Public Choice Ignorance Everywhere
Since learning about public choice economics, I have been constantly shocked by how little it has been internalized by economists. For example, the phenomenon of Donald Boudreaux, Director of the Center for Public Choice, spending his time on the activism strategy of writing letters to the editor when I would describe Public Choice as “the study of how writing letters to the editor doesn’t accomplish anything.” Imagine the Director of the Center for Einsteinian Physics calculating spaceship trajectories using Newtonian mechanics in all of his consulting work, and getting the answers wrong every time because he fails to take relativity into account, and you’ll understand my bewilderment. Public Choice provides awfully compelling reasons to Change Incentives, Not Minds, yet in the end it appears that the teacher’s urge to teach and to have teaching be the answer is so strong as to overwhelm mere economics.
More recently, Megan McArdle gave a shining example of public choice ignorance with a very sensible, reasonable piece about why we should abolish the corporate income tax. The piece concludes:
Want to get corporate money out of politics? Want to erode the power of the Chamber of Commerce? Take away one of their primary motives to get involved.
I don’t say this will persuade everyone. But I hope that liberals will at least consider that there might be a better way than the corporate income tax to achieve their goals.
Pointing out a more efficient policy is classic Folk Activism – it assumes that we don’t have efficient policies because no clever economist has yet designed them or eloquently described their advantages. That might have been a reasonable argument 100 years ago, but we’re in the post-Mancur Olson world: we have a whole school of economics explaining how democracy is systematically biased towards policies that transfer from dispersed interests to concentrated ones.
And what is McArdle doing? She’s complaining about a policy that does exactly what we expect democratic policies to do, and advocating for a different policy that would be against the goals of special interests (“Want to get corporate money out of politics?”) and better for society as a whole. As I said in a Students For Liberty talk this past weekend, for all the good this approach does, McArdle might as well have called a press conference and farted into the microphone.
My metaphor is deliberately provocative because I find this pattern so appalling, and it seems absurd that economists so often ignore these basic results in their own field. It moves me to shout: We do not live in a world that mainly suffers bad policies due to lack of ideas about better ones, or lack of elegant explanations supporting good policies, but one that suffers bad policies due to system and meta-system level incentives. In the real world, if you want to have any chance at any effect on changing bad policies, you must take this into account, frustrating and difficult though it is. Vaguely assuming that the problem is not enough eloquent blog posts or op eds is like finance professors actively investing in individual stocks (ignoring both efficient markets & diversification), or nutrition experts living on Twinkies – experts behaving directly contrary to the most basic results in their own fields.
Of course, finance professors do invest in individual stocks, and nutrition experts sometimes eat twinkies – investing and eating both invoke strong biases that make it hard to follow the best strategy. And the same is true for economists – I call it Folk Activism, after all, because it is so deeply intuitive – it’s not going to go away anytime soon. But let’s at least point it out whenever it happens, make the cognitive dissonance explicit, and call out the economist equivalents of Twinkie-snarfing nutritionists. Sound like a plan?
P.S. One challenge to this idea might be that it is itself a form of Folk Activism. A response is that shame will work on economists much better than politicians, especially if it comes from respected peers. After all, economists (and bloggers) care what other economists (and bloggers) think much more than politicians care what economists think. Still, holding the mirror of public choice up to economists might be too ineffective to be worthwhile, and the best strategy might be simply to ignore the misguided multitude.