Public Choice

So I was going to post this as a comment to Sam’s most recent post, but I think this is worthy of a thread of its own:
Alright Sam, you obviously make good points and these are the very few that I am sympathetic to (but not persuaded by). Essentially, I think you can boil your argument down to, “well, we HAVE to do SOMETHING!” I think that is a very powerful gut reaction of statists from all sides. If libertarians are going to have any traction in the modern world, we need to provide an argument that adequately addresses your concerns.
You’ll enjoy this. An important aspect of public choice economics is this idea of concentrated benefits and dispersed costs. Lobbyists, religious groups, and evil crony capitalists who have something to gain from passing a particular piece of legislation are willing to work hard to get it passed. Joe Sixpacks like you and I aren’t going to care about that little piece of legislation because it will likely only result in 5 cents of our tax money or a little bit less innovation that year.
Repeat that process over and over though, and you have a really large state that collects a lot of taxes and skews a lot of incentives. This is irrational! We shouldn’t vote for politicians that do this do us! But this is the world we live in. Voters are ignorant, information is assymetric, and regular people don’t study economics and vote accordingly.
The reason I favor markets over state action in all cases is because the market (while often wrong or harmful) provides a multitude of options to people to maximize their utility. The government can only provide one, official, government chosen option. This is a huge principle-agent problem.
If part of the market is wrong/inefficient, there is certainly harm that is done. But if the state is wrong, the harm is more widespread, sometimes even catastrophic. The biggest problems of history are not market failures. They are wars, genocide and tyranny.
Just to close, the government is not made up of super humans or people that are uber-benevolent. It is just made up of regular Joe Sixpacks like you and me. Why would you ask regular people to give you one mandate of how to live your life when you could have thousands offer you thousands of options.
Choice seems simple.

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4 Responses to “Public Choice”

  1. […] there is no incentive for the working poor to petition or vote differently (see my discussion on Public Choice […]

  2. BTW, Scott, I was happy to see a post here. You write too little.

  3. “In order to believe the costs are low I have to believe the likelyhood of state screwup is low, or can be made low, which I do and I provided a plausible mechanism (state actors constrained by public opinion) for believing that.”

    I think that rubs up against the core of Scott’s (and Public Choice’s) point, though. State actors aren’t constrained by public opinion in the vast majority of things that they do. Largely because the vast majority of things that they do are REALLY important to a small number of people and negligible, if not annoying to think about, for everyone else.

    Agricultural subsidies are an excellent example of this. A small group of people — farmers, usually, but also processors and packers — have a burning, intense interest in agricultural legislation. They should — it effects their livelihoods. However, can you name a single agricultural piece of legislation that the national government has put out this year? Perhaps a state government? I sure as hell don’t. I would be surprised if you did and at the same time didn’t have any ties to the agricultural industry. And why should you? You’ve got bigger and better things to worry about. So does most everyone else. So what do politicians see as “public opinion” when they go to vote on such issues? Only the lobbyists that are waving signs in their face. There is no public opinion on specific bills like that. It is — both literally and figuratively — a waste of people’s time to worry about it.

    ” Ditto for things like education or health care, they’re programs designed to expand the possible life choices of the recipients.”

    Sure, if done correctly. Government has shown consistently that it can’t provide these goods at a high quality.

    http://www.cato-at-liberty.org/president-to-call-for-big-new-ed-spending-heres-a-look-at-how-thats-worked-in-the-past/

    Fun graphs.

  4. samuel says:

    The argument is not we have to do something…..

    I feel like you might have missed the central point of the essay. Its not that we have to do something, its that in a lot of cases the benefits of doing something is lower then the cost and this is true in aggregate. In order to believe the costs are low I have to believe the likelyhood of state screwup is low, or can be made low, which I do and I provided a plausible mechanism (state actors constrained by public opinion) for believing that.

    Besides the kind of state action I’m in favor of isn’t really a state mandating one way to live your life but the state pricing market externalities into the system so that one persons choice of how to live their lives doesn’t infringe or diminish the choice of others. Ditto for things like education or health care, they’re programs designed to expand the possible life choices of the recipients.