Greg Mankiw and Tyler Cowen point to the release of this book by Bryan Caplan, so it might be worth pointing to my discussion of an earlier version of the book that he showed me when I visited his university in 2005. I don’t like the title (unsuprisingly, since I wrote a paper called Voting as a rational choice), but Caplan’s book is interesting.
My full comments are here, and here’s the short version:
The basic argument of the book goes as follows:
(1) It is rational for people to vote and to make their preferences based on their views of what is best for the country as a whole, not necessarily what they think will be best for themselves individually.
(2) The feedback between voting, policy, and economic outcomes is weak enough that there is no reason to suppose that voters will be motiaved to have “correct” views on the economy (in the sense of agreeing with the economics profession).
(3) As a result, democracy can lead to suboptimal outcomes–foolish policies resulting from foolish preferences of voters.
(4) In comparison, people have more motivation to be rational in their conomic decisions (when acting as consumers, producers, employers, etc). Thus it would be better to reduce the role of democracy and increase the role of the market in economic decision-making.
Caplan says a lot of things that make sense and puts them together in an interesting way. Poorly-informed voters are a big problem in democracy, and Caplan makes the compelling argument that this is not necessarily a problem that can be easily fixed–it may be fundamental to the system. His argument differs from that of Samuel Huntington and others who claimed in the 1970s that democracy was failing because there was too much political participation. As I recall, the “too much democracy” theorists of the 1970s saw a problem with expectations: basically, there is just no way for “City Hall” to be accountable to everyone, thus they preferred limiting things to a more manageable population of elites. Caplan thinks that voting itself (not just more elaborate demands for governmental attention) is the problem.
Bounding the arguments
I have a bunch of specific comments on the book but first want to bound its arguments a bit. First, Caplan focuses on economics, and specifically on economic issues that economists agree on. To the extent the economists disagree, the recommendations are less clear. For example, some economists prefer a strongly graduated income tax, others prefer a flat tax. Caplan would argue, I think, that tax rates in general should be lowered (since that would reduce the role of democratic government in the economic sphere) but it would still be up to Congress to decide the relative rates. This isn’t a weakness of Caplan’s argument; I’m just pointing out a limitation of its applicability.
More generally, non-economic issues–on which there is no general agrement by experts–spread into the economic sphere. Consider policies regarding national security, racial discrimination, and health care. Once again, I’m not saying that Caplan is wrong in his analysis of economic issues, just that democratic goverments do a lot of other things. (At one place he points out that the evidence shows that voters typically decide whom to vote for based on economic considerations. But, even thought the economy might be decisive on the margin, that doesn’t mean these other issues don’t matter.)
Finally, Caplan generally consideres democracy as if it were direct. But I think representative democracy is much different than direct democracy. Caplan makes some mention of this, the idea that politicians have some “slack” in decision-making, but I suspect he is understating the importance of the role of the politicians in the decision-making process.