No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter Fourteen: Decision-making in Democracy: Public Choice 330 PLEASE MISTER, PLEASE…VOTE FOR ME!! The next actor we need to consider is the politician . As we stated in the introduction, there are a myriad of reasons why people may enter politics: they may want to serve their country, they may like people making a big deal about them because they are a “councilman” or a “congresswoman,” or they may just enjoy the public life. Whatever their motivation to enter public office, politicians must win elections to stay in power. This means their incentive is to get at least 50.+% of the votes each election (in elections that require a majority vote—some only require a plurality)! Obviously they want more votes in order to discourage potential future competition, but a majority of the votes is sufficient. If they aren’t re-elected, they won’t be able to accomplish anything—no matter how noble their objectives are. Politicians will therefore be highly supportive of potential voters as well as campaign contributors. Since most voters are rationally ignorant, the politicians know they need to educate the voters by purchasing advertisements—a very expensive proposition. As an example, the Far-Left Mother Jones website s hows that the average spent on a 2010 Senate campaign was over $8 million, with incumbents having over a 10 to 1 advantage. Politicians will therefore pursue the policies and actions most likely to encourage voting and raise campaign contributions. While we may admire political figures that stand up for principles, the reality of the political process is that those standing for unpopular principles will tend to have fewer votes and fewer campaign contributions, and therefore, they tend not to stay elected very long. THOSE THAT CAN, DO. THOSE THAT CAN’T, REGULATE! Teachers, like me, are often slammed by a similar phrase, if you were really good at what you’re teaching you would be out in the real world doing it! A similar complaint is often leveled at government bureaucrats who regulate industry and provide government services. There are no doubt incompetent bureaucrats—but there are also some very good ones. But just as with other political figures, bureaucrats act in their own self-interest. As we’ll discuss later in the chapter, they may “cozy” up to the very industries they are called to regulate, for a variety of self-interest reasons. They may be risk averse and refuse to approve a program that could have negative outcomes, even though its expected benefits strongly outweigh the negatives. Although an older example, economist Robert Higgs studied the impact of the Food and Drug Administration’s (FDA) regulation of medical devices, and he found both regulatory overreach (regulating well beyond the nature of the problem) as well as significant delays in the approval of new medical devices. These delays are not just costly; whatever the possible benefit of the device (to include saving lives) is thereby delayed. While we may admire political figures that stand up for principles, the reality of the political process is that those standing for unpopular principles will tend to have fewer votes and fewer campaign contributions, and therefore, they tend not to stay elected very long.