Institutional Problems Demand Institutional Solutions

Point about robustness and institutional learning…

Liberal Democracy devolves to illiberal authoritarianism because factional elements can prevent any decision from being final. People and lesser institution having the option, and often taking that option to refuse to learn generally has meant that no fully fleshed out policy can get imposed. Broadly democratic societies have had many workarounds, many of them bad in the long term, like formulating policy in smoke-filled rooms and forcing up and down votes.

Any kind of study of democracy has to contend with people’s desire to simplify other people and other concerns, and heavily detail their own worlds. It generally takes real coercive power to get people to do even the most obvious and painless of things in a coordinated enough fashion to be of benefit, and I would be interested in a book about how people set up veto points and how societies got around them.

Why do you think modern parliamentary systems tend only to have a few veto points? Generally making policy flow, and deliberately making it difficult to exercise any vetos in the public policy-making process? They’ve adapted to the needs of policy making and implementation over the years. There’s a survivorship bias issue here. Take a quick look at the process of Revolutionary France’s descent into The Terror and the rise of Napoleon. Or the institutionalization of dictatorship in Russia in 1993. Or Mexico from 1824 to 1835. Go far back into the incredible infighting that characterized republican Italian city-states, or move to the present day incompetence going on in Egypt right now. Operationally successful democracies force individual power players to curry favor both among the populace (say, not just the Army) and among the people in the halls of power. Given that most societies have among their processes, the distribution of the result of everyone’s productivities, there is a natural tension in every democracy in that people tend to want to vote their interests, and power brokers want the respect, power and the mullah/girls that comes with it.

Therefore, democracy as we know it today is about a feedback cycle of norms and expectations where the masses are urged to desire some readily mass-producable item, like houses or cars, oftentimes with very specific features. They are asked to assume some costly social norms. The elite gets tax breaks, subsidies, land, whathaveyou. They also get to mug in front of the cameras and grab a bit of glory. Matt Yglesias has the right of the power games when he sez “Just give the damned Republicans what they truly want, tax breaks, so we can get XXX public goods already!” That’s what Bush did, wasn’t it? However, this is entirely a feature of a relatively settled (way, way, way too settled) global economic and military climate. The US can extract rent from the rest of the world to pay expenses to both the public and their elite class. This state of affairs cannot last, though, and we’re seeing it not last as the US (and other Western countries) governing stance becomes ever more illiberal as the stresses of the current global makeup makes it more and more costly to maintain internal social peace (between elite factions no less elite/society conflicts). And as the necessity to transfer wealth from the elite to the public–via new health care plans, new child care or other educational initiative, the inevitable jubilee process sometimes in the next five years, mount, the crazier the politics will be. In the South, Georgia, Alabama, and Florida barely can cooperate on the Apalachicola water drainage. The extreme measures various cities will undertake, engineering and legally, simply to NOT conserve water much at all is a hint at what is to come over ever more sensible policy measures.

Early on in their work they contrast ideal theory and non-ideal theory in political philosophy, and they state unequivocally that while they find fault in ideal theory, they do not adopt the non-ideal approach. A part of this debate is semantic, but I want to agree with Knight and Johnson because they want to fight for the realm of ideal theory, provided that the ideal is what I would term a realistic ideal. Meaning, an ideal that is appropriately constrained in its thought experiments about the good society; it is what we know about the operation of institutions and the structure of incentives and flow of that information.

The epistemological relationship of an ideal — meaning an a priori analytic theory — to empirical, experiential, factual knowledge is not a finished doctrine, but the main points, which are well-known, are not exactly rocket science. They ought to be part of the intellectual inventory of any educated person, in one form or another. Analytic theory can help us develop the expectations and and derive the logical, functional relationships that allow us to “see” the world around us as it works, but analytic theories, in isolation, can tell us nothing about the world as it is. What Dani Rodrik calls first best economics — the religious doctrine of the Friedmanite Chicago School — is, in its claims to be the basis of a positive economics, a total crock. The world, as it is, cannot possibly resemble the imaginary world of profit maximization or structure cum general equilibrium. Utopia, as the original post, asserts, is not an option. In the language of economics, we have only second-best options.

The usual method in economics, of comparing the actual against the standard of pure theory — e.g., the catalog of “market failures” that a Brad DeLong or Mark Thoma trots out at the drop of a hat — is unsupportable and misleading crap. When Bryan Caplan does something similar, it is worse than crap. Can we just stop, now? Stop having ill-informed conversations or debates, structured by assumptions, which ought to be rejected, at the outset.

This doesn’t mean that it is not possible to have a conversation with Frank Knight-James Buchanan-Vincent Ostrom. They have institutions, and having institutions, they’ve rejected (though they often fail to highlight the implications in ways that might inform more leftist sentiments) the idealism of Chicago-school, Friedmanite theory. They don’t think the actual world resembles the ideal; they know that the real world is a good deal messier than the ideal, and that messiness is interesting and important.

It does mean, however, recognizing that, say, Hayek is a useful fool, whose purposes are often not particularly benign; he’s a tool — duh. And, his main thesis does not make a lot of sense: he argues that market prices perform an informational role in distributed coordination of a somewhat decentralized economy. And, then, like the reincarnation of Herbert Spencer, another fool cum tool, argues against the usefulness of rules. Logically, you cannot have it both ways: if bounded rationality and radical uncertainty are problems that market prices help to solve, then so do rules. Rule-driven behavior is a solution to the same problems. And, rules are observably pervasive — more pervasive, than actual, non-metaphoric markets.

If you are going to take an institutional view, you are going to be studying rule-making, rule-revising, rule-enforcing institutions. You are not going to be able to have a useful conversation with the Friedmanite Chicago school.

Which is another way of saying that you are not going to be able to have a useful conversation with the neoliberals — at least not one that doesn’t focus pretty strongly on disabusing the neoliberals of their religious doctrines, and their fondness for grounding all debate over public policy in a dialectic with Chicago-school libertarians.

Given the power relations involved, and the strong claims of the neoliberals on legitimacy in economics despite the pervasive failure of their discipline to notice abject failure to predict or prescribe, usefully, in a series of policy failures that turn on their know-nothing approach to destroying economic institutions, I plead a certain pessimism, although there’s certainly an opportunity as well.

Yeah, political democracy! But, political science is up against a tough customer, both within the academcy, as well as in the prescriptive public policy space.

What he just said.

Criticizing “airy flights of fancy ” is not the same as putting your feet on the ground. In particular, I remain flabbergasted that we can be discussing the pros and cons of “democracy” without any sense of the variety of actual and possible meanings for that. Voting systems are my own hobbyhorse (let’s talk specifics of plurality vs approval vs proportional systems), but it could be institutional differences (parliamentary vs presidential) or campaign finance for all I care, as long as there were some specifcs somewhere.

Ted @7 “Caplan’s point–and DO read the book, which is excellent–is that politicians largely get elected and re-elected by giving people what they claim to desire,”

I recognize the point you’re making about where Caplan goes after this claim, but this starting claim is false. The weight of a great deal of decades of political science evidence shows this – what people claim they want is quite different from either 1) what gets on the agenda or 2) what gets decided. (There is a separate question about whether shifts in public opinion cause shifts in policy, but that doesn’t undermine these other claims).

I also think that that same evidence shows that when you ask people a proper question – not do you like X but how would you trade off Y vs X, that polls show people are perfectly capable of making decisions that take costs into account.

Things like “Everyone loves his own Congressman but hates Congress” or “Everyone wants the budget cut but virtually no one wants any given program cut” need explanation, but not in they way we normally think. Very few people actually love their congressmen, but the system does tend to insulate them from losing their seats. The reasons have much more to with the unwillingness of people to challenge them than with public opinion. Besides, why shouldn’t people approve of their member of Congress but not the institution, which is populated by lots of people who are different from one’s own member and is a product of rules not just the aggregation of individual behavior?

As for the budget point, people’s support for cutting the budget is fairly soft, a product of both parties and the media insisting that it must be done. But when given the job of choosing between various taxes and spending cuts people come up with solutions that make sense – albeit not those that our elites would prefer. Bad poll questions and worse interpretations that are self serving for elites are what’s going on here, more so than irrational people.

I thought shah8 @2 and especially @ 4 had fairly brilliant comments. “democracy as we know it today is about a feedback cycle of norms and expectations” (to quote shah8), and Knight and Johnson are caught out, neither able to embrace a truly general abstract theory, which might categorize our peculiar case of democratic practice, nor confident in a pragmatic descriptive optimism, focused on our peculiar case, that might highlight how our early 21st century democracy works in ways that reinforce our faith in those norms. Because, frankly, to gaze unblinkingly at democracy at this moment is meditate on the probability, if not the relative certainty, that democracy, as exemplified by the U.S. and Europe, is on a decaying flight path, heading toward a crash. As shah8 put it, “This state of affairs cannot last, though, and we’re seeing it not last as the US (and other Western countries) governing stance becomes ever more illiberal as the stresses of the current global makeup makes it more and more costly to maintain internal social peace”

Gaius Publius writing at Americablog puts the case for a decaying flight path, and running out of fuel to stay aloft, in more detailed, specific terms. He itemizes 16 “deadline” policy trends, where a crash is coming, and he traces the dynamics of all to a single, general cause: the contest between the billionaires and their CEOs and hedge fund managers and banksters and oil companies (aka the plutocracy), on the one hand, and the rest of us. Quite simply, the greedy and powerful are now in very nearly complete control of U.S. politics, and they are trying to take everything.

I said in a comment on another thread, that I don’t think you can do broad political theory outside a context of anacyclosis, that is, an awareness that all institutional political systems are as subject to a kind of entropy as any machine. Democracy in the U.S. and elsewhere in the post-WWII world has “deteriorated”, at least since the 1970s, and that deterioration has paralleled, and been conditioned on, trends in the global international order and political economy (which have their own cyclical pattern). It is significant that so much of the American political economy and the American place in the international global order, is way past its expiration date. In American political economy, neoliberalism has been practically defined by its policy focus on dismantling the New Deal, which neoliberal policy program is nearing an end game, accounting for a number of Gaius Publius “deadline” policy challenges.

It is in this political context, that I can scarcely credit this Bryan Caplan fan club in comments. First, Caplan, an associate professor of economics at George Mason University and an adjunct scholar at the Cato Institute, essentially works for the Koch brothers, the epitome of billionaire greed financing the subversion of democracy.

So, yes, Kaplan discovered, Affluence and Influence, and takes pains to state emphatically: “To avoid misinterpretation, this does not mean that American democracy has a strong tendency to supply the policies that most materially benefit the rich. It doesn’t.” (Of course, he’s correct that Gillens’ book does not argue that; he’s wrong, though, if he thinks that policy doesn’t materially benefit the rich, and I think that’s what he intends his readers to believe.)

Just to take up one thread of Caplan’s argument, Caplan’s book takes up the issue of how the general public’s perception that the U.S. economy is deteriorating, with a declining proportion of good paying jobs, clashes with the perceptions of economists and the “enlightened public”, who take a more neutral view. There’s a lot of rubbish piled up about the excessive pessimism of human nature, fondness for mythical apocalypse and a dark view of the morals of the younger generation, etc. But, there he is — with a publication date of 2007! — touting the superiority of the views of economists. And, guess what? The general public was broadly right: Back in 1996, when the survey of the general public he references took place, incomes from wages were going nowhere, and had been going nowhere for years — since Nixon, basically — and, as it turned out, except for a small blip at the end of the Clinton administration during the tech boom, both income and wealth would decline significantly in the future. And, the neoliberal policies, favored by the economics profession and the “enlightened public” were among the proximate causes of that decline to come.

Bryan Caplan is very smart. He’s facile with numbers and with the rhetoric of smarmily charming reasonableness, as well as the relentless logic of ideology. To me, there’s something juvenile in his persona, that makes me think he is forever stuck in high school, feverishly reading Ayn Rand novels, but ymmv on that.

In the end, Caplan’s arguing, disingenuously, against the legitimacy of democratic governance, and for the dictatorship of private business interests. He actually quotes Milton Friedman saying the he, Friedman, would prefer the lesser evil of private monopoly as a general rule, to public monopoly or publicly regulated monopoly, as support for the proposition that Friedman was not a doctrinaire market fundamentalist. Now that’s some impressive rhetorical jiu jitsu, and I guess he can be congratulated on bringing it off with some readers.

The core of Caplan’s ideological frame is that markets and government are alternatives at the margin: that the first-order choice (to use the terminology in vogue) is between private choice mediated by markets and collective (public) choice mediated by the (democratic) state. If democracy is misinformed by irrational voters, that’s just one more reason to want fewer statist policy interventions and less statist resource and product control. (Good political memes for the Koch brothers and their ilk.)

We can just stop at the core framing. and save ourselves the delusions that follow from reading his book. And, if we are wise, we will stop there. The frame is wrong; no good can come from applying it.

Democracy is just a feedback mechanism (for any given political economy) for avoiding revolutions.

Way too cynical.

Moreover, it is a contradiction-in-terms to claim that you can have democracy, with “the greed and powerful controlling everything”, if the set of “greedy and powerful” is small enough and advanced enough in its control of “everything”. Democracy is not audience polling for Britain’s Got Talent (unless you’re thinking of putting Pudsey up for monarch).