Notes and Fragments: Classical public choice is wrong
In this “Notes and Fragments” series I will briefly discuss some ideas that I might write about in more detail in the future. See Part I, Part II.
On the classical public choice view, “Politics is about concentrating benefits on well-organized and well-informed interest groups, and dispersing costs on the unorganized and ill-informed masses.” Since voters are rationally ignorant, they don’t pay attention to politics, and special interest groups determine policy against the wishes of the majority.
But there are problems with this story. Rational voters are not gullible; if special interests fund political advertising, rational voters would treat this information as biased and discount it accordingly. Even if ignorant voters have a small chance of catching politicians engaging in backroom deals with special interests, there is an easy solution: discipline politicians with optimal punishments. When politicians are caught misbehaving, punish them harshly to adjust for the small probability of apprehension. If voters are too uninformed to evaluate government programs, they can follow the rule: when in doubt, say no. On this account, rational ignorance leads to smaller government.
Furthermore, there are few examples of policies that are unpopular. As Caplan and Stringham argue, traditional examples of special interest activity like tariffs and pork barrel spending are in fact supported by a majority of voters. Foreign aid is unpopular, but is roughly 1% of the federal budget. Are there any other existing policies that the majority does not want?
These considerations should lead us to doubt that voters are actually rational. As Caplan argues, voters are rationally irrational: that is, it is instrumentally rational for voters to be epistemically irrational. The upshot is that although the arguments of classical public choice are false, most of the conclusions are still true.
See Caplan’s notes here and here, Caplan’s “Rational Irrationality and the Microfoundations of Political Failure,” Wittman’s “Why Democracies Produce Efficient Results,” Caplan’s Myth of the Rational Voter, and Wittman’s Myth of Democratic Failure.