This approach is a huge extension of government’s role, one that is fraught with peril—it represents nothing less than a fundamental rethinking of the democratic system. Normally, democracy empowers government to be responsive to your preferences. That’s what voting is all about: You vote, Congress passes laws in line with voters’ inclinations, and bureaucracies carry out those laws. But the reality is now quite the opposite, as the federal government employs manipulative psychology to bring about its desired outcomes, which are intentionally hidden from voters.Rather than turning to behavioral economics to run government, Obama's administration would be better off studying public choice economics. Perhaps such a study would help Obama understand why government never seems to perform the way he hoped. It is as if it never occurred to Obama that government has its own inefficiencies. Veronique de Rugy gave a little primer to the House Oversight and Government Reform Committee when she testified last week to tell them how public choice economics helps explain the problems with Obamacare.
The “nudge” philosophy of government is also problematic from a market perspective. Traditionally consumers empower governments to protect them—for instance, from inaccurate or insufficient product information or pollution, which are not always inherently part of market transactions. In the field of behavioral economics, bureaucrats try to guess what they believe to be citizens’ personal mistakes—decisions individuals would regret if only they were as rational and enlightened as government officials. But, not only are government officials subject to the same psychological errors as everyone else, they are also constantly nudged into decisions by political factors, such as firms seeking favors from government or logrolling, whereby one politician supports another’s bad decision in order to get his or her support in the future. This makes it unlikely that the government is actually looking after our best interests. What began as a benign effort may evolve into something truly scary.
How can a bureaucrat in Washington, D.C., determine what’s right for you when your needs are different from everyone else’s? Behavioral economics and “nudge” theories suggest that if you provide people with the right information through the right channels, they will be empowered to make choices that help them achieve their own goals. Sure, businesses already do this through marketing to consumers, but they do it in a competitive setting. The problem here is that government, in contrast, can act as a monopoly, making blanket decisions for a range of citizens. What’s worse, because government has coercive power, bureaucrats are equipped not just to influence people’s choices, but also to enact regulation to force choices. In the government’s hands, the nudge becomes a shove.
Public choice theory applies economic analysis—or the study of how incentives influence behavior—to politics. For instance, economists assume that people interacting in the marketplace are mostly driven by self-interest. That doesn’t mean that people aren’t concerned about others, or can’t act charitably. It simply means that their dominant motive—whether they are employers, employees, or consumers—is a concern for themselves. Public choice economists make the same assumption about government actors. As Jane S. Shaw writes in a primer about public choice economics, “although people acting in the political marketplace have some concern for others, their main motive, whether they are voters, politicians, lobbyists, or bureaucrats, is self-interest.” 3This is all so rational, yet liberals again and again design policies based on the premise that government bureaucrats will act more morally and efficiently than private actors.
In other words, unlike many economists before them, public choice economists revolutionized the field of economics by having symmetric assumptions about humans in public and private settings and replacing “romantic and illusory notions about the workings of governments” with more realistic ones.
In the marketplace, scarcity guarantees that people compete for resources. In that environment, the price system and the risk of losses, combined with the prospect of potential profit, are powerful signals that guide people’s decisions to prudently buy, sell, invest, and save.
But unlike in the marketplace, the incentives for good management in government are very weak. For instance, even though lawmakers are expected to pursue the “public interest,” they make decisions that use other people’s money rather than their own. This means that their exposure to the risk of a bad decision is fairly limited, and there is little to no reward for spending taxpayers’ money wisely or providing a service effectively or efficiently.
Furthermore, because each voter bears a very small part of the cost of these bad decisions, and they have their daily lives to manage, voters lack the incentives to sufficiently monitor the government.
Ace at Ace of Spades wrote a very interesting analysis of liberal support of Barack Obama He uses the concept of Alfred Hitchcock's theory of the McGuffin as a plot device that the protagonist seeks for some complicated, yet really unimportant reason. Think of the Lost Ark in an Indiana Jones movie. Ace's insight is that for those who admire Obama, as exemplified by Chris Matthews and his peeps on MSNBC, the policy choices of the President are less important than Barack Obama himself. He is the hero of the movie they're enjoying watching and they're less interested in how wise or successful his policy enactments are than in Obama as hero.
Watching Chris Matthews interview Obama, I was struck by just how uninterested in policy questions Matthews (and his panel) were, and how almost every question seemed to be, at heart, about Obama's emotional response to difficulties-- not about policy itself, but about Obama's Hero's Journey in navigating the plot of President Barack Obama: The Movie.Read the rest of Ace's essay. It is quite perceptive.
As with a MacGuffin in the movie, only the Hero's emotional response to the MacGuffin matters.
Again and again, Matthews and his panel focused not on weighty questions of state, but on what toll these important-sounding MacGuffins took upon the Star of the Picture, Barack Obama.
Matthews was not terribly interested in hearing about the problems with Obamacare, or how Obama planned to address them.
But he was very interested in learning how Obama was coping with the challenges.
Matthews didn't care all that much about disputes over the budget. But he was keenly interested in Obama's thoughts on his opponents in such struggles.
Chris Matthews' called Obama's last answer the most important in the interview, and his entire panel agreed it was simply amazing.
That last question was about Obama's -- the Hero's -- travails.
Mickey Kaus follows up on Ace's insights in his criticisms of Obama's income inequality speech last week.
Isn't it about time to examine whether extending unemployment benefits is a good idea?
I wonder what that great advocate of media freedom, Edward Snowden, thinks of his protector, Vladimir Putin's decision to dissolve the state news agency because it reported too many news stories that Putin didn't like getting public airing.
Robert Samuelson details the generational conflict built into our political policy today.
At the federal level, even this sloppy generational reckoning is missing. The elderly’s interests are running roughshod over other national concerns . Social Security, Medicare and Medicaid — programs heavily for the retired — dominate the budget, accounting for about 44 percent of spending, and have been largely excluded from deficit-reduction measures.If the younger generation weren't so clueless, perhaps this imbalance could be addressed, but that just isn't happening.
Almost all the adjustment falls on other programs: defense, courts, research, roads, education. Or higher taxes. The federal government is increasingly a transfer agency: Taxes from the young and middle-aged are spent on the elderly.
The explanation for this is politics. For states and localities, benefit cuts affect government workers — a powerful but small group — while at the federal level, it’s all the elderly, a huge group that includes everyone’s parents and grandparents. As a result, the combat has been lopsided. Political leaders of both parties have avoided distasteful choices. Younger Americans have generally been clueless about how shifting demographics threaten their future government services and taxes.
Apparently Kanye West thinks that his dancing puts him at similar risk to police officers or soldiers at war. The mind boggles.
Politico dares to ask whether Hillary Clinton was a good Secretary of State? You can tell what the answer is when the liberals the reporter talks to have all sorts of excuses for her lack of accomplishments of tenure in office.