Public Choice – A Primer
You are more likely to be run over on your way to the polling station than for your vote to make a difference. And you may figure that, even if it did make a difference, the politicians who you elected would do pretty much the same anyway. Like pre-revolution France or Russia, we are ruled by a separate political class of politicians, journalists and officials, whose interests seem very far from ours. They pander to the interest groups and the lobbyists, but hardly seem to acknowledge that the silent majority exits.
To an economist, that is not so surprising. Economists see the marketplace as a forum in which people haggle and bargain to promote their own interests – and see the political marketplace as pretty similar. Indeed, there is a whole school of economists who study this problem – the Public Choice School, subject of my new IEA primer.
Elections are sold to us as exercises in which we express our preferences, which allow decision-makers to understand what is in the ‘public interest’ and then to get on with doing it. Wrong on both counts. For a start, there is no single ‘public interest’. We all have different and indeed competing interests. When two wolves and a sheep vote on what to have for dinner, there is no collective ‘interest’ but two starkly opposite ones. The majority wins, but the result is messy.
And do politicians actually act as the majority want anyway? Hardly. After all, politicians have their self-interest to consider too. Even the most virtuous of them need votes to do anything at all: so votes are what they pursue. That makes them prey to lobby groups, who again have their own very specific interests to promote. It is worth donating a few pounds to party funds if in return you can make politicians grant you subsidies or special regulatory privileges that boost your income and keep out competitors. The economists even have a name for it: rent seeking.
Markets are not perfect, of course, and the existence of market failure prompts us to make decisions collectively instead. But whoever thought the political process was perfect – or even rational? Quite often, we would probably be better off accepting the market failure rather than landing ourselves with government failure, which is even worse.
We can improve the quality of public decision making, say the Public Choice School, by voting system that do not allow the wolves to exploit the sheep, and by other methods that reduce the power of politicians and officials. The one thing we can never do, though, is to make public decisions perfect. It is astonishing that, for so long, many economists thought we could.
Dr Eamonn Butler is Director of the Adam Smith Institute. His new book for the IEA, Public Choice – A Primer, is available as a free download.