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James Buchanan, RIP

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The Nobel Prize-winning economist James Buchanan has passed away. Along with Gordon Tulluck, Buchanan was the leading proponent of and researcher in the field of public choice theory. I'll let the New York Times explain exactly what public choice theory means:

Dr. Buchanan, a professor emeritus at George Mason, in Fairfax, Va., was a leading proponent of public choice theory, which assumes that politicians and government officials, like everyone else, are motivated by self-interest — getting re-elected or gaining more power — and do not necessarily act in the public interest.

He argued that their actions could be analyzed, and even predicted, by applying the tools of economics to political science in ways that yield insights into the tendencies of governments to grow, increase spending, borrow money, run large deficits and let regulations proliferate.

The logic of self-interest was nothing new. Machiavelli’s 16th-century treatise “The Prince” detailed cynical rules of statecraft to extend political power. Thomas Hobbes, in his 17th-century book “Leviathan,” held that aggressive self-serving acts were “natural” unless forbidden by law. Adam Smith’s “The Wealth of Nations,” published in 1776, noted that people pursuing their own good also produced benefits for society at large.

But Dr. Buchanan contended that the pursuit of self-interest by modern politicians often led to harmful public results. Courting voters at election time, for example, legislators will approve tax cuts and spending increases for projects and entitlements favored by the electorate. This combination can lead to ever-rising deficits, public debt burdens and increasingly large governments to conduct the public’s business.



Several years ago (in 2006), I was at a luncheon sponsored by the Federalist Society, the advocacy group started during the Reagan administration to provide a counter to the American Bar Association, which the political right believed to be too liberal. The keynote speaker was Ted Olson, the former Solicitor General under President George W. Bush. During his speech, Olson ran down a list of recent Supreme Court decisions to make the point that then-President Bush had made excellent decisions in his nominations to the high court. I don't recall Olson's exact words, but I distinctly remember him mentioning a case in which the Court had struck down a decision by the Environmental Protection Agency. Olson praised the Court's decision in that case and a few others with some remark about how we shouldn't entrust important decisions to federal bureaucrats.

But in the same speech, Olson also praised the Court for a few decisions that same term that gave more power and judgment to the police. I distinctly remember the comments because it was the year the Court handed down its decision in the Hudson v. Michigan, a case I had written about. In that case, the Court ruled that even if police officers violate knock-and-announce rule while conducting a raid on a private home, any contraband or evidence of criminality they find inside can still be used against the suspect. Olson praised the ruling. And in this case, he made comments about how the Court was wise to defer to the judgment of police officers and prosecutors.

The discrepancy struck me at the time, and has stuck with me ever since. Buchanan's work is often seen on the right as a critique of the left's faith in public service. He showed that like everyone else, public servants tend to serve their own interests, not necessarily the interests of the greater public good. When a new federal agency is created to address some social ill, for example, there's a strong incentive for the employees of that agency to never completely solve the problem they've been hired to solve. To do so would mean there would no longer be a need for their agency. It would mean layoffs, smaller budgets, even elimination entirely. In fact, there's a strong incentive to exaggerate the problem, if not even exacerbate it. The agency itself is never going to get blamed for the problem. So exaggerating it helps the agency argue for more staff and a larger budget. (Thus, Milton Friedman's axiom, "Nothing is so permanent as a temporary government program.")

It doesn't even need to be a deliberate thing. When your livelihood, your self-worth, and your career depend on things looking a certain way, there's always going to be a strong incentive for you to see them that way.

Conservatives have always bought into public choice theory when it comes to paper-pushing bureaucrats. But when it come to law enforcement, they often have the same sort of blind faith in the good intentions and public-mindedness of public servants that the left has for, say, EPA bureaucrats. But public choice problems are as prevalent in law enforcement as they are in any other field of government work. And you could make a strong argument that it's more important that we recognize and compensate for the incentive problems among cops and prosecutors because the consequences of bad decisions can be quite a bit more dire.

If we reward prosecutors who rack up convictions with reelection, higher office, and high-paying jobs at white-shoe law firms, and at the same time provide no real sanction or punishment when they break the rules in pursuit of those convictions, we shouldn't be surprised if we start to see a significant number of wrongful convictions. If we reward cops who rack up impressive raw arrest numbers with promotions and pay raises, and at the same time don't punish or sanction cops who violate the civil and constitutional rights of the people who live in the communities they serve, we shouldn't be surprised if we start to see a significant number of cops more interested in detaining and arresting people than in protecting the rights of the citizens they encounter on their patrols. We can certainly hope that a sense of civic virtue and veneration for justice will override those misplace incentives, but it would be foolish--and has been foolish--for us to rely on that. Incentives do matter.

A few other thoughts on public choice theory . . .

Libertarians are often derided for being unapologetically selfish. I don't think that's a fair criticism of libertarian thinking. It is a fair criticism of Randianism/Objectivism. But the two aren't the same. (I will concede that too many libertarians don't make enough of an effort to distinguish the two.)

Libertarianism is a philosophy of governing, and only of governing. Ayn Rand's politics were also her personal creed and ethos. Her political beliefs dictated her taste in art, friends, music, food, and men. I find all of that rather horrifying. One of the main reasons I'm a libertarian is that I loathe politics, and I want politics to play as diminished a role in my day-to-day life as possible. Letting politics dictate my friends, loves, and interests to me sounds like a pretty miserable existence.

When it comes to "the virtue of selfishness" I think the difference between Randianism and libertarianism is best explained this way: Randianism is a celebration of self-interest. Libertarianism is merely the recognition of it.

So what does all of that have to do with James Buchanan and public choice? The idea behind public choice is not that public employees are terrible, selfish, horrible people. Or at least uniquely so. It's that they're merely human, like the rest of us. We all like to think we put the public good ahead of our own interests, but when the two come into conflict, we usually do what's best for ourselves, our families, our friends, or businesses, and our immediate community. That's true whether you're the CEO of an oil company, a Chicago cop, a truck driver, the president of a teacher's union, or a journalist. I'm of course speaking in generalities, here. I'm sure there are lots of exceptions. But we should make public policy based on the rule, not the exception.

This problem exists not just with government, but also with the groups that seek to influence it. The NRA claims to stand for the rights of gun owners. But the most important gun rights case to come before the Supreme Court in 80 years was the Heller case in 2008. The NRA fought like hell to try to prevent it from happening--at least until the very end. The organization will claim that it fought Heller because it wasn't the right test case, or because the makeup of the Court wasn't right. But some close to the case have suggested--plausibly I think--that the organization fought the case in the early stages because it wasn't brought by the NRA, and the group would look foolish if such an important case for gun rights had been initiated by someone other than the NRA. Which is to say that the NRA was more interested in protecting the NRA than in protecting the rights of gun owners. (Note: This point really has nothing to do with how you may personally feel about gun control and the Second Amendment.)

Another example: Mothers Against Drunk Driving was enormously successful at attaching a social stigma to drunk driving. Since MADD began its various public relations pushes to raise awareness in the 1980s, DWI deaths plummeted, until about the late 1990s. But then the numbers began to level off. It seemed likely that in a country of 300 million people, the figures had fallen to about as low as they were going to get. But rather than declare victory, MADD expanded its mission, and began taking on underage drinking, happy hour specials, alcohol advertising, and other booze-related issues beyond just DWI. Even the organization's founder eventually came around to say that MADD had outlived its original mission, and become merely an anti-alcohol group.

One more example: private prisons and prison guard unions. Free market types who normally believe in the power of incentives for some reason think corporations that operate prisons will some how resist the incentive to lobby for laws that will create more prisoners, even though more prisoners means a better bottom line for the prison company. That hasn't happened. At the same time, progressives seem to think that some sense of solidarity with the greater, pro-union progressive cause will prevent prison guard unions from also lobbying for laws that create more prisoners, even though more prisoners means more prison guards, which means more dues-paying members of the union. That hasn't happened, either.

The takeaway here is not that we should start questioning the motives of everyone who claims to believe in something. But we should be aware of incentives. And in the aggregate, it's generally wise to be skeptical of large organizations claiming to speak on behalf of large groups of people, and especially of those who claim to be acting in the public good. It's a safe assumption that the primary objective of MADD is the preservation of MADD, that the primary objective of the NRA is to preserve the NRA.

And yes, the same is true of public service unions. The policies that best serve teachers' unions are not necessarily the policies that are in the best interest of teachers. The best interests of students are (at least) another step removed. The policies that are in the best interests of police unions aren't always the policies that are in the best interests of police officers, and certainly aren't always the policies that are in the best interests of public safety (never mind civil liberties).

Most people generally understand that corporations and businesses put the preservation of corporations and businesses above all else. And they're right. But it's also a common assumption that public interest groups and government employees are mostly just trying to do what's best for society. Buchanan's work shows that this just isn't so. They too tend to do what's best for themselves and those closest to them. We're just hard wired that way.

One more example that's related, if not directly on point. I've argued against laws that prohibit specific forms of distracted driving. I've pointed out that I personally have a terrible sense of direction. Which is to say I get lost often. Smart phones with GPS have saved me countless hours and gallons of gas I'd otherwise have spent making u-turns and asking for directions. I've made the argument that me fumbling with my cell phone's GPS app is likely quite a bit safer than me having a map unfolded over the steering wheel, or constantly gazing down at printed directions. This typically brings responses accusing me of being selfish and unconcerned about the welfare of other people on the road. Why don't I just memorize my route before leaving? What kind of asshole would put others at risk by plugging an address into his GPS while driving instead of pulling over first?

Great questions! But all beside the point! If I'm doing it, other people are too. And if a lot of other people are doing it, then the law is probably making the roads less safe. Which means it's a bad law, no matter how well-intentioned the lawmakers who passed it.

Different political philosophies will obviously disagree on which goods and services ought to be provided by government, and which should be left to the private sector and voluntary action. Since it's a field that explores the limitations of government, public choice theory is of course naturally skeptical of just how many goods and services the government can practically and efficiently provide.

But public choice theory libertarianism isn't really about demonizing public service, casting aspersions on the motivations of advocacy groups, or celebrating selfishness by, say, defending my God-given right to use my cell phone while driving. The lesson all political ideologies can take from James Buchanan is that when considering public policy, we should look to structure incentives in ways that anticipate and compensate for how people actually behave, rather than how we'd like or hope they'd behave.

Filed by Radley Balko