eat, what I drive, and so on. I also pay for drug rehab coverage in my health insurance but that was because voters (via their representatives) made that choice, though they leave it to me to pay for it. I doubt that I am alone in being more satisfied with the decisions I make for myself than with the decisions voters make for me.

Unless you have very unusual preferences, you probably prefer the payer chooses system as well. How frequently do you wish that you could decide for yourself some matter which voters or their representatives currently decide for you? How frequently do you wish that a decision that you currently make and pay for yourself was instead made by majority vote?

James writes:

Scott,

You make an interesting point with respect to voting for utilitarian reasons but neglect opportunity cost. From a utilitarian point of view, you would have to weigh the expected impact on aggregate utility from a person's vote against the expected impact on aggregate utility from whatever else they would do with their time if they did not vote.

Since you do not know the relevant information to make that comparison, as a utilitarian you should be pleading ignorance on whether or not other people should vote.

E. Harding writes:

"In my view, countries with a long history of democracy, such as the US, Switzerland and Britain, tend to produce pretty good outcomes, in a relative sense."

-True enough. But correlation is not causation. Perhaps, there is some other factor that makes groups of people predisposed both to democracy and to creating countries that produce pretty good outcomes.

"My claim is that countries much lower down on the scale, like North Korea, are usually non-democratic."

-Of course. So are countries much higher up. Hong Kong's still not quite democratic.

Lorenzo from Oz writes:

A fine post. I would add the "pay attention" factor. Democracy drives the attention of office holders very broadly. The attention is imperfect, for the reasons you mention, but it is much better than being able to ignore.

mbka writes:

Scott,

I love the candy wrapper analogy. And I never understood Bryan Caplan's point. This is clearly a Zeno paradox kind of situation. Every single action is infinitesimal, but they do matter in the aggregate. Like in the formation of prices, come to think of it.

Here is my own take on democracy and why the argument of "my vote has no influence anyway" is bogus. My take is that people misunderstand the nature of democracy fundamentally. Democracy never "gets the people what they want". It cannot do so because "the people" don't exist. There are only people with mixed and diversely ordered preferences. So, even if "your" party wins, you never get exactly what you wanted. Due to the voting paradoxes, there may not even be a majority satisfied with the order of preferences of the outcome.

So why does democracy produce on average good outcomes? Because it creates a market for political ideas with competition. Competition is the key. The mere threat of losing the elections forces all parties to cater to their best guess of the mainstream "voter's will". It almost doesn't matter who wins, save for unusual constellations. On average, any winner will have catered to a watered down set of solutions that can please most.

By extension, you don't even need a strong democracy. You don't need changing parties either. The mere threat of facing an election is enough. Because what matters for evolution, adaptation, improvement, is the threat of competition, not the actual outcome of it.

mbka writes:

Forgot to add the conclusion. For this to work, the system needs voters that appear to care. And this is why your vote matters.

Sam W writes:

@james-

There's no need for a utilitarian to plead ignorance on the issue. After all the utilitarian doesn't know whether the litterer in Yellowstone maybe had some pressing need that caused him to drop the candy wrapper on the ground rather than carrying it out of the park. You can however GENERALLY say that carrying it out of the park is better than not carrying it out of the park and voting is better than not voting.

Your statement would ban every and any kind of moral exhortation on account of the unseen. Which might be your actually position but its rather unfair to any system that has dogmatic ideas about what other should do.

Sam W writes:

@james-

There's no need for a utilitarian to plead ignorance on the issue. After all the utilitarian doesn't know whether the litterer in Yellowstone maybe had some pressing need that caused him to drop the candy wrapper on the ground rather than carrying it out of the park. You can however GENERALLY say that carrying it out of the park is better than not carrying it out of the park and voting is better than not voting.

Your statement would ban every and any kind of moral exhortation on account of the unseen. Which might be your actually position but its rather unfair to any system that has dogmatic ideas about what other should do.

Scott Sumner writes:

Everyone, Thanks, lots of very good comments.

James, I would distinguish between systems and policies. I see democracy as a system, which will hopefully produce good policies, such as "payer chooses".

Harding, You responded:

""My claim is that countries much lower down on the scale, like North Korea, are usually non-democratic."

-Of course. So are countries much higher up. Hong Kong's still not quite democratic."

I think you overlooked the term "usually".

Maurizio writes:

"I see democracy as being superior to all other systems, for standard "wisdom of crowds" reasons."

I think there is a dangerous mistake here. "Wisdom of the crowd" only exists when there is a process by which wrong beliefs are discarded and correct beliefs are rewarded, over and over again. An example of this process is the natural selection that happens in markets: people who make bad predictions go bankrupt, correct predictors are rewarded.

But in democracy, crucially, there is nothing like that: if you have false beliefs, you are not the one who bears the costs of them (because your vote does not influence the outcome); so wrong beliefs continue to exist indefinitely; and in addition they become _prevalent_ over correct beliefs, because they happen to be more useful than the correct beliefs to the people in power.

James writes:

Scott,
In the US there has been a trend away from payer chooses toward electorate chooses. Once the electorate takes over some decision, you can reasonably expect that you will never get to make that decision for yourself ever again. I would be much more comfortable with democracy if it didn't have a tendency of gradually and irreversibly taking over everything.

Sam W,
I think utilitarians should plead ignorance where they are ignorant. You misread me to think I mean anything else. Given the unknown sign and small size of the expected impact of voting, even a tiny opportunity cost negates any utilitarian case for voting. This criticism would not apply to a utilitarian case for hand washing, vaccines, or safe drinking water.

Alex writes:

[Comment removed. Please consult our comment policies and check your email for explanation.--Econlib Ed.]

Maurizio writes:

"in democracy... if you have false beliefs, you are not the one who bears the costs of them (because your vote does not influence the outcome); so wrong beliefs continue to exist indefinitely;"

I should add that Caplan understands this, and also offers the solution: in his system, when you "vote", you do pay for the cost of your false beliefs. (because in his system the act of voting is replaced by the act of subscribing to a protection agency of your choice). And that makes _all_ the difference with democracy. Imagine all the people suddenly stopping believing economic nonsense.

John Fembuo writes:

America a democracy?

Or - A Republic, madam, if you can keep it?

The difference sure seemed important at the time.

Tochukwu Okoye writes:

If you define democracy as requiring at a minimum the right of citizens to decide who their leaders are, then the UK, the US and Switzerland didn't become democracies until the 20th century - long after their economic successes, compared to the rest of the world, had accumulated. Therefore, the good outcomes you observe aren't necessarily a product of democracy, they reflect economic successes/advantages achieved prior to democratisation.

The case of the 2 Koreas is apt: the Miracle on the Han River happened whilst South Korea was non-democratic. That you observe better living standards in the South today than in the North is not explicable by reference to the South's present democratic system. The democracy today is a byproduct of economic successes in the past.

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