Structure vs. Belief


Many libertarians embrace public choice theory as a sophisticated, intellectually rigorous political analysis that is consistent with libertarian ideas. This does not mean that libertarians should accept it uncritically.

Public choice theory looks at politics through a lens that treats politicians as selfish actors striving to maximize their power and self-interest, not as people chiefly motivated by the public good. Public choice theory has identified several structural defects in the American political process that lead politicians to destroy liberty as a byproduct of their self-interest. One such defect is the dispersion of interests problem, the fact that a rent-seeking law imposing taxes to help a special interest group has a highly concentrated interest group to lobby for it, whereas the interest to lobby against it is dispersed over the entirety of the taxpayers. Individual taxpayers aren’t sufficiently aware of the tax to be highly interested in fighting it.

Another defect is the fact that politicians usually get noticed by the media for what they do, and not for what they don’t do, so election campaigns tend to reward politicians for being active, which leads to bigger government. Because of the fame that attaches to moralistic crusades, the structure of democracy also rewards legislatures for passing new criminal laws, which leads to overcriminalization.

It is the beliefs of the people that caused the decline of liberty and the rise of big government in post-New Deal America.

But despite public choice theory’s analytical value and libertarian leanings, I would argue that it is mistaken about the fundamental cause of statist laws. As an alternative to public choice theory I would present the rule of intended consequences: the reason for the existence of any given law in a republican democracy is the voters’ belief that the law is good and performs a just purpose; the unintended consequences of a law are usually not the primary reason for that law’s existence. This rule holds that the best way to get an unjust law repealed is to persuade the voters that the law is unjust, so that voter pressure will lead the politicians to repeal it.

For example, the reason why gambling is illegal is that mainstream American voters have inherited a Puritan conservative Christian morality dating back to the colonial era, and they feel that gambling is evil and should be illegal. The Indian casino owners and the casinos in Las Vegas and the state lotteries all benefit from the anti-gambling laws. And they all have lobbying power. But despite the lobby whose interest is favored by criminalization, the primary reason for the anti-gambling laws is the feelings of the voters, not the lobbying of the special interests who benefit from the law. If the voting public did not believe that gambling should be illegal, then it would be legalized.

I doubt that any amount of lobbying or special interest funding could keep gambling from being legalized if the politicians thought that the voters strongly favored its legalization. Legislators who fought the tide of public opinion would simply be voted out and replaced by legislators who would obey the public will. Gay marriage and Prohibition are two other examples showing that the law tends to change when the beliefs of the voters change. The rise of gay marriage laws and both the start and end of Prohibition illustrate the fact that politicians will adopt policies that were once unpopular if they see that the mainstream beliefs of the public have changed.

I would characterize the debate between public choice theory vs. the intended consequences rule as a quarrel between structure and belief. Public choice theorists think that the structure of a republican democracy disadvantages liberty and favors the growth of government. In contrast, I think it is the beliefs of the people that caused the decline of liberty and the rise of big government in post-New Deal America. The rise of socialist sympathy in the Democratic Party in the 1930s coincided with the seepage of socialist theories from the late 19th century into the consciousness of the American public. The expansion of our government has followed Americans’ abandonment of the libertarianism of the American Revolution and their acceptance of modern liberal dogma.

If I am correct, then the key to restoring liberty is not to alter the institutional structures of the nation. Instead, the key is to persuade the voting public to believe in liberty, to transform the people’s moral sentiments so that they feel that statist laws are unjust. This challenge may seem difficult to meet, but altering beliefs would be easier than the task presented by public choice theory, which would be nothing short of fundamentally altering the structure of American government. Public choice could probably succeed only through a series of libertarian constitutional amendments, which seems unlikely. The war of ideas and persuasion is the right path for libertarians to focus on.

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A New Wrinkle on Public Choice Theory


In my business ethics classes, I typically discuss public choice theory (PCT) right after I survey ethical egoism. I explain that by taking egoism seriously, economists have been able to understand many issues more profoundly than philosophers, who currently tend to dismiss egoism from the realm of serious ethical theory. (Other important phenomena that are generally beyond the appreciation of academic philosophers, uninterested in the profound role of self-interest in real life, include moral hazard, the principle-agent problem, regulatory capture, and especially “rent-seeking.”) In short, many philosophers buy into the Hegelian notion that the state (which they equate with the government) is the realm of disinterested charity — unlike business, which they take to be the realm of pure self-interest. Most economists are not Hegelians, which needless to say is part of their charm.

PCT asserts three propositions. First, everyone in the political process — voters, politicians, government bureaucrats, special interest groups, and the lobbyists who represent them — are motivated primarily (if not entirely) by self-interest. That is, egoism governs political reality. Second, there is an asymmetry in what participants in the process stand to gain, with special interests often standing to gain a lot while the average taxpayer only a little. And there is a concomitant asymmetry of knowledge. Third, since politicians are not spending their own money, but are using other peoples’ money (OPM), they have no incentive to use resources for the general good.

Most economists are not Hegelians, which needless to say is part of their charm.

The classic use of PCT is to explain why pork-barrel spending is so prevalent among politicians of every party (including those accurately characterized as libertarians, such as Ron Paul), and so hard to control. Suppose I am Congressman Jason (a jarring thought, I grant you), who represents a district dominated by a university. Suppose further that I am approached by a group of people who want me to build a “senior center” in my district, which, being a university-dominated area, has a lower concentration of old people than many other districts. They approach me, pleading their case, and reminding me that they made a large donation to my campaign in the last election. This group will typically include the folks who have the most to gain, such as the old people who will benefit from the project without having to spend a nickel more than taxpayers who won’t be able to use it, and the construction firm that will pocket millions of bucks from it. But the group will give itself a virtuous-sounding name, such as “Citizens for the Elderly” or “Seniors in Solidarity.”

PCT predicts that I, the politician, will reason as follows: “If I put this project in some grand bill, say, a defense spending bill, and it passes, I will get tens of thousands of campaign dollars for my next election. And, hey, money is the mother’s milk of politics. Moreover, voters in my district — especially elderly ones — will see my name on this new center and give me credit for it, even though it was OPM that financed it. Of course, the populace as a whole would be better off if this senior center were built in a district with a higher concentration of old people, but it isn’t my money, so I don’t care.”

PCT also predicts that since some of the old people in my district stand to gain a lot, not to mention the construction company, they will follow the progress of the legislation very closely, write letters on its behalf to my colleagues, call other congresspersons, and so forth. On the other hand, since the average voter only stands to lose perhaps a dollar on this boondoggle — and has other pressing matters to worry about — that voter will have no incentive to follow the legislation. He will be “rationally ignorant,” in the snappy patter of the economists.

So, when we think of politicians acting for their self-interest, as predicted under PCT, it is self-interest at arms length, so to say. We think of pols who decide to push suboptimal taxpayer-funded projects to directly help favored supporters or their constituents as a whole, so they can indirectly benefit by harvesting more votes. But a recent article in the Washington Post suggests that when they put through pork-barrel projects, many pols receive a much more directly personal payoff.

The newspaper compared public records about the property owned by all 535 members of Congress, and correlated the information with the earmarks pushed by these people over the past four years. It turns out that 33 of these solons pushed projects (costing taxpayers over $300 million) that were within two miles of their own properties. Moreover, 16 of them pushed subsidies for companies or programs in which their immediate family members (children, parents, or spouses) were employed.

The report notes that under the rules of Congress, this is all perfectly legal, and the members so benefiting were under no obligation to disclose it.

When confronted, the legislators naturally explained away their conflicts of interest by remarking on how necessary the projects were for their local economies, and claiming that the personal benefits they received were unimportant or merely coincidental.

Here are some of the juicier examples. Notice that members of both major parties are well represented.

  • Rep. Bennie Thompson (D-MS) got $900,000 in funding to resurface some roads back home. One stretch of resurfaced road just happened to be the one on which he and his daughter own two homes.
  • Rep. Roscoe Bartlett (R-MD) arranged for $4.5 million in taxpayer cash to improve a freeway interchange at a junction near his 104-acre farm and a bunch of his rental properties.
  • Rep. Ruben Hinojosa (D-TX) got an earmark to widen a major road in his district that just happened to be 600 feet away from a property that was owned and being developed by his family.
  • Rep. Jack Kingston (R-GA) used a $6.3 million earmark to restore the beaches on little Tybee Island. By sheer coincidence, he owns a home on the island, about 900 feet from the beach.
  • Rep. John Olver (D-MA) got $5.1 million to realign part of a highway. The project starts at a part of the road that is only about 200 feet from his 15-acre home, as well as some adjoining properties owned by his family.

The capper is Rep. Doc Hastings (R-WA). He was serving on the House Ethics Committee when it defined a congressperson’s financial interest as one having “a direct and foreseeable effect” on his or her assets. But the committee added that, as the Post put it, “’remote, inconsequential or speculative interests’ do not count.” Two years after writing this, however, Hastings himself got a $750,000 earmark for a new overpass — on a site only three blocks from a business he formerly owned and ran that is now operated by his brother, on land he still owns.

So when politicians spend OPM, they not only use it to buy votes, they often use it more crudely, to feather their own nests. This hardly supports the Hegelian concept of the state as the realm of disinterested charity.

Sixteen members of Congress pushed subsidies for companies or programs in which their immediate family members were employed.

Why do politicians think they can get away with such obvious use of taxpayer money for their own direct benefit? Well, to begin with, in every case they think they can successfully rationalize away their behavior to the voters. So, for example, Rep. Kingston, when questioned by the reporters, said brazenly, ”It’s absurd to suggest that this benefits me. The beach doesn’t improve the real estate of a house, unless it’s on the beach. . . . The only thing that changes in value is the beachfront property. It does have an economic impact on the beach and the community.” One has to suppose that Kingston thinks the average voter is a fool — which may or may not be a plausible view, depending on the depth of your cynicism.

But one should also remember that politicians are rarely caught. Few reporters ever do the sort of research needed to discover cases of such directly beneficial pork projects. Indeed, the research that the Post reporters did seems to be the first of its kind.

Perhaps the Post will now do an expose showing that Santa Claus doesn’t really exist. Its management, which is highly favorable to expensive government, may be similarly surprised.

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