A glorious example of political naivety

There’s any number of lessons that we might take from the past few years. Fragile banking systems aren’t a good idea perhaps. We seem to have shown that monetary policy is still effective at the zero lower bound, therefore fiscal policy isn’t the only thing we can turn to in recession. The eurozone is giving a useful empirical lesson in optimal currency areas. There’s all sorts of things we can and should learn from recent times. But then it’s also possibly to be hoplessly naive about all of this:

The biggest surprise for me, and perhaps it shouldn’t have been, is the degree to which politicians are willing to put political interests ahead of helping people in need. Watching the political/policy reaction to the Great Recession was both disappointing and eye opening.

Well, no, it shouldn’t have been. Ourselves we waver between thinking that public choice theory is the right way to think of this (politicans and bureaucrats are subject to the same incentives of self-interest as everyone else) and the pronouncements of Mancur Olson (all governments are bandits exploiting the population and about the best we can hope for is a stationary bandit, not a roving one) dependent upon the crust of our liver on any particular day. But either insists that we cannot look to the political class as being interested in either what we want or what we need: not unless it’s going to directly impact upon our propensity to vote for them so that they get to stay part of that political class.

The idea that a professional economist should believe that politicians would ever put helping people in need above political interests strikes us as simply hopelessy naive. However, this is still a good outcome: the next politician promising that we’re going to run the world off kisses and unicorn parps is less likely to be believed now, eh?

An odd theory but it’s ours and we like it

As a result of a conversation going on elsewhere an odd little theory but as it is ours we rather like it. So, why is it that foreign state owned companies are able to run things rather well in Britain (trains, water, electricity, whatever) while when the same companies were British state owned they were appalling? It’s almost as if only the British state is appalling at running things.

To which we would say yes: the British state is appalling at running commercial enterprises in Britain. As if the French state in France, the German in Germany and so on. There’s a tad of hyperbole there but here’s the reason why.

Politicians running something (the definition of course of the state running anything) are going to run it with an eye to politics. The art of getting elected is, of course, to build a large enough coalition to get elected. This does mean pandering to various constituencies: the workforce of that state run business, the unions, the capitalists (for a different flavoured coalition) and so on. That concern over getting elected rather outpaces the single minded focus upon efficiency (and if you’re cynical about capitalism, that efficiency can be in extracting profit,) that the private sector at least strives to through competition.

It’s not so much that know nothing politicians inevitably screw up whatever they do. It’s that the incentives for a politician running something are different given that he’s got both the organisation itself to think about and all of those electoral pressures.

But that same organisation, when freed from those political concerns, might be reasonably efficient at doing whatever. So, for example, French politicians don’t give a rat’s ar….well, no, this is a family blog, …don’t care one whit about the political heft of British unions. In a manner that British politicians very much do. The same is true on the other side of the political ledger. Which way the media plutocrats instruct the populace to vote doesn’t matter a darn for a politician in a different media market, in a different language. And no one at all has won or lost a French election on the performance of the 7.15 from Brighton to Waterloo.

The end result of this, we admit slightly odd, argument is that the British state would be just fine running the French railways, as the French state owned companies seem not bad at running portions of the British ones. Simply because being outside the political jurisdiction that elects the politicians at the top the politicians don’t have those conflicted incentives and can thus allow the companies simply to run as companies, not as political arms of the state.

Or as we might also put it: by being outside the political jurisdiction that owns them allows state companies to simply be competitive companies.

In which we find ourselves agreeing with Owen Jones

We found ourselves agreeing with George Monbiot earlier this week and now we find, to our surprise, that we’re agreeing with Owen Jones. Must be something in the water:

Being “normal” often means having a complex life. A huge chunk of the population have taken drugs, cheated on a partner, slept with or gone out with someone they regret, been unfair to someone close to them or a stranger. Maybe we committed some misdemeanour when we were younger. Personally I would prefer more MPs with complex backstories, because that makes them more representative and more human. But with the promise – the threat – of unforgiving media intrusion into every last facet of our personal life, why do we expect normal people, with complex lives, to stand for elected office? And then we complain that our politicians are boring on-message robots.

Chuka should have expected it and learned to take it, some will say. It’s all part of the territory. If you don’t want that level of intense scrutiny, choose a different path in life. You saw what they did to Ed Miliband, did you not? What a bleak approach, that the price of political service should be having your life and the lives of those who love you torn to shreds. A mean, cruel, macho, debased political “debate”, stripped of humanity or understanding.

Indeed. The corollary of which is that those who do glide into the higher levels of politics are drawn from the inhuman part of the population, those who never have actually had what the rest of us would consider to be life experience.

Meaning, of course, that we want them to have as little as possible to do with how the rest of us do live our real lives as they’ve obviously got no clue. Yes, we do need some method of working out who is going to collect the rubbish so there will always be a need both for politics and politicians. But given that, as Jones points out, it’s only the nutters and sociopaths who are willing to go through the process of gaining that political power we obviously want that power limited only to those areas where it is absolutely essential.

Thus roll on the minimal, even minarchist, state. As Owen Jones will no doubt shortly agree.

How I learned to stop worrying and love electoral politics

ASI bloggers spent a decent wodge of time blogging about how democracy is silly or irrelevant or bad. I’m probably the worst here.

But I have to say that I had a great time following the election, which was instantly hugely exciting and shocking and interesting after the truly unbelievable 10pm exit poll.

My experience has led me to perhaps a more sanguine view on this central institution of modern developed society.

Democracies don’t make that much difference to policy—possibly because technocrats rule anyway. Democracies potentially lead to less violent transfers of power. Democracies may make people happy through recognising people’s fundamental equality. Democracies may make people feel like they’re having a say. And democracy is a fantastic spectator sport.

1. Democracies and non-democracies that are otherwise similar have quite similar policies, except that non-democracies may have more progressive tax schedules. (pdf)

2. It feels likely that democracies minimise the costs of power transitions. I’m not absolutely sure about this one, because I can’t find any good papers (please send them my way). If you can vote people out, you don’t need to fight them out.

The problem is that democracies tend to be systematically different to non-democracies in loads of ways (e.g. Western Educated Industrialised and Rich as well as Democratic). Just looking at how power changed hands in 1700s France and how it does now might not be enough. Ditto comparing France now with, say, Algeria.

And I can at least imagine transition mechanisms that would make monarchies even more flexible than democracies, if changing all the king’s advisors counts as a transition as well as changing the man himself. But let’s chalk this one down anyway.

3. When you drill down, lots of people value democracy for more than its supposed benefits for picking policy. People think that fundamental equality of humans/citizens is very important, and this is an important way of recognising it. If lots of people care about it then it probably makes them all a bit happier and more satisfied with their lives which is good. Obviously I’d need to see evidence to be sure, but again it seems an under-researched topic.

4. This is slightly different to the above. Voters are very unlikely to make a difference; it’s about 10m to one in swing states in the USA; and the closest ever parliamentary election was decided by two votes, but then redone anyway for a gap of hundreds. No single vote ever makes a difference to the direct outcome.

But it’s quite reasonable to view a vote as being ‘a say’, even if it’s not necessarily heard in policy. And if this siphons off popular dissent and makes people identify more with their government and society it might make people more satisfied with their lives, which is good.

5. This is really how I changed during this election: it was so exciting. I didn’t really go into the election caring about who won, except that I hoped the Lib Dems held up and UKIP didn’t get too many seats—I didn’t vote or even spoil like last time.

But as it turned out I got caught up in it all and had a great time cheering and booing. Think how many people are made happier by sports—and politics is like a sport which really matters in measurable ways!

I never really got het up about democracy, but I’ve decided I’m a whole lot more comfortable with the whole thing.

Why we vote the way we vote

In my last post I tried to understand why people vote, suggesting that even if a sense of civic duty or a desire to express oneself can explain why we turn out to vote, these can’t really tell us much about why we vote the way we vote. In this post I’ll try to explain why I’m convinced that, for voters, ideas matter.

There are two basic views among political scientists about this: people vote to maximise their own wellbeing (“pocketbook” voters) or people vote to maximise the wellbeing of their society (“sociotropic” voters). The literature here is enormous so this post will try to sketch out the argument broadly – it is not intended to be anywhere near comprehensive.

There is a clear correlation between declines in GDP per capita and declines in support for the political party in power (‘economic voting’). But this could be because people who are worse off are changing their votes to improve their own welfare, or because people in general are trying to improve their society in general.

In ‘Sociotropic voting: The American case’, Donald Kinder and D. Roderick Kiewiet look at how voters behave when their personal circumstances differ from those of society in general – if you are unemployed, but total unemployment is low, are you more likely to want a change of government?

Looking at Congressional elections during the 1970s, they find strong evidence that people are more concerned with society and the economy as a whole than for their own circumstances.

‘A person’s private economic experience had very little impact on his choice of candidate in the congressional elections whereas his sociotropic judgements were of the utmost importance … American voters resemble the sociotropic ideal, responding to changes in general economic conditions.’

Kiewiet’s conclusion in a later book is that people blame factors other than the government for their own circumstances, but blame the government for the overall state of the economy. Is this a uniquely American phenomenon, though?

Leif Lewin’s review of the evidence in his excellent Self-interest and public interest in Western politics suggests that it is not – Western European voters, including British voters, also seem to be much more inclined to vote sociotropically than with regard to their own circumstances.

We know that voters are mostly very ignorant of the facts of politics, which may make it very hard for them to form accurate judgements about the best policies to achieve the end-goals they have in mind. But it also means that the media that they do pay attention to has an enormous influence over their perceptions, and that people’s political awareness may affect how ‘benevolent’ they really are.

In light of this, Gomez and Wilson (2001) adapt the pocketbook thesis to argue that more sophisticated, politically aware voters are more likely to be affected by pocketbook factors than others.

They are the ones who can think in terms of specific policies, make connections between particular policies and their own incomes, and do not blame incumbents for everything that goes wrong with the economy.

Other, less sophisticated voters simply assume that the President is responsible for what goes wrong with the economy. That might explain why electoral ‘giveaways’ (pensioner bonds, opposition to new home builds) seem to be concentrated on quite small groups of well-heeled voters – nobody else would notice.

The last word on voter behaviour must go to Philip Converse, whose 1956 survey data showed that most voters make their decisions based on extremely broad judgements of the ‘sign of the times’ (22%), or based on which group – posh people? workers? – a party or politician seems to speak for (45%), or even evaluations that had no shred of policy significance whatever, like which candidate was the funniest (17.5%).

Only around 15% of voters used ideology or ideology-like rules-of-thumb to decide who to vote for, and those were the most rigid in their decisions about how to vote.

To sum up, people seem to mostly vote for the candidates that they think will be best for society as a whole, though they may make very poorly considered judgements of that. If there is a ‘pocketbook’ effect, it is probably limited to the most well-informed voters.

All this suggests that the public choice view of democracy as just a way to divide the spoils of government between interest groups may well be wrong. Yes, voters are amazingly ignorant of basic facts, let alone economic theory, but we do have a chance of persuading them and changing the world for the better. To those of us who would like to believe in the power of ideas, that’s something to celebrate.