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Why Voters Reward Lucky Governments More than Good Ones:

Some scholars who discount the dangers of widespread political ignorance argue that voters don't really need to know much to make good decisions. They can simply reward incumbents who do well and punish those who perform poorly - an approach known as "retrospective voting." Unfortunately, effective retrospective voting requires citizens to be able to tell the difference between conditions caused by incumbents' policies and those that merely happened to occur on their watch without any such causal connections. Tim Horford summarizes a recent study by Australian economist Andrew Leigh which shows that voters generally can't do this [HT: Bryan Caplan]:

The question is, can the voters tell the difference between an incompetent government and an unlucky one? Andrew Leigh, an economist at Australian National University, thinks not. In a recent article in the Oxford Bulletin of Economics and Statistics, he looks at 268 elections held across the world between 1978 and 1999. He estimates how much of a country's economic performance is due to booms in the world economy and how much is due to competent government - and whether the voters can tell the difference.

Both matter, but as far as the voters are concerned, it is better to be a lucky government than a skilful one. For instance, a one-percentage point increase in world economic growth above the norm is associated with a hefty rise in the chance that incumbents will be re-elected - from the typical chance of 57 per cent to a more than decent 64 per cent. A stellar domestic performance, outpacing world growth by one percentage point, contributes less than half as much to the chances of being re-elected, raising them from 57 to 60 per cent.

These results may actually overstate the voters' knowledge. Short term growth rates higher than those of the world economy are also often due to luck. For example, Vladimir Putin reaped enormous political benefits from Russia's strong growth earlier in this decade - despite the fact that the growth was mostly due to a rapid increase in world demand for oil that Putin had done nothing to cause (just as he also didn't create Russia's large oil deposits). Ultimately, the effects of government competence are swamped by those of luck because the latter has much larger effects on short term swings in economic conditions - even though good policies have a major influence on long-run growth rates, which are far more important. Unfortunately, as Princeton political scientist Larry Bartels notes, most voters tend to focus inordinately on very recent economic events, discounting more significant longer term trends.

Leigh's study reinforces the conclusions of previous research on retrospective voting, which shows that voters routinely punish incumbents for bad events they didn't cause and could not prevent, including shark attacks and droughts.

A related danger of flawed retrospective voting is that it might lead voters to punish flawed incumbents by electing opposition parties that are much worse. The most famous example is the reaction of German voters to the Great Depression, which was blamed on the mainstream parties of the Weimar Republic. This led to electoral successes for the Nazis and (to a lesser extent) Communists, with horrible consequences for both Germany and the world. In recent years, poor economic performance and rising crime rates in Western Europe has led many voters to support parties on the socialist far left and nationalist far right; to put it mildly, either of these factions' policies are likely to make Europe's problems worse rather than better. Even if the incumbents really have screwed up, voters need to have sufficient knowledge to consider the possibility that the alternative is even worse.

I describe several other shortcomings of retrospective voting in Part III of this paper.

As Horford emphasizes, flawed retrospective voting is part and parcel of the more general problem of the public's rational political ignorance. Voters have little or no incentive to do the hard work of separating out outcomes that really are the result of incumbents' policies from those that are due to factors beyond their control:

Why are voters so wretchedly ungrateful? The common-sense answer is that it is not easy to distinguish a lucky government from a skilful one. In addition -- and this point is less obvious -- an individual voter has little incentive to do so. We all know that elections are almost never decided by a single vote, and so each voter would be right to conclude that her vote is highly unlikely to make a difference....

And if the result does not depend on any particular one of us, trying to disentangle luck from skill by ploughing through the latest reports from the International Monetary Fund is likely to remain a minority hobby.

UPDATE: It's worth noting that voters' myopic focus on short term economic trends has two other bad effects. It reduces officials' incentives to adopt policies that promote long-term growth (especially if they have visible short term costs), and it gives them strong incentives to adopt ones that artificially stimulate the economy in the short run at the cost of serious long term damage. Richard Nixon's 1971 price controls (which helped him win in 1972, but caused considerable longterm harm) are an excellent historical example.

ruuffles (mail) (www):

For example, Vladimir Putin reaped enormous political benefits from Russia's strong growth earlier in this decade - despite the fact that the growth was mostly due to a rapid increase in world demand for oil that Putin had done nothing to cause (just as he also didn't create Russia's large oil deposits).

You fail to mention similar cases here, namely Perry in Texas, Jindal in Louisiana, and Palin in Alaska. Perry is in the fight of his political life and that's just his party primary. Palin's popularity has dropped 30 points. And Jindal, well, where the heck is he?
6.26.2009 1:43pm
Ilya Somin:
You fail to mention similar cases here, namely Perry in Texas, Jindal in Louisiana, and Palin in Alaska. Perry is in the fight of his political life and that's just his party primary. Palin's popularity has dropped 30 points. And Jindal, well, where the heck is he?

Many politicians in oil-producing countries and states benefitd politically from rising oil prices a few years ago, and are now suffering because the price of oil has plummeted thanks to the recession. Obviously, Putin, Palin, et al. did little to cause either the earlier increase in prices or the more recent drop.
6.26.2009 1:49pm
frankcross (mail):
And this is a good thing! Incumbents have serious advantages. If they weren't blamed (albeit unfairly) for economic downturns, you would see much less turnover in government. Although it is only random this way, it's better than the alternative.

With a very bad economy and the failure to rescue Iranian hostages (another random event), Reagan and Carter are very close until the end. And I bet Carter wins if the economy is doing well, or if he were not blamed for the bad economy.
6.26.2009 1:51pm
Hannibal Lector:
On the other hand, Schumpeter suggested in Capitalism, Socialism, and Democracy, that representative democracy's greatest asset is its ability not to choose good regimes but to dump really bad ones. And it's not all taht hard for voters to figure out when a regime has performed poorly.
6.26.2009 1:52pm
Ilya Somin:
And this is a good thing! Incumbents have serious advantages. If they weren't blamed (albeit unfairly) for economic downturns, you would see much less turnover in government. Although it is only random this way, it's better than the alternative.

It depends on what alternatives. It's certainly inferior to an alternative where voters actually have some real idea of what is happening. Moreover, I'm not convinced that more turnover is necessarily good - especially when it brings to power opposition parties with even worse policies than the incumbents.
6.26.2009 1:54pm
wm13:
But doesn't the market also reward people who are lucky? Isn't this an argument for having university professors run everything, rather than leaving it to such chance mechanisms as democracy and free market capitalism?
6.26.2009 1:54pm
geokstr (mail):
I made a similar point shortly after the election that got predictable responses from the left.

I said that if, despite Obama's hard left policies, the resourcefulness of the American people and the capitalist system managed to create an economic rebound anyway, he and his policies of high-tax, high spending would get the credit. This would send exactly the wrong message to the voters that socialism, not capitalism, works.

The response was that that's the way the cookie crumbles, although I doubt that will be the same attitude if the economy stumbles even more under Obama. Then it will be back to the interminable studies from academia proving it was all Bush's fault all along.
6.26.2009 1:54pm
Ilya Somin:
In response to Frank Cross, it's also worth noting that incumbents are not only unfairly blamed for bad economic conditions, but also unfairly rewarded for good ones. Thus, it's not clear that poorly informed retrospective voting necessarily increases turnover in government on net. Sometimes it will lead to the defeat of incumbents who might otherwise have survived. But at other times, it will save an incumbent who would otherwise have been defeated.
6.26.2009 1:59pm
Ilya Somin:
Schumpeter suggested in Capitalism, Socialism, and Democracy, that representative democracy's greatest asset is its ability not to choose good regimes but to dump really bad ones. And it's not all taht hard for voters to figure out when a regime has performed poorly.

Unfortunately, as this and other studies show, it actually is pretty hard, or at least hard enough that voters often don't know enough to do it.
6.26.2009 2:00pm
Jon Roland (mail) (www):
A major part of the problem is that politicians claim credit for lucky developments, and blame their opponents for unlucky ones.

Any party which takes credit for the rain must not be surprised if its opponents blame it for the drought. -- Dwight Morros

This falls into the general class of logical fallacies called causal fallacies. The Rooster Syndrome — giving credit to the rooster crowing for the rising of the sun — applied to giving credit or blame to leaders for events that occur on their watch to which they made little if any contribution. It may also be called Canute Syndrome or Deification Syndrome.

While this would seem to be an argument against democracy, it should be pointed out that policy experts tend to commit the same errors, often with even greater intensity.

See Counterintuitive Behavior of Social Systems, by Jay Forrester.

Humans generally are incompetent to make public policy.
6.26.2009 2:01pm
Ilya Somin:
But doesn't the market also reward people who are lucky? Isn't this an argument for having university professors run everything, rather than leaving it to such chance mechanisms as democracy and free market capitalism?

The problem here is not that politicians are unfairly rewarded, but that policy is of low quality because voters have little ability to punish leaders who pursue bad policies and reward good ones. In markets, people often get lucky too. However, this "luck" doesn't have the same kind of negative systemic effects as bad retrospective voting (which leads to the selection of rulers who pursue bad policies.

In addition, there is far less rational ignorance in markets than among voters (because market participants make decisive decisions to invest their own money that have a very high chance of actually affecting their returns, whereas individual voters know that there is little or no chance that their vote will be decisive).
6.26.2009 2:04pm
ruuffles (mail) (www):
Does Ilya Somin propose a solution, aside from a time machine?
6.26.2009 2:05pm
Jon Roland (mail) (www):
Correction: Should have been Dwight Morrow.

One thing that academics should hammer into the heads of their students is that the main positive things government can do for economic growth, besides not interfering, is to invest in new technology, but that the payoff from doing that has a lag time of more than 30 years, and likely 40-50 years. Most of our recent economic growth was the result of investments in technology made in the 1960s, and investments made today won't pay off much until 2040 or beyond.
6.26.2009 2:09pm
Soronel Haetir (mail):
Even if everyone were perfectly informed about every canidate's actual voting record in advance I doubt you'd get much improvement in overall outcomes. The jumbled mass of priorities just doesn't lend itself to making good choices when one set of actors makes all the decisions.

I almost wonder if we wouldn't be better off with multiple legislative bodies, each given a single power to exercise and unable to tap others. And for the sake of the nation, be sure that members of Tax Congress and Budget Congress aren't allowed to speak to each other.
6.26.2009 2:16pm
gab:
Better to be lucky than good? I didn't know that!
6.26.2009 2:17pm
Oren:


It depends on what alternatives. It's certainly inferior to an alternative where voters actually have some real idea of what is happening.

Ilya, I love your posts (as always), but how about an alternative that isn't a pie-in-the-sky fantasy?
6.26.2009 2:19pm
Oren:
I have to agree with Jon here -- so much of the technology that fueled growth in the 90s was a product of the Cold War military (ARPANET!). Of course, we had a good short-term reason to invest then, now I'm not so sure...
6.26.2009 2:21pm
kietharch (mail):
"it is not easy to distinguish a lucky government from a skilful one."

What we should hope is that the governing administration itself recognizes when it is lucky and when it is effective. I think that is a more realistic wish than hoping that the electorate correctly perceives that distinction.
6.26.2009 2:21pm
geokstr (mail):

ruuffles:
Palin's popularity has dropped 30 points.

Gosh, it must be just a coincidence that you failed to mention the remorseless, relentless, despicable, and completely dishonest attacks on her, her husband, her kids, even her baby from all the members of your team, an attack that continues unabated to this day. While no reporters could figure out how to get to Chicago to investigate the very many real controversies surrounding Obama, the media managed to airdrop armies of lawyers and crack journalists into Wasila for months to sniff her garbage cans 24/7 and make up sh*t.

I wonder how fast Obama's lofty god-like image would be destroyed by a similar assault, including Photoshopped pictures of Sasha and Malia to make them look deformed, as was just done to Palin's baby by a kindly, tolerant Democratic blogger and serial Palin hater.

And then to gloat and pretend her popularity has declined only because the price of oil has dropped takes disingenuousness to heights never before seen, and that's being very charitable. I think it's about time to turn Alinsky's Rules on the Radicals and see how your side likes it.
6.26.2009 2:23pm
Chris 24601 (mail) (www):
Same reason we have strict liability crimes: too hard to tell who's actually doing a good job, but we can (sort of) tell who is causing harms.
6.26.2009 2:29pm
RPT (mail):
"JR:

This falls into the general class of logical fallacies called causal fallacies. The Rooster Syndrome — giving credit to the rooster crowing for the rising of the sun — applied to giving credit or blame to leaders for events that occur on their watch to which they made little if any contribution. It may also be called Canute Syndrome or Deification Syndrome."

Or the Reagan Syndrome ("I won the cold war") or the Bush/Cheney Syndrome ("No attacks since 9/11").
6.26.2009 2:32pm
ruuffles (mail) (www):

Gosh

I bawwd because everything after that isn't true. BAW.
6.26.2009 2:32pm
ruuffles (mail) (www):
Also, this is Palin's popurlarity in ALASKA. I would think you'd give more credit to the people that actually elected her .
6.26.2009 2:33pm
Oren:


Gosh, it must be just a coincidence that you failed to mention the remorseless, relentless, despicable, and completely dishonest attacks on her, her husband, her kids, even her baby ...

30% of the people of Alaska must be mighty stupid then.
6.26.2009 2:35pm
PeterWimsey (mail):
Schumpeter suggested in Capitalism, Socialism, and Democracy, that representative democracy's greatest asset is its ability not to choose good regimes but to dump really bad ones. And it's not all taht hard for voters to figure out when a regime has performed poorly.

Unfortunately, as this and other studies show, it actually is pretty hard, or at least hard enough that voters often don't know enough to do it.



Schumpeter is absolutely correct on this point. He's talking about the advantages of representative democracy over other forms of government - monarchy, communist dictatoship, regular dictatorship, etc. Representative democracies tend not to communist regimes that endure for 50 or 70 years, nor military dictatorships that last almost as long. While democracies may not use the brake at the precisely right time to get an extra 1% out of the economy, they are still miles ahead of the results obtained in the old USSR or the old GDR. And I think that that was Shumpeter's point.
6.26.2009 2:39pm
American Psikhushka (mail):
Well they have scorecards for politicians' voting records on various issues. And they have the Economic Freedom Index for countries. Perhaps someone could come up with an index of government competence or effectiveness, attempting to strip out as much of the randomness and luck as possible. Of course it would likely be difficult to do, and do well.

Ilya -

I would try to refer to the nasty nationalist parties as "ultra-nationalist" or something else. Because you know the mainstream and left media in the US, Europe, and everywhere else would like to label whatever libertarian or libertarian-leaning parties exist as being "far-right" or "ultra-rightwing" to try to tar them with the same brush as the neo-nazis, racists, etc. One doesn't want to make it easier for them to falsely demonize libertarians, classical liberals, etc.
6.26.2009 2:43pm
Soronel Haetir (mail):
There are other issues in play here in AK. One of which is a very good example of the topic of this very thread.

Last year an additional $1200 was tacked onto the permanent fund divident to help people pay for energy costs, so the total was close to $3300. Palin pushed hard for that extra payout. This year, due to poor investment performance over thepreceeding 5 years the total will likely to be around $1500. People are forgetting why it was so high last year and grumbling now.

Alaska also has regionalism issues, with Palin focused very strongly on the Anchorage area to the detriment of everywhere else.
6.26.2009 2:46pm
Soronel Haetir (mail):
So at least in-state I would say the attacks on Palin have helped prop her up if they have accomplished anything.
6.26.2009 2:49pm
Kenvee:
And this is a good thing! Incumbents have serious advantages. If they weren't blamed (albeit unfairly) for economic downturns, you would see much less turnover in government. Although it is only random this way, it's better than the alternative.

If incumbents already have serious advantages, why is it a good thing that they get yet another advantage by getting credit for good economic conditions they did nothing to cause?

Bush Sr was voted out of office due to the bad economy, even though we were coming out of the recession before he left office, and Clinton got all the credit for the dot com boom that he had nothing to do with.
6.26.2009 2:51pm
MCM (mail):
Surprised not to see a mention of Nassim Nicholas Taleb's The Black Swan here. Humans are at best pseudo-rational, don't care about things they can't put into a narrative, and consistently mistake luck for skill.
6.26.2009 2:58pm
PersonFromPorlock:
'The voters and the government' was never meant to be the whole of the political process. It's 'voters - press - government', and the weakness in the system isn't the voters' inability to analyse government performance so much as it is the failure of the press to provide them with any data worth analysing.
6.26.2009 3:07pm
MCM (mail):
In markets, people often get lucky too. However, this "luck" doesn't have the same kind of negative systemic effects as bad retrospective voting (which leads to the selection of rulers who pursue bad policies.


Sure it does. It's just more insidious and happens from the bottom up, whereas bad policy happens from the top down.

People try to replicate the successes of others, no? This is what causes bubbles and crashes. That's a negative systemic effect for you.

In addition, there is far less rational ignorance in markets than among voters (because market participants make decisive decisions to invest their own money that have a very high chance of actually affecting their returns


There's a lot less rational ignorance and a lot more false knowledge.
6.26.2009 3:10pm
interruptus:

Perhaps someone could come up with an index of government competence or effectiveness, attempting to strip out as much of the randomness and luck as possible. Of course it would likely be difficult to do, and do well.

It's the time-lag effects that would make this most difficult, I think. Just stripping out global conditions would be comparatively easy---you could say that GDP growth during X's term was +/- some percentage relative to worldwide GDP growth, or relative to G8 GDP growth, or some other relevant baseline. But how do you even start getting at long-term effects? That requires answering questions that aren't even agreed when we have the benefit of hindsight, like "who caused the Great Depression?"
6.26.2009 3:10pm
MCM (mail):
Perhaps someone could come up with an index of government competence or effectiveness, attempting to strip out as much of the randomness and luck as possible. Of course it would likely be difficult to do, and do well.


The randomness and luck is the vast majority of it. The exercise you are describing is pointless.
6.26.2009 3:13pm
Arkady:
On Luck

Napoleon was considering a certain general for promotion to Marshal of the Empire, and asked the opinion of his staff. Going around the table, staff officer A said, "yes, General _______ is brilliant tactician; staff officer B: "indeed, and a first-rate strategic thinker; staff officer C: "and let not overlook his keen grasp of logistics." And so on. Praise all around.

Napoleon: "But, gentlemen, is he lucky?"
6.26.2009 3:16pm
Snaphappy:
Isn't the main virtue of representative democracy that it makes people feel like they have the opportunity to be involved in the choice of their leaders? I think it should be clear by now that what makes one electable is largely irrelevant to what makes for good outcomes for society. You could probably get an equally good government to most representative democracies if you chose leaders by some combination of a lottery and minimum intelligence test.
6.26.2009 3:54pm
American Psikhushka (mail):
interruptus-

But how do you even start getting at long-term effects? That requires answering questions that aren't even agreed when we have the benefit of hindsight, like "who caused the Great Depression?"

It would almost have to be from a libertarian / Austrian School perspective. Since a la Hazlitt's "Economics in One Lesson" they are the ones most focused on the optimum for all groups for the long term.

Everyone else thinks Keynes' famous statement "in the long run we're all dead" gives them license to try to tweak things for "stimulus", etc. And then the bread and butter of the political process is distorting the economy for the benefit of specific groups, long term be damned.
6.26.2009 3:55pm
American Psikhushka (mail):
MCM-

The randomness and luck is the vast majority of it. The exercise you are describing is pointless.

There certainly is a lot of randomness in the process. But check out the Economic Freedom Index - just scanning it you can see that there are some pretty strong relationships between policy and results. It might be difficult, but I don't think it would necessarily be impossible to start to suss out what makes good policy and what doesn't.
6.26.2009 4:02pm
Gabriel McCall (mail):
Isn't this an argument for having university professors run everything, rather than leaving it to such chance mechanisms as democracy and free market capitalism?

No, it's an argument for not having ANYONE "run everything", since there is no reliable system for assuring that anyone who "runs everything" will do it at all well. The best of the bad options available is to decentralize power as much as possible so that the effects of bad leadership are localized rather than nationwide.

One would think that a federal system where power is reserved to the states except for a few limited and enumerated powers would be a good method for keeping the blast radius of bad policies to a minimum. Apparently, that's trickier than it sounds.
6.26.2009 4:09pm
just another commenter:
Sure, the "masses" don't evaluate policy outcomes well. But do elites do any better? Regardless of how any of us comes down on judging the case of current economic conditions, we can't deny that a good chunk of "experts," or Nobel-prize winning economists, or whatever, disagree with us. I can find brilliant people to explain why the latest meltdown was the fault of too little or too much government, or that Reagan's policies were great or disastrous, etc. A commenter above dismisses as bogus any claim that Reagan won the Cold War, and many "experts" agree, but of course many "experts" disagree.

So educating the masses, until every plumber and bus driver has Nobel-level analytical abilities and massive data memorized, might amount to nothing more than the ability to chant "tastes great! less filling!" in fancier language.

Ironically, it seems that when a solid consensus really develops in a field, so that it's 95% settled rather than a 50-50 or even 80-20 dispute, the consensus turns out a decade later to have been horribly wrong.
6.26.2009 4:55pm
MCM (mail):
There certainly is a lot of randomness in the process. But check out the Economic Freedom Index - just scanning it you can see that there are some pretty strong relationships between policy and results. It might be difficult, but I don't think it would necessarily be impossible to start to suss out what makes good policy and what doesn't.


At the extremes, sure. But looking at the EFI, consider, say, the US and Denmark, which have virtually the same EFI. But they're both liberal democracies, they have very different economies and economic policies.

How can we possibly make a scorecard that decides that American politician A was better at governing American than Danish politician B was at governing Denmark?

I'm not arguing for some kind of wimpy moral relativism, I'm just saying it's completely apples and oranges. There's a million confounding variables on both sides.
6.26.2009 5:07pm
MCM (mail):
Sure, the "masses" don't evaluate policy outcomes well. But do elites do any better? Regardless of how any of us comes down on judging the case of current economic conditions, we can't deny that a good chunk of "experts," or Nobel-prize winning economists, or whatever, disagree with us. I can find brilliant people to explain why the latest meltdown was the fault of too little or too much government, or that Reagan's policies were great or disastrous, etc. A commenter above dismisses as bogus any claim that Reagan won the Cold War, and many "experts" agree, but of course many "experts" disagree.

So educating the masses, until every plumber and bus driver has Nobel-level analytical abilities and massive data memorized, might amount to nothing more than the ability to chant "tastes great! less filling!" in fancier language.

Ironically, it seems that when a solid consensus really develops in a field, so that it's 95% settled rather than a 50-50 or even 80-20 dispute, the consensus turns out a decade later to have been horribly wrong.


I have to agree - and I have to pump The Black Swan by Nassim Nicholas Taleb again.
6.26.2009 5:08pm
wfjag:

Why Voters Reward Lucky Governments More than Good Ones

Is this any less rational than Representatives voting on laws that have huge, long term consequences for the citizens when they have not read those bills, or, when the Congressional leadership rams the legislation through so fast that the Representatives (assuming they wanted to) don't have time to read, much less analyze, those bills?

Then again, maybe there's a song in this -- like Tina Turner doing "What's Luck Got to Do With It?" She's still got a great voice and amazing legs. Before our elected reps manage to mess up things so badly that the power is shut off, it'd be nice to see her in concert one last time.
6.26.2009 5:13pm
John kmm (mail):
In Venezuela, many people including 90 % of Faculties at Public Universities voted for Chavez to punish the widespread corruption that everyone in the country once profited on.
He promised to do everything he has done since. When confronted today,voters hey say didnt know he will be that way. Then they called liars to anyone telling them he will be a tyrant
6.26.2009 6:14pm
rosetta's stones:
Government is too big, and is still growing. So, no wonder that people have trouble sorting out who to blame, and who to reward, because they're all contributing to this growth.

But, they will sort it out, make no mistake. The Spendulus bill will not likely lead to significant economic growth by the runup to election 2010, and those who voted for it will face opponents who will hammer them for that vote, particularly if the unemployment rate is still as massive as it is now. A TARP vote will be tons of fun for incumbents, as well. Tack on inflation potentially rising by then, and there might be a perfect storm. Throw in cap and trade and new entitlements, to boot.

Misery index rising, spending going through the roof, and 15% of GDP borrowed from the Chinese. If this is the scenario, the voters will be fully reminded who brought that on, and punish those who contributed to it, as well they should.

Now, you can play the "What's wrong with Kansas?" card all you want, and say the voters are wrong, but that and a $1 will buy you... basically nothing... not even in a dollar store.

Voters are not as dumb as certain academics think they are.
6.26.2009 6:15pm
ReaderY:
The post seems to assume we have a way of knowing the difference between being good and being lucky. But how can we tell this? By what method? Randomly assign societies to a set of parallel universes with conditions carefully controlled to be otherwise the same and time-travel to the future to see which interventions worked best? To say it is to see how absurd it is.

We appear to know a great deal and to have a great deal of control over our lives. But this appearance is often illusory. We actually often don't really know.

If things are constant over a very large span of time, we can learn from history. But over large spans of time, the universe around us sometimes changes and methods that repeatedly worked in the past sometimes no longer do so. Each solution creates new problems that are sometimes not apparent until too late.
6.26.2009 6:24pm
ohwilleke:
The Weimar Republic example isn't a very good one. While the Treaty of Versailles and general negative aftermath of World War I was undoubtedly bad for Germany (bad luck from the perspective of the current government), it is also the case that some of the most disturbing destabilizing circumstances that led to the pre-Nazi government's fall were due to incompetence. For example, hyper-inflation, which was one of the most politically important symptoms of economic malaise and dissatisfaction for the government's economic policy, is a phenomena that is almost entirely a result of bad government policy.

Any political model that assumes that elections are referrenda in the incumbents, which empirical evidence tends to support, poses the greater evil question. It doesn't matter if the bums are being thrown out because they are unlucky or because they are incompetent. In contrast, while "lucky" governments get a pass, simply not fixing things that aren't broken sufficiently to permit "luck" to be realized constitutes a certain amount of competence. There are plenty of historical examples (e.g. North Korea after the Korean War, and many of the newly independent governments coming into being in the 1960s) of bad governments screwing up in potentially good conditions.

The problem in the Weimar Republic was not that the bums were thrown out, but that they were replaced with the wrong people in a situation where many political parties were viable alternatives (the pure proportional representation system combined with the newness of the arrangement which hadn't left time for marginal new small parties to shake out of the system put many parties in parliament). This, in turn, had as much to do with the tactical political adroitness of Hitler and his key advisors, in a newly post-authoritarian regime where no one had any experience in electoral or parliamentary politics under the system in place, as it did with any rational policy debate. He was the first one to figure out how to game the system and profited from that decision.

Also, a lot of years passed between the time that the Nazis rose to power in the Weimar Republic and the time that the decision became ruinous for the marginal German voter. From the point of view of the rational German voter whose top issues were to restore order, restore German international stature, and turn around the economy in the time period before the next election was supposed to happen, it is not at all clear that this voter had any better choice. Hitler has immense grass roots popularity for a reason. He did what the marginal German voter wanted at the time.

Nobody believes that the Weimar Republic was ultimately a success for Germany or the world. Hitler managed to discontinue democratic government once brought to power, before there was another election and no one stopped him from taking this unconstitutional action. He did it without, it is worth noting, the kind of military coup that would become the norm in most of the new democracies of the 20th century, indeed, coups may have become the norm in part precisely because World War II illustrated how badly a misguided civilian leader could point a nation in the wrong direction. Hitler also managed (with popular support engendered from his ability to deliver on campaign promises until well after things were far out of control) to violate individual liberties, again because no one stopped him.

What was wrong with the Weimar Republic's evolution was not bad voter choice in the political theory sense, but excessive respect for voter choice that was very likely doing precisely what political theory says good voters do -- support politicans who have the greatest ability to accomplish what they most deeply want government to do for them. This excessive respect for voter choice and once voter choice was ended, for political popularity, to the exclusion of all other values, is what went wrong in the Weimar Republic. This is a horrible political theory and real world sin. But, the sin's name is not "flawed retrospective voting."
6.26.2009 6:44pm
frankcross (mail):
It depends on what alternatives. It's certainly inferior to an alternative where voters actually have some real idea of what is happening. Moreover, I'm not convinced that more turnover is necessarily good - especially when it brings to power opposition parties with even worse policies than the incumbents.

Ah, but you well know that we can't expect voters to have a good idea of what's happening, right?

And the second sentence is obvious but I don't say necessarily good, just net good. Because of at least two important effects. First, entrenched power corrupts and second, the virtue of experimentation.
6.26.2009 7:41pm
tvk:
It strikes me that this is not as bad as you make it seem. Ex ante, a government cannot control whether it will be lucky; it can only control whether it will be competent. Thus, it still has a good incentive to adopt policies that will, all else being equal, bring about prosperity. Of course, more discriminating voters are always better, but it is not clear to me that having voters spend more social resources discussing politics is altogether a good thing. In other words, I question your assumption that rational voter ignorance creates some negative externality.
6.26.2009 9:03pm
Soronel Haetir (mail):
Ilya,

You still haven't put forward an alternative. You have been hammering away at rational political ignorance for at least a couple years now.

Even an alternative to make aquiring political information rational would be a good start but I have yet to see it.
6.26.2009 9:06pm
Seamus (mail):

The response was that that's the way the cookie crumbles, although I doubt that will be the same attitude if the economy stumbles even more under Obama. Then it will be back to the interminable studies from academia proving it was all Bush's fault all along.


But isn't that only fair? After all, everyone knows that Herbert Hoover was to blame for the fact that the country was still in depression in 1940.
6.26.2009 9:09pm
Lior:
tvk: Governments have no interest in policies that will affect prosperity beyond their re-election horizon. Voters might not care so much on the theory that if today's laws mean disaster will strike in 2020 then the government in power in 2018 will want to repeal them. Unfortunately, this is very wasteful to the voters.

As an example, the US government is passing laws intended to reduce carbon emissions to below developing-country levels. My guess is that the cost to the average US voter of giving up their current century lifestyle in favour of the standard of living in Egypt is quite high -- high enough to merit becoming informed today even if the main reduction in quality of life will happen in the future.

In fact, the CBO estimates the annual direct costs of the bill to be about $200/household (this omits the loss due to damage to the economy). How much work should a household put into a potential saving of $200/year?
6.26.2009 9:58pm
American Psikhushka (mail):
MCM-

At the extremes, sure. But looking at the EFI, consider, say, the US and Denmark, which have virtually the same EFI. But they're both liberal democracies, they have very different economies and economic policies.

The economies are different, but not as different as you may think. Many people consider the "social democrat" countries of Europe to be "socialist". According to the Austrian School, however, they are more accurately classified as "hampered market" economies - market economies that happen to be stifled by higher relative levels of taxation and regulation. (There are variables that determine whether an economy is a socialist or market economy, one of the main ones being whether they have or are a member of a stock market.)

How can we possibly make a scorecard that decides that American politician A was better at governing American than Danish politician B was at governing Denmark?

Well Denmark has somewhat high levels of taxation and regulation. (Compared to the countries higher on the Economic Freedom Index.) And the US, unfortunately, has a fairly high level of taxation that appears to be about to increase more, unfortunately during a depression when this can least be afforded.

So despite the differences, a politician in the driver's seat in either country would have many of the same basic goals. To begin with, a minimum level of performance would be to hold taxation and regulation at existing levels. Higher performance would occur when taxation could be reduced (assuming spending is held the same or reduced as well) and regulation could be reduced, streamlined, optimized, or otherwise made less of a hindrance to businesses and consumers.

Now there will be differences between countries because they have different priorities. But from an economic perspective the goals are relatively simple, mainly reducing taxation and regulation burdens and leaving those resources in the hands of the citizens. Those additional funds in the hands of the people will provide their own "stimulus" - more effective, informed, efficient, and sustainable than any Keynesian "stimulus" - growing the private economy, increasing investment, increasing consumption, reducing unemployment, etc.

Of course there would have to be a component of the index measuring fundamental civil rights and freedoms as well, like freedom of speech, freedom of assembly, self-ownership, property rights, etc.
6.26.2009 10:02pm
David Welker (www):
Mr. Somin,

The problem with your analysis is very simple. You assume that your simplistic abstract theories about how the world work are really much more useful than they are. I would suggest sticking with the concrete rather than pretending you can explain the whole world with your simple abstractions. I understand the appeal of simplicity, but the world is more complex than it is simple.

For example, in the real world, incentives are not all that matter. In the real world, people often try to do a good job for its own sake. A lot of people put effort into becoming informed even though it is not "rational" (in your opinion) for them to do so.

Also, there is another concept and that is division of labor. I have mentioned this before. It really is a problem that you have not addressed. An individual does not need to know the details of every policy to be a good voter. Primarily, all they need to know is what their values are and be able to identify experts who share those values. You don't need to be an auto mechanic in order to fix your car. Instead, you can allocate this task to an expert auto mechanic. Obviously, more knowledge is useful and does help improve your individual results. But, on the whole, it would inefficient for most people to become complete experts in auto mechanics. It is the same with political knowledge.

The bottom-line is that your agenda is obvious and your reasoning is clearly driven by that agenda. You are of course correct that ignorance does lead to a less than optimal political process. But, you have every incentive to overstate the costs of political ignorance, because you believe it will advance your ideological biases. Your a libertarian. The "reasoning" goes: Political ignorance leads to less optimal actions by government. Therefore, the government doing nothing is preferable because government actions will be imperfect due to voter ignorance.

But hello! Nothing in life is "perfect." The actions of individuals are systematically imperfect. For example, why do we have so much obesity in the United States? Because people do not have adequate "incentive" to be healthier and more attractive? I would submit that people have every incentive to be healthier and more attractive. But the problem is that these incentives are not enough to overcome a basic fact: individuals, like governments, are flawed and imperfect. In fact, individuals are so flawed that they make bad decisions even when they know better. Most people are not ignorant of the effects of a poor diet and too little exercise.

Anyway, your point that government is not perfect due to voter ignorance is actually fairly useless. Because it is so obvious. Everyone knows and agrees that the government is imperfect, in part because of voter ignorance. But even if voter ignorance were not a problem, the government would still be imperfect. Just as individuals are imperfect even when ignorance isn't a problem.

Finally, a libertarian utopia would not even partially address the problem of voter ignorance. Because a choice to do nothing is a choice with consequences. In a multiple choice test, let libertarianism be answer D. The solution to the problem of ignorant students is not to advise them to always pick D on a multiple choice test. The solution is to educate them. It isn't the solution for ignorant voters either.

The bottom-line is that your "contributions" here are useless or close to it. Your views are both too abstract and too simplistic. Yeah, I get it. You are biased in overstating the costs of voter ignorance. That much is clear. Excuse me if I don't see that as particularly enlightening.
6.26.2009 10:09pm
Soronel Haetir (mail):

For example, in the real world, incentives are not all that matter. In the real world, people often try to do a good job for its own sake. A lot of people
put effort into becoming informed even though it is not "rational" (in your opinion) for them to do so.


Except he would claim that most of even this group is not well informed. Which is probably true, but still irrelevant due to the factors you go on with.

As I said up thread, even if voters were given perfect knowledge of how any particular canidate would vote in advance of the election I doubt overall results would be particularly better than current efforts due to conflicting priorities.

That is almost an argument for direct democracy, though that doesn't seem to be working out too well in California. It would be interesting to see the results of a system where any majority of the polity could repeal legislation without the effort of normal election access systems.

Just some government website where if 50% + 1 registers disapproval of any set of provisions of the U.S.C or C.F.R it is gone.
6.26.2009 10:41pm
American Psikhushka (mail):
David Welker-

Although you did not address me directly, I hope you don't mind if I comment on your remarks.

You assume that your simplistic abstract theories about how the world work are really much more useful than they are. I would suggest sticking with the concrete rather than pretending you can explain the whole world with your simple abstractions. I understand the appeal of simplicity, but the world is more complex than it is simple.

From what I see your worldview isn't that complex either: Just increase taxes and the government will solve all problems - with "stimulus", redistribution, etc.

In the real world, people often try to do a good job for its own sake.

Great. Under a market system their value creation will be rewarded monetarily in addition to the emotional satisfaction they get. And if they don't want the money they can volunteer or give the money to charity. (Nothing wrong with voluntary charity under a market system as long as the money is being freely given and not stolen.)

You don't need to be an auto mechanic in order to fix your car. Instead, you can allocate this task to an expert auto mechanic. Obviously, more knowledge is useful and does help improve your individual results. But, on the whole, it would inefficient for most people to become complete experts in auto mechanics. It is the same with political knowledge.

Funny you should pick auto repair as an analogy. Some (not all) auto mechanics are notorious for ripping people off. The more you know about cars, the more your chances of being ripped off go down. And in many cases just a little knowledge will be enough to tip you off about some of the most blatant and outlandish scams. In some ways this is similar to politics, some knowledge will help you determine how competent a politician is.

Also there is the problem that a politician or expert that claims to share your values: Doesn't actually share them; Will be subverted, corrupted, etc. - which happens often in politics and academia; Or will not express those values in the same way that you would.

Political ignorance leads to less optimal actions by government. Therefore, the government doing nothing is preferable because government actions will be imperfect due to voter ignorance.

Well not only are government actions imperfect and often downright harmful, they cost money that has to be taken from the rightful owners that earned it. So right there the money is being taken out of the private economy, weakening it - incrementally decreasing investment, decreasing consumption, increasing unemployment, etc. Often it seems that some that share your ideology see the people's money as money that they should be allowed to play with. And they don't realize how taking that money out of the private economy harms it. And this may just be how it seems, but they often seem to show a callous disregard for the people's time and labor that went into earning that money that they want to play around with.

Because a choice to do nothing is a choice with consequences.

Yes. But as mentioned above sometimes government action is uneccesary, harmful, creates more problems than it solves, etc. Liquor prohibition was an example of this, and the correct answer was to stop government action.

In a multiple choice test, let libertarianism be answer D. The solution to the problem of ignorant students is not to advise them to always pick D on a multiple choice test. The solution is to educate them. It isn't the solution for ignorant voters either.

I think you're sparring with a straw man here. I don't think anyone said not to educate voters. Hell, you're typing comments on a website that educates about legal and political matters. I read a number of websites that educate people about politics, economics, etc. Most lean libertarian, but not all. And they have a variety of operating structures - some are run by for profit entities, some are run by non-profit entities, some are run by unpaid or marginally paid amateurs/hobbyists, etc.

The bottom-line is that your "contributions" here are useless or close to it. Your views are both too abstract and too simplistic. Yeah, I get it. You are biased in overstating the costs of voter ignorance. That much is clear. Excuse me if I don't see that as particularly enlightening.

Well that's your opinion. I think some of these issues are pretty important. Ideas have consequences - especially bad political and economic ideas, as we're seeing in the real world now. Which makes it all the more important to get the good ideas out there so they can be implemented to turn the economic mess around.
6.27.2009 8:37am
Oren:

First, entrenched power corrupts and second, the virtue of experimentation.

Just to play devil's advocate on those two points:

(1) A politician that will be removed from office shortly has less incentive not to cheat/lie/steal. This is my main argument against term limits at the local/state level -- once they are lame ducks their audacity in filling their retirement fund goes up considerably, since the costs are much lower.

(2) Experimentation is nice, but the costs of rapidly changing policy are enormous. First, with most spending-type projects, starting and stopping is hideously expensive. This is a big problem for military projects where the DOD steams ahead full, puts on a hold, then decides to proceed after all. Same for local road projects, construction and all other manner of gov't spending.

On the regulation side, it's fairly obvious that "experimenting" means huge amounts of uncertainty and a corresponding decrease in the expected return from investment in the form of an uncertainty premium.
6.27.2009 11:52am
random observer:
Reader Y notes, rightly, that we cannot ever have laboratory conditions to test policy A vs. B, asking if we could ever, as (s?)he puts it


Randomly assign societies to a set of parallel universes with conditions carefully controlled to be otherwise the same and time-travel to the future to see which interventions worked best? To say it is to see how absurd it is.


But, while we can't run parallel universes with and without the stimulus bill, we have had, in recent history, two pretty darn good examples of such "parallel universe" lab experiments: North/South Korea and East/West Germany. In each case, you had a country with similar background, people, resources, climate, etc., with a line drawn down the middle and radically different paths from there. The differences were of course stark, and pretty fast, in so many respects. Standard of living and TVs and cars, on the material level, and more important to some of us, a radical difference between personal freedom and tyranny. Symbolizing all of this was a wall or DMZ, with the attempts to escape all running in one direction.

But did this convince our brilliant academics, who are not as ignorant as the plebes? Uh, no. We're not talking defending the New Deal, we're talking outright communist dictatorships, and the committed could explain it all away because, well, the weather was better for the crops in South Korea. Yeah, that's it.

Evidence is not the issue for the faith-based. If someone's faith in Statism was not shaken by extreme horrors like North Korea, then evidence certainly won't do the trick where the evidence is less clear-cut and where the policy differences aren't as stark.
6.27.2009 12:23pm
Oren:
RO, do you see any academics writing papers in support of the Statist economic system in NK? I'd like to read them!
6.27.2009 7:20pm
David Welker (www):
American Psikhushka,

A few responses:


From what I see your worldview isn't that complex either: Just increase taxes and the government will solve all problems - with "stimulus", redistribution, etc.


It isn't my view that the government can or will solve all problems. Nothing I said gave you a reasonable basis for this inference.


Great. Under a market system their value creation will be rewarded monetarily in addition to the emotional satisfaction they get. And if they don't want the money they can volunteer or give the money to charity. (Nothing wrong with voluntary charity under a market system as long as the money is being freely given and not stolen.)


I haven't argued against a market system. Arguing against libertarianism is not equivalent to arguing against the use of markets. Obviously.

Your point about taxes being theft is typical libertarian fringe garbage. You live in a society that protects you and recognizes your ownership in property. The concept of ownership is very much a social concept, invented by humans. Animals do not have property. They may have territory, but control is contingent on having the force themselves to maintain it. As humans, we are more civilized. We allow even the weak to own and control territory and other types of property.

Given that ownership is a social concept, it is defined by society not by individuals. You don't have a right to define property. Taxes that are legally levied are not your property. By the definitions established by law and society. Taxation is not theft. You are not the ruler who decides what is or is not your property that society must recognize. Instead, we have a system of law, which is a product of all of society, that makes that determination. What you are implicitly advocating in asserting that taxation is theft is that you are the one that gets to make the rules. That you are the ruler over society rather than an individual within society. In other words, you are subverting the rule of law and substituting your individual opinion for the law.


Funny you should pick auto repair as an analogy. Some (not all) auto mechanics are notorious for ripping people off. The more you know about cars, the more your chances of being ripped off go down. And in many cases just a little knowledge will be enough to tip you off about some of the most blatant and outlandish scams. In some ways this is similar to politics, some knowledge will help you determine how competent a politician is.


I have already addressed the auto mechanic issue. I asserted that one is likely to get better results the more one knows. Nonetheless, it would be inefficient for most people to become complete experts. The "little knowledge" that you propose people have to avoid scams is not equivalent to becoming an expert. Clearly, more knowledge is better, but one can expect diminishing marginal returns to increased expertise to the extent one does not wish to become an auto mechanic themselves as a profession or unless one enjoys auto mechanics as an avocation.

I also agree that more knowledge is better when making voting decisions. I also think, as in the auto mechanic realm, there is rapidly diminishing marginal returns to gaining yet more expertise. The choices one has as a citizen in a representative winner-take-all democracy are limited.


Also there is the problem that a politician or expert that claims to share your values: Doesn't actually share them; Will be subverted, corrupted, etc. - which happens often in politics and academia; Or will not express those values in the same way that you would.


Obviously, people make mistakes. For example, many people voted for Richard Nixon thinking he shared their values when he did not with his defiance of the rule of law. But once again, neither individual decisions nor social decisions exercised through the mechanisms of government are perfect.


Well not only are government actions imperfect and often downright harmful, they cost money that has to be taken from the rightful owners that earned it. So right there the money is being taken out of the private economy, weakening it - incrementally decreasing investment, decreasing consumption, increasing unemployment, etc. Often it seems that some that share your ideology see the people's money as money that they should be allowed to play with. And they don't realize how taking that money out of the private economy harms it. And this may just be how it seems, but they often seem to show a callous disregard for the people's time and labor that went into earning that money that they want to play around with.


First of all, obviously there are trade offs associated with taxation. That is not a free lunch. It is quite clear that taxation does in fact leave less money for individuals to make individual decisions regarding the expenditure of that money. If we can achieve social goal X with less taxation by being more efficient, we definitely should do so.

But, once again, money is a social concept. Animals do not have money. With it, you can influence the energies of other humans and manipulate their energies to further your own ends. Therefore, with the expenditure of money comes social responsibility. It not ethical to use people through money as means rather than ends.

It is justified that some portion of the money that one is able to have distributed to oneself through the mechanism of contracts with the potential to be enforced through coercion (yet another social mechanism) be transferred to be allocated collectively by all of society. First of all, property, money, and contracts are all social constructions that have unchosen and enormous influences on individual behavior by their very existence. Second of all, no money is earned in a vacuum, but instead through social cooperation. If you are an employer, you share, often but not always disproportionately, in the surplus generated by your efforts and your employee's efforts. Even if you have no employees, you benefit through the labor of others via the mechanism of trade. When someone earns minimum wage and you are therefore able to enjoy a very low cost for a good or service that would otherwise be impossible or very costly for you to provide for yourself, you have extracted a very important benefit from society.

As individuals who receive so many benefits from society, it is justified that we give something back to society. Whether we like it or not. That is the institution of taxation. You, like everyone else, are then entitled to a voice concerning the allocation of such funds. But, you like everyone else, are not entitled to be a dictator.

If you don't pay your taxes, that is an unethical violation of law. Just as it is not up to you as an individual to decide on the definition of property which must be respected by all of society, it is not up to you as an individual to decide what level of taxation is rightful. While you have a vote just like everyone else, you are not the dictator. So, stop with the rhetoric that implies that your views are entitled to absolute deference by society. Taxation is not theft. Both taxation and theft are social concepts with social definitions chosen by society and not by an individual would be dictator.

Obviously, when it comes to allocating money obtained through taxation, one should not show a "callous disregard" for the time and effort that went into producing the income or wealth that is taxed. But, it should be noted that this time and effort that went into producing that income or wealth was not solely that of the person who just so happens to hold the dollar bill that is the social recognition of that time and effort. That dollar of income or wealth was produced through the joint efforts of society, not merely that individual. This is evident because what is taxed is a dollar bill manufactured by the government and which was received through at least one act of trading with another member of society, but most likely through many such transactions.

It is impossible for an individual to earn money except by interacting with other individuals in society - whose efforts are also utilized in producing the good or service that results in money being allocated to the individual. Therefore, taxation is justified.


Yes. But as mentioned above sometimes government action is uneccesary, harmful, creates more problems than it solves, etc. Liquor prohibition was an example of this, and the correct answer was to stop government action. [sic]


I agree with this statement 100%. The reason I agree with it is because of the adjective "sometimes."

I also think the government should stop prohibiting some other things it currently prohibits, such as marijuana. But, I also recognize that my opinion is not law and until law is changed through the democratic process, that I am bound as an individual to respect it.

And that is the point. Relying on mere generalities does not tell one much about correct policy. Yet libertarians love their silly abstractions (aka generalities) don't they?


I don't think anyone said not to educate voters.


Libertarians who advocate abolishing both public education as well as taxation to fund vouchers for private education are saying, in effect, that it is okay for voters to not be educated. You do realize, don't you, that taxation (which you have seemed to imply is theft) is necessary to fund either public education or vouchers, don't you?

But more to the point, the reason that Mr. Somin is pushing this voter ignorance point is quite clear. His purpose is to argue against government. His proposed solution to the very real problem of voter ignorance is not so much to educate voters as to further limits on government. I would produce previous links of statements by Mr. Somin to that effect, but am unwilling to take the time at present.


Ideas have consequences - especially bad political and economic ideas, as we're seeing in the real world now. Which makes it all the more important to get the good ideas out there so they can be implemented to turn the economic mess around.


I agree that ideas have consequences. It is amazing how many conservatives have forgotten the basic lessons of macroeconomics in their zeal to oppose stimulus. But, here the problem is not merely one of inadequate education - although that is a problem. The problem is one of ideology preventing one from clearly processing available lessons from historical experience.

What we should have had was a bigger stimulus. Especially immediate subsidies to the states so that they did not have to implement drastic cuts which will only work to further seriously dampen economic prospects.
6.27.2009 9:26pm
Arkady:
@Ilya


It's worth noting that voters' myopic focus on short term economic trends has two other bad effects. It reduces officials' incentives to adopt policies that promote long-term growth (especially if they have visible short term costs), and it gives them strong incentives to adopt ones that artificially stimulate the economy in the short run at the cost of serious long term damage.


Couldn't resist this:


It's worth noting that voters' shareholders' myopic focus on short term economic trends gains in stock price has two ... bad effects. It reduces officials' managment's incentives to adopt policies that promote long-term growth (especially if they have visible short term costs), and it gives [management] strong incentives to adopt ones that artificially stimulate the stock price in the short run at the cost of serious long term damage.
6.28.2009 5:36am
American Psikhushka (mail):
David Welker-

Your point about taxes being theft is typical libertarian fringe garbage.

Not at all. A tax rate of 100% is clearly theft.(Essentially slavery.) A tax rate of a couple percent to pay for essential services is likely justifiable. But there is clearly a point along the continuum where taxation becomes theft.

Of course as tax rates get higher they starts crippling the private economy and making society as a whole poorer as well, but that's a separate issue.

And actually I believe I was originally referring to charity - that funds have to be freely given to actually be charity. Doesn't change the other points though.

You live in a society that protects you and recognizes your ownership in property.

I'm not going to comment on my individual situation. But yes, in theory, if society is being honest, treating people equally under the law, following the Constitution and the rule of law and the like it should be protecting me and honoring my property rights.

The concept of ownership is very much a social concept, invented by humans. Animals do not have property. They may have territory, but control is contingent on having the force themselves to maintain it. As humans, we are more civilized. We allow even the weak to own and control territory and other types of property.

Perhaps from a collectivist perspective. But from a natural rights perspective one would say that society has wisely chosen to recognize the natural right of property. Bastiat put it well:

"Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place."

I say wisely because the practice of society honoring property rights - when it actually does - is likely the simplest, fairest, most peaceful, and economically advantageous way to do it. There are other ways to do it, like family and clan systems, but those tend to be wasteful, violent, an impediment to trade, etc.

Taxes that are legally levied are not your property.

Taxes are the property of the people, period. Government is supposed to be the custodian of the people's property. The government serves the people, not the other way around. (Of course this is when we are talking about legitimate taxes. If some politicians came up with a discriminatory tax aimed at a specific individual for the sole purpose of stealing money from him and hid and destroyed all records, even those that the IRS is supposed to have, it would be a different story. That's more like fraud, theft, unconstitutional taking, etc. And it would be the rightful property of the person it was improperly taken from.)

Taxation is not theft.

At certain levels it becomes theft. And virtual slavery as well. And at certain levels it stifles the economy, prevents economic growth, and depletes societal wealth, but that's a separate issue.

What you are implicitly advocating in asserting that taxation is theft is that you are the one that gets to make the rules. That you are the ruler over society rather than an individual within society. In other words, you are subverting the rule of law and substituting your individual opinion for the law.

I didn't say I was "ruler over society". And it may be an opinion, but I guarantee if you confiscated 100% of someone's property they would agree with the opinion that it was theft, and basically slavery. And many would still agree that it was theft at levels much lower than 100%.

If you don't pay your taxes, that is an unethical violation of law.

Provided that it's a regularly enacted, non-discriminatory, legitimate tax (Not the illegitimate, hidden, undocumented kind.) I would say that's a reasonably accurate statement.

Just as it is not up to you as an individual to decide on the definition of property which must be respected by all of society, it is not up to you as an individual to decide what level of taxation is rightful. While you have a vote just like everyone else, you are not the dictator.

I can and certainly will argue what the rightful level of taxation should be. Especially when:

- It is so high that it is beginning to stifle the economy and prevent economic growth or recovery;

- Much of it is being lost to fraud, waste, and abuse;

- It is approaching confiscatory (theft) levels, especially when looking at total tax loads;

- Reducing it and returning those funds to the private economy would speed recovery and spur economic growth.

But, it should be noted that this time and effort that went into producing that income or wealth was not solely that of the person who just so happens to hold the dollar bill that is the social recognition of that time and effort. That dollar of income or wealth was produced through the joint efforts of society, not merely that individual. This is evident because what is taxed is a dollar bill manufactured by the government and which was received through at least one act of trading with another member of society, but most likely through many such transactions.

Again these are collectivist arguments. There is not an absolute claim on the assets of the people. The government is there to serve the people, not to play with their money. When taxation levels are stifling the economy, a lot of it is being lost to fraud, waste, and abuse, etc. it is time to reduce tax levels.

And that is the point. Relying on mere generalities does not tell one much about correct policy. Yet libertarians love their silly abstractions (aka generalities) don't they?

It does when the "generalities" describe real relationships. Like how high taxation levels begin to stifle the economy and prevent economic growth. Examples of this relationship can be seen in true communist and socialist economies. And in other economies at lower relative tax rates. See the Index of Economic Freedom.

But, here the problem is not merely one of inadequate education - although that is a problem. The problem is one of ideology preventing one from clearly processing available lessons from historical experience.

One could say the same about the Keynesians. The Japanese stimulated and stimulated, to not much avail. Better to cut taxes and put the money in the hands of its rightful owners, which provides a more sustainable and lasting "stimulus".
6.28.2009 11:53am
Joseph Slater (mail):
One problem is that, although some voters are no doubt ignorant of various political matters and theoris, even among the "non-ignorant," there is no widespread agreement as to what constitutes "good" means and/or ends of government policy, even within the framework of western democracies. Surely the Scandanavian people, as a whole, are not so ignorant that they do not notice that their governments have been mostly socialist to social-democratic over a number of decades -- including various tax, labor, and other policies. And it's unlikely the effects of those policies, in place for decades, are due primarily to "luck." Yet those parties and the policies they enact would certainly not strike U.S. libertarians as "good."

Ilya's position, it seems to me, is Method Number 2 for libertarians to confront a fundamental problem for their political ideology. That problem is, at least as far as economic policy goes, pretty much all democratic societies have rejected the more pure, hard-core libertarian economic models. Even the U.S. has, for example, long-established labor and employment laws that libertarian theory says is a bad idea which ain't going away.

Method Number 1 for Libertarians, at least for some of the legal types who are on this blog, is to insist that the Constitution actually forbids the type of laws they dislike. We've all gotten it wrong since the 1920s (or maybe earlier); all we need to do is get a Supreme Court that agrees with us, and hey presto, all those bad laws libertarians dislike but vast majorirites in democracies like have to go away.

Method Number 2, Ilya's approach, is to say (i) people are too ignorant to know what good government is, and therefore (ii) government should be very limited, because people don't know what good government would actually be; which would lead to (iii) all those bad laws libertarians dislike but vast majorirites in democracies like have to go away.

Neither strikes me as practical, but hey, I'm not a libertarian.
6.28.2009 12:03pm
Oren:

Not at all. A tax rate of 100% is clearly theft.(Essentially slavery.) A tax rate of a couple percent to pay for essential services is likely justifiable. But there is clearly a point along the continuum where taxation becomes theft.

A tax rate of 100% on some income (for instance, gambling wins, sales of arms to hostile foreign government) adopted by a sufficiently representative government is not theft in any reasonable sense of the word.


But yes, in theory, if society is being honest, treating people equally under the law, following the Constitution and the rule of law and the like it should be protecting me and honoring my property rights.

Or amending the Constitution via supermajority vote to change the manner in which we identify and protect property rights, presumably. Or are you asserting that even 75% of the legislatures and States have no right to define your rights in a way that you don't see fit?
6.28.2009 2:52pm
Oren:


I can and certainly will argue what the rightful level of taxation should be.

Absolute, please do. But we would appreciate it if you respectfully accept the decision of the polity even when contrary to your preferred view.

I routinely argue that the rightful speed limit on the highway should be 100MPH but I don't believe that I have the right to override the popular will that (because they are wrong) disagree with me on that issue.
6.28.2009 2:54pm
Oren:

And in other economies at lower relative tax rates. See the Index of Economic Freedom.

That's not working so great in Ireland at the moment.

FWIW, I'm something of a moderate on economic issues. I'd like to see the total tax load drop (as a matter of political preference, not because I have some inherent right to low taxes) and regulation to be minimized and generally adhere to a strict cost/benefit analysis. I think the stimulus was net positive not because of the spending but merely psychologically (i.e. if you could convince people you were spending $1T on stimulus without actually spending it, it would work just as well and save you $1T).
6.28.2009 2:57pm
ReaderY:
I have a number of disagreements with Professor Somin's general arguments. One of them is a tendency to associate compromise interventions that tack a bit to the left, increase government or regulations or reduce civil liberties somewhat, etc., with extreme interventions that involve totalitarian governments.

The stimulus bill, government-supported or even universal government health care, environmental whatever their disadvantages, are simply not the same things as Stalin, Nazi Germany, North Korea, etc. Saying the sky is falling only works so much.

In some ways the benefit of American politics has been its ability to compromise and experiment with different political philosophise and proposals without completely committing to any.

Professor Somin is confident that his theories are the right theories and the outcomes of government behavior can be reliably be predicted by their adherence to those theories — and if governments that don't adhere to those theories sometimse do better than governments that do, it must have been due to bad luck.

I have no such confidence. However fervently libertarians may believe that small government is always better than big governemnt, deregulation etter vthan regulation, government projects less efficient and more corrupt than private projects, etc. etc., I don't think we have evidence that would lead us to be certain that this is so. "Luck" here may represent a lack of evidence or a degree of uncertainty, or even a possibility that one is sometimes wrong, rather than an independent force.

This is why I think it's important that courts not force their own political philosophy de jour down the throats of the public, no matter how obviously right it may seem at the time. Judges have more power and authority than the electorate, but this doesn't make their opinions more correct, in the long run, than anyone else's. Only trial, error, and reflection over a long period of time can lead to reliable conclusions. One of the advantages of the federal system is that it permits legal diversity which, much like species diversity in evolution, permits different approaches to be tried so that their effects can be observed over time, and permits weaker approaches to be weeded out through attrition, and persuasion, over time. We often can't predict the effects of different proposals in advance. We haven't yet found a set of simple principles seems to be sufficient to capture the complexity we find in human life and human society or to be able to guide policy for dealing with it reliably, and there may well be none. Rules seems to always have exceptions.
6.29.2009 1:55am
loki13 (mail):

Ilya's position, it seems to me, is Method Number 2 for libertarians to confront a fundamental problem for their political ideology. That problem is, at least as far as economic policy goes, pretty much all democratic societies have rejected the more pure, hard-core libertarian economic models. Even the U.S. has, for example, long-established labor and employment laws that libertarian theory says is a bad idea which ain't going away.

Method Number 1 for Libertarians, at least for some of the legal types who are on this blog, is to insist that the Constitution actually forbids the type of laws they dislike. We've all gotten it wrong since the 1920s (or maybe earlier); all we need to do is get a Supreme Court that agrees with us, and hey presto, all those bad laws libertarians dislike but vast majorirites in democracies like have to go away.

Method Number 2, Ilya's approach, is to say (i) people are too ignorant to know what good government is, and therefore (ii) government should be very limited, because people don't know what good government would actually be; which would lead to (iii) all those bad laws libertarians dislike but vast majorirites in democracies like have to go away.

Neither strikes me as practical, but hey, I'm not a libertarian.


J. Slater,

As I am sure you realize, they are mutually reinforcing positions. IOW, the Constitution protects civil liberties from the tyranny of the majority.

So Prof. Somin uses his beliefs to argue the following:

1. The Constitution has been interpreted incorrectly and should protect, inter alia, economic liberties much more strongly.

2. The dumb majority passes stupid laws due to their ignorance that infringes on the economic liberties of others.

3. Ergo, these laws should be struck down.

For those of us who believe the perfect is the enemy of the very good, Prof. Somin's fantasyland doesn't work so well. It's like the story about the American engineer who built a bridge in France across a gorge that many thought couldn't be crossed. When he showed the completed bridge to his French counterparts they were nonplussed, saying, "Well, yes, it works well in practice, but how does it work in theory?"
6.29.2009 8:44am
Joseph Slater (mail):
Loki13:

Well, I imagine one could hold only one of the two beliefs I ascribe to libertarians, but I agree with you that in most cases the two beliefs are probably mutually reinforcing.

My critique of those positions is not so much that the perfect is the enemy of the good, since I don't believe economic libertanianism is "perfect" at all.

Rather, my critique is that both sets of beliefs/arguments that I ascribe to libertarians are at best fanciful ways to imagine how a small minority of folks (economic libertarians) could enforce their views on labor rights, taxes, and other economic policies against the clear wishes of the vast majority of society. It's not a plausible view of how laws evolve and get put into place.
6.29.2009 9:16am
American Psikhushka (mail):
Oren-

A tax rate of 100% on some income (for instance, gambling wins, sales of arms to hostile foreign government) adopted by a sufficiently representative government is not theft in any reasonable sense of the word.

What you are describing is confiscation for an act that is presumably illegal. So that isn't really a "tax", it's a fine or penalty. And it would also be considered theft if a private party did it or if the confiscation was improper - if the person did not do the things mentioned.

Or amending the Constitution via supermajority vote to change the manner in which we identify and protect property rights, presumably. Or are you asserting that even 75% of the legislatures and States have no right to define your rights in a way that you don't see fit?

I already acknowledged that following the Constitution and the rule of law was a legitimate way to establish taxation. (Of course certain kinds of discriminatory and other actions wouldn't be Constitutional/legal, as I also mentioned.) Be careful wrestling with that strawman, you could sprain something.
6.29.2009 6:22pm
American Psikhushka (mail):
Oren-

Absolute, please do. But we would appreciate it if you respectfully accept the decision of the polity even when contrary to your preferred view.

Well I'm not a tax evader so I basically do accept the polity's decision on taxation. (Providing we are talking about legal taxation. Not hidden, undocumented, discriminatory, etc. taxation that is likely hidden because it would not pass legal or Constitutional muster. It's a good thing fraud often tolls statutes of limitations on behavior like that.)

Of course I wouldn't accept some kinds of criminal or immoral behavior no matter what the polity said - Slavery, Torture, Racist Discrimination, Illegal Human Experimentation, Racist Property Confiscation, etc.
6.29.2009 6:33pm
American Psikhushka (mail):
Oren-

That's not working so great in Ireland at the moment.

A low tax rate didn't cause those problems. Those problems were likely caused by the same thing that caused our problems: A central bank creating too much money and credit which causes asset bubbles and wildly exaggerated boom/bust cycles.
6.29.2009 6:59pm
American Psikhushka (mail):
Joseph Slater-

Surely the Scandanavian people, as a whole, are not so ignorant that they do not notice that their governments have been mostly socialist to social-democratic over a number of decades -- including various tax, labor, and other policies. And it's unlikely the effects of those policies, in place for decades, are due primarily to "luck." Yet those parties and the policies they enact would certainly not strike U.S. libertarians as "good."

This reaches to the issues discussed in Bastiat's "Seen and Unseen" essay.(well worth a read) That's the essay where he debunks the "Broken Window" fallacy. The main point is that the money that went to fix the broken window doesn't get to be spent on something else, so the good it could of provided is Unseen. Likewise, what could have been done with all the capital eaten up by taxes and regulation - the wonderful things provided to human enjoyment and advancement - are Unseen, so they are not missed.

That problem is, at least as far as economic policy goes, pretty much all democratic societies have rejected the more pure, hard-core libertarian economic models. Even the U.S. has, for example, long-established labor and employment laws that libertarian theory says is a bad idea which ain't going away.

Unfortunately a lot of these are bunk, they just survive due to widespread lack of education in economic matters. Take minimum wage, which invariably increases unemployment. Henry Hazlitt of "Economics in One Lesson" fame addresses it here. Click "Contents" to check out some of the other topics he tackles. Often these practices survive because they create the illusion that politicians and bureaucrats are "doing something" about the economy or a particular issue.

Method Number 2, Ilya's approach, is to say (i) people are too ignorant to know what good government is, and therefore (ii) government should be very limited, because people don't know what good government would actually be; which would lead to (iii) all those bad laws libertarians dislike but vast majorirites in democracies like have to go away.

I don't know about all that. The reason to be against big government is because it has to be paid for through big taxes. When the taxes are taken from the private economy it is weakened and economic growth slows or stops, making society as a whole poorer. So generally no matter what society is poorer. This would tend to indicate bad government, unless you're going by other factors. Singing? Dancing? Juggling? Mime? Sense of humor? "Well the economy sucks and everyone's poorer on average, but boy are those congressman funny...."
6.29.2009 8:33pm
American Psikhushka (mail):
Reader Y-

I'm not Ilya, but I hope you don't mind me commenting.

The stimulus bill, government-supported or even universal government health care, environmental whatever their disadvantages, are simply not the same things as Stalin, Nazi Germany, North Korea, etc. Saying the sky is falling only works so much.

Well there does seem to be a lot of creeping collectivism going on. Or maybe it's actually "frog in a pot" Fabian Socialism. In any case what's concerning is that several of the areas you mentioned have "tipping points" that once tripped carry either drastic consequences, a very difficult prospect of correcting or reversing, or both. For example they are creating a dangerous amount of money and credit to fund the various stimulus efforts, in addition to the already enormous sums already created and in the hands of other countries. These are conditions that could lead to hyperinflation, and hyperinflation of the world's main reserve currency at that.

Also alarming is that many of these efforts pave the way for other violations or eliminations of rights. Take socialized or government funded medical care. The pattern in countries that have adopted it is this: "Now that we're paying for you and everyone else's healthcare, just about every facet of your life becomes our business." The war on smoking was largely justified because second hand smoke effected other people, not just the smoker. Under socialized health care an individual's personal decisions effect what the government has to eventually spend on their care, so often this has been used as an excuse for near-endless meddling, intruding, preaching, nannying, nagging, whining, scolding, and general ill-treatment. All kinds of silly, annoying, and intrusive campaigns, bans, limits, etc. on all kinds of food, drinks, and activities. And that isn't even getting into all the distortions in the market for healthcare, months and year long waiting lists for some services, etc.

In some ways the benefit of American politics has been its ability to compromise and experiment with different political philosophise and proposals without completely committing to any.

Well the problem with some of the things they're doing now is that they are leaving the country in some instances in situations where we will be committed to a particular philosophy in a way that will likely be difficult to get out of.

Professor Somin is confident that his theories are the right theories and the outcomes of government behavior can be reliably be predicted by their adherence to those theories — and if governments that don't adhere to those theories sometimse do better than governments that do, it must have been due to bad luck.

Do you have particular examples you have in mind?
6.29.2009 9:15pm
American Psikhushka (mail):
Joseph Slater-

Rather, my critique is that both sets of beliefs/arguments that I ascribe to libertarians are at best fanciful ways to imagine how a small minority of folks (economic libertarians) could enforce their views on labor rights, taxes, and other economic policies against the clear wishes of the vast majority of society. It's not a plausible view of how laws evolve and get put into place.

In my opinion your caricature of libertarians is somewhat inaccurate. Most libertarians realize that educating the public at large is key to realizing change. And not everything revolves around having to change the current political structure. Many libertarians just concentrate on ways of making sure undesirable policies have as little impact on their lives as possible.

And I think you'd be surprised as to how many people hold a lot of libertarian views. Some of the polls show a pretty big portion do, unfortunately I don't have links. To an extent a lot of the problem is going to be helping people to realize that they actually have more in common with libertarians than with either of the two-party duopoly. And also countering a lot of the demonization and misinformation in the media.
6.29.2009 9:34pm

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