Democracy is the theory that the common people know what they want and deserve to get it good and hard.
H.L. Mencken
My colleague Bryan Caplan explains today in the Wall Street Journal.
When special interests talk, politicians listen and the rest of us suffer. But why do politicians listen? Social scientists’ favorite explanation is
that special interests pay close attention to their pet issues and the rest of
us do not. So when politicians decide where to stand, the safer path is to
satisfy knowledgeable insiders at the expense of the oblivious public.This explanation is appealing, but it neglects one glaring fact.
"Special-interest" legislation is popular.Keeping foreign products out is popular. Since 1976, … Americans who
"sympathize more with those who want to eliminate tariffs" are seriously
outnumbered by "those who think such tariffs are necessary." Handouts for
farmers are popular. A 2004 … Poll found that 58% agree that "government needs
to subsidize farming to make sure there will always be a good supply of food."
In 2006, … over 80% of Americans want to raise the minimum wage. … These
results are not isolated. It is hard to find any "special interest" policies
that most Americans oppose.Clearly, there is something very wrong with the view that the steel industry,
farm lobby and labor unions thwart the will of the majority. The public does not
pay close attention to politics, but that hardly seems to be the problem. The
policies that prevail are basically the policies that the public approves. …
To succeed, special interests only need to persuade politicians to swim with the
current of public opinion.Why would the majority favor policies that hurt the majority? … The
majority favors these policies because the average person underestimates the
social benefits of the free market, especially for international and labor
markets. In a phrase, the public suffers from anti-market bias.
Thoma excerpts more.
Home run.
People, including the ‘intellectual elite’ at Warwick or Harvard, have trouble understanding the fundamental lessons of economics.
Economists now have a solid grasp of how the social world works and what steps we need to take to improve it. Unfortunately, we are not nearly as good at telling why some ideas fail to filter through to voters and policy makers.
Understanding public perceptions of economics and loosely branded ‘economic policy’ is a vastly under-researched area, and many academic economists seem to have taken science’s definition as ‘disinterested study’ too close to heart. While I agree that in many cases reform runs into vested interests, it is usually economic illiteracy that allows these very interests to make a persuasive, if in reality flawed, case to voters and policy makers.
If our aim is not only to understand the world but also to make it better, we need to take a step back and redirect some of our energies away from understanding and towards explaining. And to do this we first need to grasp what the public biases are, why they are so persistent in the face of mounting evidence – and, most importantly, what we can do to overcome them.
Is this anti-market bias inherent or do special interest groups indoctrinate the public to suit their needs?
Either way, people are sheep.
“Is this anti-market bias inherent or do special interest groups indoctrinate the public to suit their needs?”
Scroll down six posts. Or if you prefer, here’s the permalink:
http://www.marginalrevolution.com/marginalrevolution/2007/05/evolution_and_m.html
Assuming the bias is inherent, people can go either way on many issues. Special interests represent the establishment opinion and the maximum extent that it can manipulate the masses. The majority is whoever has the money to control it.
I’m always surprised we have as free of a market as we do.
Economics is counter-intuitive and hard to learn. Our naive ideas about economics and fairness hurt us here. Jealousy and hatred of the rich is a pretty universal human trait. We are evolutionarily built to live in a small scale tribal society, not the massive impersonal society we find ourselves in.
I, too, was surprised that we have as free a market as we do. Supporting a free market requires accepting some counter-intuitive notions. But so does supporting a science. There was a time not too long ago (from a hisotrical perspective) when ideas like “freedom of religion” and “evolution” were impossible for most of our ancestors to conceive. Even Russians living under communism didn’t support the idea of a free press. These ideas were not only foreign, but they challenged existing power structures that had zero use for them. Yet here we are.
I believe that markets are a product of social evolution. But we won’t get there without educational support for ideas that. It’s not far-fetched. Even when I was a kid in public school, I remember a teacher saying “the legislature can’t legislate morality,” and being quite disturbed as an adult to see Congress actually trying to do so. Educating liberalism is within reach.
I don’t know why Caplan identifies tariffs as “special interest” legislation but not their alternatives. Import-competing industries will form special interests in favor of tariffs, while exporting industries and industries that rely on imported goods will form special interests opposing tariffs. The distribution of opinions in favor of free trade or protection probably reflects the fact that exposure to trade does not affect everyone uniformly.
The last paragraph in my post should start off If we can not….
Bernard Yomotov,
Sure, it’s rational for people to support protectionism in their particular industry. But that’s completely not the subject of the article. The question isn’t why farmers support farm subsidies, but why most voters do too. That’s not self-interest. It’s not even ignorance about economics — people vote systematically in a non-market fashion.
Trying to get the American public to understand economics isn’t going to work: it’s too hard. Once upon a time, though, we understood freedom pretty well; that’s been lost. And if freedom is valued, you get a free market. When I was young, the standard kid’s response to a complaint from another kid about some action was, “hey, it’s a free country.” Kids don’t say that any more. And they’re right. I don’t smoke (any more), and I enjoy smoke-free public places. But I fear that we’ve paid a very high price for getting them. Almost everyone’s starting point today is “if something harms someone, let’s ban it.”
One of my biggest pet peeves is polling methods. Those poll questions are single-sentence questions, typically posed with a positive “defense” of the question, and no discussion of the consequences. If the farm subsidy question were posed like: “would you be willing to pay $X more for food, and hurt farmers in poor countries, to pay for subsidies to American agricultural corporations?”, most people would answer No.
Other polls construct questions in much the same way, which is why you’ll get 50% of people to agree to virtually anything if you ask it right – and this is why polls suck as a means of figuring out policy preferences.
Also, most ordinary people don’t spend lots of time thinking about public policy questions, so often the first chance they have to think at all about these questions is when they’re asked by a pollster. Unless they’re crusty curmudgeons or policy wonks, they’ll answer Yes to anything that sounds “nice” and “reasonable” – and that sounds like it wouldn’t hurt them.
Ryan,
But people don’t frame their attitudes just on the basis of their immediate situation. If you think protectionism in a specific case will help your town, or a family member, you may well favor it. Similarly if you see no immediate benefit, but fear your job will be next you may favor protection.
Try telling someone that a policy threatens the factory in his town (even though he doesn’t work there) but might create more jobs a thousand miles away, and reduce the price of blue jeans by fifty cents. What do you think his reaction will be? You can spout about comparative advantage all you want, but whether he understands it or not you’re not going to convince the guy. And guess what? He’s right. It’s not worth it to him.
The author certainly has a point; the originality of his argument is weak though. As an undergraduate political science student, one of the first basic features of political economy that you learn is the so-called ‘concentration of cost’ v. ‘dispersion of costs’ paradigm. That is essentially what the author describes. Tyler Cowen commented on it in an earlier posts. For a better explanation of anti-market bias follow this link, which was previously posted on MR.
Sound a little Aryan to you too, Bernard?
Bernard, I don’t know if you haven’t been paying attention, but Caplan has made the point many times that VOTERS ARE NOT SELF INTERESTED. Whether your job is safe has no effect on how much you like protectionism, how educated you are does.
How about this form of bias: “You dismiss someone based entirely on their tastes in literature.”
Most people ARE mediocre. Almost all aptitudes are normally distributed.
Wouldn’t the fact that the face of a special interest is giving money to the decision maker have… an effect?
What does the politician have to gain from people who just vote rather than people who give you money?
Even the stupidest politician knows it is better to go for the money and votes rather than going to the votes of the people that actually spent the time to google this crap.
One is etherial promises and the other is cold hard cash you are funneling to your wife.
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