My colleague Kapil Bajaj has done some good work on the Delhi-Gurgaon expressway project, which illustrates some valid conclusions of Public Choice theory even where it goes wrong. As I do not read Newspapers much, I haven’t gone much into the details of the project Kapil has mentioned. So, I do not have any hard knowledge. But, I think I get the essentials.
As Kapil has written, many Public Choice theorists argue that individual voters have little incentive to be aware of politics, and vote accordingly. Similarly, politicians and bureaucrats try to optimize their own utility and power. And Kapil has written, (and unfortunately so), many public choice economists believe in the Self Interested Voter Hypothesis (SIVH) which assume that individual voters vote their pocketbooks. It is all true.
The Delhi-Gurgaon expressway project
Kapil argues that contrary to the claims of Public Choice Theory, in the Delhi-Gurgaon expressway project, the public, bureaucracy and representatives have acted against their self interest: The public protested against a Government policy forgetting their narrow self interest. The elected representatives and officials have revoked a policy which led to much public outrage. So, the assumption of utility maximizing behavior doesn’t hold much water. People are after all, not as bad as cynical economists believe.
The flaw I see in this reasoning is that if bureaucrats and elected officials try to maximize their power and positions, it shouldn’t be surprising that they changed their position when there was public outrage. They do optimize their welfare, but the fact that they revoked their position only proves it. Second, as Self Interested Voter Hypothesis is long discredited, it is not at all surprising that the public protested against it, assuming that they had little incentive to protest. Moreover, the standard public choice notion that politicians give into special interests is wrong. They rarely undertake a project out of their financial self interest, when the public is largely against it. They might. But they just ‘might’. Politicians do often get around public outrage by serving special interests behind the mask of public interest. Finally, though the public might take to the streets to protest against a policy, the self interested reasons to do so are weak. But, they occasionally do.
Public Choice Theory
Public choice theorists are not a homogenous group. Their positions are varied, though there is wide agreement on many substantive issues. Alternative schools of thought are often not represented fairly in mainstream texts. Even when they are, mainstream, authors do not take in to account the fact that their positions are far more complex and varied. Truth is often a minority position.
Economists tend to believe in the Self Interested Voter Hypothesis. Political scientists tend to believe that voter behavior is aligned with the common good. Economists see Self Interested Voter Hypothesis as a good reason to have a healthy suspicion of the masses, and in rare cases, even to reject democracy altogether. Political scientists see their rejection of the Self Interested Voter Hypothesis as a reason good enough to accept democracy. Strangely, both are wrong. Economists are wrong in believing that voter behavior is self interested, but right in thinking that democracy doesn’t work well because of voter irrationality. Political scientists (Like David Sears) are right in believing that voter’s behavior is not self interested, but wrong in believing that it makes democracy work better. Some Public Choice theorists like Bryan Caplan have accepted the reasoning of political scientists, and think that Self Interested Voter Hypothesis is horribly wrong.
People Vote Selflessly
Contra economists, voters typically do not vote for government policies which fit in well with their financial self interest. They generally vote in the larger interest of the society. The reason is simple. As Bryan Caplan puts it, “Self-interest appears to explain most of what people want and do. But at the same time, politics—with its ideologues, heartfelt appeals, and heated debates—seems to determine the “rules of the game” that self-interested individuals are playing.” Being altruistic at the polling booth is an easy way to feel “noble”, as the vote of a single person is close to irrelevant. If I can feel good about myself by pressing a button, why shouldn’t I? It is not true that politicians and bureaucrats always maximize their positions and power, though they almost always do.
We all maximize our utility, though not in so obvious a manner. However, it doesn’t mean that Mother Teresa’s do not exist or that we all pile up money beneath our mattresses and would die rather than share it with our fellow beings. It doesn’t mean that financial self-interest is the only motivating factor behind human behavior either. Human beings are complex and different, but there is a general pattern which is evident through introspection, analysis and empirical data: Human beings are by and large, motivated by self-interest.
When I say that voters vote according to the larger good, it only means that they virtually never do otherwise. In issues related to gender, race, ethnicity, and sexual orientation, people often vote according to their group interests even when their self interests are at harmed. The wages of immigrants and their children will suffer the most when new immigrants with similar skills join the workforce, but they are more in favor of immigration than natives as they identify with the immigrants who have come over there to make a living, just like them or their parents. In minor issues, there is some mixed evidence. Smoking is a case in which smokers overwhelmingly prefer to vote against a ban on smoking. But, these are rare exceptions.
Selfishness Improves Political Outcome
Public choice theorists often believe that their belief that voters vote according to their self interest is reason enough to think that democracy doesn’t work well. Strangely, democracy wouldn’t be as bad as it is, if voters voted their pocketbooks. It is a surprising conclusion, even for people who loathe democracy.
I think this needs explanation. Consider minimum wages. There is much dispute, and many do not quite put it quite that way, but economists tend to believe that minimum wage laws lead to unemployment. The common public, and of course, most intellectuals tends to believe that minimum wage laws help workers, especially the poorest among workers. Economists on the other hand, think that when the Government imposes a minimum wage, employees tend to fire or refuse to hire workers who are less productive as it makes no economic sense. Workers who are fired or are having a hard time finding a job will be the least productive, and often the most poor. It is hard to argue against the fact that if the Indian government imposes a minimum wage of Rs. 1000 a day and strictly enforces it, most unskilled laborers will be out of work. I find it retrospectively obvious. So, what if voters are not self-interested, and vote according to the larger good of the society? As they wrongly believe that minimum wage laws help the poor, they will vote in favor of it. Not just the low skilled workers, the middle class and the rich too will vote in favor of the minimum wage legislation. What if voters are self interested? The low skilled workers might vote in favor of it, but the middle class and rich mostly won’t. So, instead of utter chaos, we get what many economists call a “consensus of folly”. If voters are economically and politically aware, it would be better if they vote for the larger good. But, when they are ignorant and have “systematic biases” (In more honest terms, stupid), the results will not be pretty.
Most voters in the United States (I am not aware of, or have gone deep into such studies in India, though I am sure that the situation is in all likelihood worse.) do not know their senators. In cases they know them, they do not know their positions too well. In cases they know the positions, they are not capable of analyzing them, as it is too complex a task which requires specialized and often abstract knowledge. It is a fact that most voters, even highly educated voters are ignorant as these are highly specialized fields of knowledge in which even experts with decades of learning can easily go wrong.
The political outcome will be better if voters are selfish, apathetic or even mean. Not because meanness, selfishness and apathy are intrinsically good, but given the fact that they have systematic biases, it all helps improving the political outcome. An analogy might help: If all mothers believe that placing a hot iron on their babies will give them superhuman powers, the best mother on earth would be the mother who is too lazy to do it. But, we will still be far from proving that laziness is splendid.
Bryan Caplan-The Myth of the Rational Voter
Mencken-Notes on Democracy
Etienne de La Boetie-The Politics of Obedience
Gordon Tullock-The Vote Motive
Hoppe-Democracy, the god that failed
Gordon Tullock-Public Goods, Redistribution And Rent Seeking
Rick-Shenkman- Just How Stupid Are We?
Farber & Frickley-Law and Public Choice
Lecky-Democracy and Liberty
Peter J Boettke (Ed.)-Public Choice and the Challenges to Democracy
Richard Posner – Law, Pragmatism & Democracy
Richard Posner-Public Intellectuals
Loren J Samons II- What’s Wrong With Democracy?
Edward Stringham-Anarchy, State and Public Choice
Buchanan-The Calculus of Consent
Gordon Tullock-Government failure
Murray.N.Rothbard-Power & the Market
Ludwig Von Mises-Bureaucracy
David Gordon-Secession, State and Liberty