Don't Look to Political Parties for a Solution?

|Peter Boettke|

As Barkley Rosser points out in the comments to my post of Martin Feldstein's essay on dealing with the debt, thinking in terms of political parties is not the way to resolve the issue.  It is not a matter of voting for conservatives or liberals, let alone Republicans or Democrats.  So much for choosing between tweedle dee and tweedle dum.

Instead, creative solutions are to be found in structural changes to politics, not merely shifts in policy.  This was, of course, a core message of James Buchanan and his development of constitutional political economy.  In the specific context of public finance, Buchanan sharpened this argument against the new orthodoxy of Keynesianism.

As Buchanan and Wagner write in Democracy in Deficit:

“The book is concerned, firstly, with the impact of economic ideas on political institutions, and, secondly, with the effects of these derived institutional changes on economic policy decisions. … We step back one stage, and we try to observe the political along with the economic process. We look at the political economy. The prescriptive diagnosis that emerges suggests disease in the political structure as it responds to the Keynesian teachings about economic policy. Our specific hypothesis is that the Keynesian theory of economic policy produces inherent biases when applied within the institutions of political democracy. To the extent that this hypothesis is accepted, the search for improvement must be centered on modification in the institutional structure.” (emphasis added)

One thing we definitely should take away in these discussions, is that more of the policies pursued over the past 50 years is not going to provide a solution to these ills.  As Luigi Zingales argued at the very beginning of the public discourse over the policy response to the global financial crisis:

"If Keynesian principles and education are the cause of the current depression, it is hard to imagine they    can be the solution. …

 

Keynesianism has conquered the hearts and minds of politicians and ordinary people alike because it provides a theoretical justification for irresponsible behaviour. Medical science has established that one or two glasses of wine per day are good for your long-term health, but no doctor would recommend a recovering alcoholic to follow this prescription. Unfortunately, Keynesian economists do exactly this. They tell politicians, who are addicted to spending our money, that government expenditures are good. And they tell consumers, who are affected by severe spending problems, that consuming is good, while saving is bad. In medicine, such behaviour would get you expelled from the medical profession; in economics, it gives you a job in Washington."

It is not a question of political parties and policy preferences, but the structure of politics itself.  We simply cannot afford to continue to let the foxes guard the chicken coups anymore, and not expect the chickens to be eaten.

 

Comments

[Daniel Kuehn]

The sentence you emphasize is interesting. Buchanan writes that "to the extent that this hypothesis is accepted" institutional modification is required. My question to you is - to what extent is acceptance of the hypothesis really necessary for this point about institutional reform?

I find the hypothesis about Keynesianism embarrassingly weak, but I don't personally think that threatens the institutional or constitutional argument. I'm sometimes afraid that the possibilities for substantial public choice advances are held hostage to this common (although not universal) attempt to sneak a poor macroeconomic argument through the back door and hitch many of the stronger institutional arguments to it.

[Daniel Kuehn]

I shouldn't even really say "poor macroeconomic argument" because it's not a macroeconomic argument - it is a legitimate public choice argument. I suppose it seems like letting a macroeconomic argument spill over into a public choice argument, and foreclosing the possibility of a lot of good public choice arguments that are not contingent on that hypothesis.

[Daniel Kuehn]

I agree on the parties thing - the best people to achieve the institutional reform (and therefore to solve the debt problem) are fairly well distributed across all parties - or have no party affiliation. "People who are good on the debt" (and I'm not just talking about politicians here, obviously) don't seem to have a uniform political make-up.

It's probably one of the best arguments for a third party movement. The current party system does a great job fighting for things that fall along those party lines - it does a terrible job fighting for things that fall across those party lines.

[Peter Boettke]

What hypothesis do you reject Daniel? That Keynesian policies produce particular biases within the democratic polity? What argument or evidence would you provide to counter that hypothesis?

That the particular bias is toward a short-sighted bias? That this leads to a bias toward deficit financing?, etc., etc.

[Daniel Kuehn]

Certainly they produced "particular biases" - I suppose I was inferring some, knowing Democracy in Deficit. No I didn't mean that they don't produce any biases - only that shortsightedness/unmanageable debt is not reasonably attributable to Keynesianism.

Anyway - I don't mean to fight that out. Quite the opposite. One of the concerns that I have about how public choice theory is practice is precisely that it is regularly hitched to this anti-Keynesianism streak, which in my view limits public choice. Indeed, there's simply a lot of good working being done under New Institutional/political economy and even public finance labels that is essentially public choice, but I think public choice work and particularly constitutional economics can be isolated from that. That seems unfortunate to me.

Do you think Buchanan's constitutional economics and public choice theory generally rely at all on this "hypothesis" about Keynesianism? I personally don't think so, but then you're more of an authority so I was curious.

[Niko]

@Daniel:

"One of the concerns that I have about how public choice theory is practice is precisely that it is regularly hitched to this anti-Keynesianism streak, which in my view limits public choice."

Please explain this one. As I understand it, public choice theory limits public choice. Basically what you are saying is that if public choice would embrace Keynes, it would spur new studies in public choice, but since they are anti-Keynes, a hole lot of interesting papers could not be written.

I often wondered if the people didn't severe limit themselves by adopting the view that the Earth is (almost) round. Imagine the wide range of possibilities if they allowed some room for the possibility that it was a cube ...

PS: what public choice considers about Keynes are not "hypothesis", but conclusions.

[Daniel Kuehn]

No Niko, what I'm saying is that a lot of public choice theory seems mired in poor arguments about certain macroeconomic policy orientations, that that focus is to a certain extent an historical artifact and completely unnecessary, and that I think other more interesting things could be done. My whole point is I don't think it's particularly important what public choice theorists think of Keynesianism. And I would say this of any field. If IO economists spent a lot of their time arguing about Keynesianism and closely associating the field of IO itself to an anti-Keynesian perspective I would probably argue that IO isn't reaching it's full potential. Not because they're not Keynesian (far from being the problem, that is entirely irrelevant) but because it's a distraction from good IO!

New Institutional economics, political economy, and public finance are all doing great stuff. To a certain extent they are isolated from a lot of the good work on constitutional economics, and I think a lot of that is because a lot of constitutional economics has been caught up in an anti-Keynesian/libertarian mindset.

So when you say that I'm saying "if only public choice would embrace Keynes" you have me exactly backwards. I think it's an over concern with Keynes that's the problem, not that they might not be Keynesians. For all I know 95% of microeconomists aren't Keynesians. Who cares? If they spend a bunch of time talking about Keynes and calling that "microeconomics" I would care and I'd say they're not reaching their full potential.

[Allan Walstad]

How is the structure of politics changed, other than through the present structure of politics? I'm not yet sold on armed rebellion. Shall we all just "tune in, turn on, and drop out?" If I vote capital-L Libertarian, many small-gov types say I'm wasting my vote. Well then, how about working to build a foundation of intellectual support for people like Ron and Rand Paul and Gary Johnson, who are operating (at this time) through one of the major parties? Or -- what?

[Niko]

@Daniel:

I don't understand what you are saying. Basically if you do research, a lot of it, and your research gets you to the conclusion that the dominant paradigm in macroeconomics, the Keynesian paradigm, is wrong, then you are limiting yourself? Aren't people who talk only about Keynes also limiting themselves and aren't they also over concerned about Keynes? Like you for example?

"If they spend a bunch of time talking about Keynes and calling that "microeconomics" I would care and I'd say they're not reaching their full potential."
The above makes no sense to me. Maybe somebody else can translate.

[K Sralla]

Defining the problem is the easy part. Designing new institutions to fix the problems may carry other hazards we can't yet foresee. Even if our institutional reforms had a chance to be enacted, some of them might not work as intended.

This is sort of a Hayekian jail.

Maybe the least bad option is to allow things to evolve on their own without any big designed institutional reform??? This seems to be where Buchanan (and the New Institutionalists) and Hayek part ways to some extent, with Buchanan and company much more willing to engage in deliberate rule experimentation.

[Daniel Kuehn]

Put it this way, Niko. There are people that call themselves "public choice theorists" and there are people that call themselves "political economists" and there are people who call themselves "institutionalists".

It seems to me lots of the people who call themselves "public choice theorists" have really important insights.

It also seems to me lots of the people who call themselves "public choice theorists" are having a separate discussion from a lot of the people who call themselves "political economists" and "institutionalists" (who also have lots of important insights of their own).

And it seems to me one of the reasons why the people who call themselves "public choice theorists" and the people who call themselves "political economists" and "institutionalists" sometimes (not always) fail to talk is that there are certain things that people who call themselves "public choice theorists" feel the need to dwell on, and one of those things is Keynesianism. That's all I'm saying. It happens on the other side too. There are a lot of people who call themselves "institutionalists" who aren't as productive as they could be because they dwell on exegesis of Veblen or something like that. That's all I'm saying.

[Daniel Kuehn]

And Niko - I'm not trying to push anyone around here. Part of my asking was motivated by the fact that even if Peter doesn't agree with me on this particular point, I know he has a history of calling out people on this sort of sub-field insularity.

[Daniel Kuehn]

I thought this would be a quick "yes, I think public choice theory can definitely be done without this referentialism to Keynes or this tie to a normative disposition of libertarianism". Or not. But we don't need to drag this out Niko.

[Niko]

@Daniel:

So public choice is ok as long as they don't talk about Keynes. Well, not really not talk, but not a lot. And not really not a lot, but not negative. And not really not negative, but they should also broaden their horizons and see the good stuff in there. And then the sky is the limit.

So ... Can Keynesianism be done without all that stuff that makes it, you know, what it is?

[Peter Boettke]

Daniel,

Clearly public choice can be done without any commitment to a particular macroeconomic theory, right?!

The question I have back, is that can we have serious macroeconomic analysis that doesn't incorporate public choice analysis of the political decision process? I am not sure we can. And I think that might constrain the set of macroeconomic theories that can be proposed as serious.

Do you think that is intellectually unfair on my part? I certainly am not trying to be unfair, but I think "good" analysis must endogenize political decision making and take account of the political structures in place at any given time.

[Jerry O'Driscoll]

It is all about public choice: concentrated benefits and dispersed costs. Getting rid of both the gold standard and the balanced-budget constraint eliminated the two complementary constraints on federal spending.

You no longer have rational, intertemporal budgeting. That gives the bias to growth of government. Government promise more than the resources they have in the present. They mortgage the future and then the central bank monetizes the debt.

Adam Smith explained it all in WN because there was already centuries of accumulated evidence.

[McKinney]

The institution that is at the heart of the problem is democracy. Economists can propose, but the public disposes.

[perfectlyGoodInk]

To get a third party movement beyond spoiler status in this country, you need to reform the voting system away from the plurality system we inherited from the British and towards Proportional Representation. Then the fiscally conservative Democrats and the socially liberal Republicans can split off to join the moderate libertarians.

[Chris]

Daniel,

I want to respond to your post on your blog about this subject so that the professors here can add it to the discussion if they wish.

You state that if we apply the same argument that Zingales, Boettke, and Buchanan use against Keynes, then we should lay at Hayek's feet "Massive military buildups...Large and growing deficits during recessions as well as boom years...A complete lack of will to deal with entitlements or propose a long-term budget solution."

So, if I may oversimplify the issue, the argument here is that it is illegitimate to attribute to Keynes the folly of politicians because he did not support to this level the fiscal policies being abused. However, if we are to levy this criticism, then we must also apply it to Hayek and attribute to him the Republican's massive military budget, the resulting deficits, and lack of budget

I'm not sure about this. Buchanan is starting his argument with the premise that the ideas espoused by Keynes existed prior to his publication of them. He provided academic and intellectual legitimacy to these ideas. Formally, you can call this theory whatever you may want to call the economics of Keynes. Now, if you want to argue about to what extent we may attribute to Keynes himself the policy prescriptions of those that came after him, I think that is an interesting question. The issue that I see is in the fact that the policy prescriptions that you believe that we cannot attribute to Keynes are considered within the vector that we call Keynesian economics due to the academic and intellectual contributions of economists that consider themselves in the same tradition. I think it is hard to argue that the advances of Keyenes and the Keynesians after him did not provide politicians with modern tools to abuse the strategies espoused by both the man and those considered in his tradition. (Yes, I did use the Leijonhufvud distinction.)

What about the other side of the coin? Your argument is that the policy prescriptions stated above can be attributed to Hayek because Thatcher, Reagan, Paul Ryan, Rand Paul, and Glenn Beck said that they were inspired by him. I may be incorrect, but I am not familiar with any of the professional or academic economists which consider themselves within the same tradition as Hayek to have espoused the policies that would have granted politicians the political license for the results you stated.(For example, Hayek criticized Reagan for cutting taxes without cutting spending. Also, I am aware that many of Reagan's advisors were members of the Mont Pelerin Society. However, I don't think that qualifies them as being Hayekians. Reagan's attorney general Edwin Meese stated that Friedman was the more important influence on the administration. If you want to claim that Friedman was pro military buildup, then welp.) In other words, the vector of Hayekian economists relative to Keynesian economists is less dense and contains significantly less cache in the realm of public policy and high institutional academia (I'm ignoring the influences of Hayek on Ostrom, V. Smith, etc. because of the non relevance to the points that you made.) What tools did Hayek provide for what these politicians decided to do?

That was a lot so I will summarize if you do not wish to read all of it. I think it is hard to (and after reading your contributions here and on Cafe Hayek, I do not think you will) disagree that Keynes and whatever we may want to define has Keynesian economists, intenionally or not intentionally, provided the modern tools necessary to accomplish and rationalize the abuse of ideas espoused by Keynes and the Keynesians. Therefore, there has been a significantly deeper and stronger influence by the Keynes and the Keynesians on public policy and academia than Hayek and the Hayekians. I am unconvinced of the necessity to make the same argument against Hayek because the evidence is unclear (or non existant) that the man or his followers provided the tools that produced the folly of the Republican party.

I mean, I'd like to believe that The Road to Serfdom and The Constitution of Liberty were as influential in economics as The General Theory, but I'm not sure that the RTS should be influential in academic economics, and I'm sure that neither are as influential.

I have not really addressed the issue of whether or not we can attribute the work of the Keynesians to Keynes. I will in a later post if needed.

Just as a side note, I mean this post in the most cordial manner. I hope you will take it that way.

[Rafe Champion]

What has the classical liberalism of Hayek and Friedman got to do with the Big Government follies of the Republican Party?

[geoih]

The problem is even more basic than that. Politics is about force and coercion. Politics is the antithesis of economics. Keynesianism is about justifying political intervention into economics. Keynesianism is about politics, not economics.

Using politics for economic growth is like using fire for combustible material growth. All you get is a bigger fire and all of your combustible materials are destroyed.

[austrian away]

I hope this quote will temper somewhat the Austrian enthusiasm for Public Choice theory:

"Public choice theory has extended neoclassical theory to the political process, but the results have been quite modest. There are some basic differences between the operation of markets and the political process, which so far defy effective modelling by the public choice theorist. The breakdown of the Madisonian system and the development of a new set of political controls over property rights, which is the dominant feature of a structural transformation over the past century and a half, requires more fundamental theorizing about the nature of the state than that achievable at the superficial level employed by public choice theory."

--- Douglass C. North

[Niko]

@Muller:

Why should that quote temper the ... etc? Because is made by Douglas North? It is the only thing that gives weight to it, the content is rather shallow.

[Rafe Champion]

This is where Mark Pennington's robust political economy is required.

[austrian away]

Niko, I would kindly remind you that Dr. North is a Nobel Prize winner, which is the surest criterion we have in distinguishing the opinions of anyone with a PhD after their name. His statements, I think, merit considerable weight.

[James McClure]

@ austrian way,

Silly argument; the signal is unreliable. Think of Hayek and Mydral getting it in the same year.

[austrian away]

Mr. McClure,

Yes, it may perhaps be unreliable, but that does not stop it from being "authoritative." Whatever you think of the quality of the work of Nobel Price recipients, the fact remains that the prize still carries a lot of weight, unless, of course, you are one of those Austrian types who completely disparages the Nobel Prize institution because it was never given to Mises or Rothbard! (I have seen this argument made by some at the Mises Institute).

[Niko]

@Muller:

So you admit that the quote has no value, except for the fact it has been told by North. Now, I am pretty sure North said a lot of things every day. I can only imagine the huge lose to humanity caused by the fact he was not recorded. As a (memorial) Nobel prize winner, every single vocal probably was a pearl of wisdom.

Now, tell us about North's whole argument against public choice, not just a quote which by itself has no value.

[Niko]

@Muller:

By the way, you do know James Buchanan also won a full (memorial) Nobel prize, don't you? North got only half (had to share it with Fogel). So, using your playing field, Buchanan in twice as cool as North.

[austrian away]

Ha. Well, actually, the quote I provided was culled from a published article of his (I did not actually record any of his vocal pronouncements). But let's try not to turn this into a debate over the Nobel Prize. Let's analyze instead what North was attacking in Buchanan's theory. Public Choice basically just applies neoclassical behavior theory to the arena of politics. This theory itself is pretty unremarkable -- the one thing in its favor is the incredibly naive assumptions people made about government officials before Public Choice became popular. What North is trying to do is show that this assumption is too narrow. If we want to understand things like institutional structures and economic performance, this naive assumption of Public Choice really gets us nowhere.

And on this point, why do most Austrians fault the neoclassical paradigm for its failure to adhere to the principles of subjectivism and diffuse knowledge while endorsing Public Choice theory (which is just an application of neoclassical theory)? The only conclusion I can come to is that Public Choice serves their political leanings. (And yes, I know that Buchanan authored what is probably the best book on subjectivism and cost, yada, yada, yada. That does not change the fact that Public Choice Theory is just applied neoclassical theory.)

[Rafe Champion]

Paul Samuelson got a Nobel, he thought that the Soviet economy was booming and rapidly overhauling the US! Is he an authority as well?

[Niko]

@Muller:

The proper thing to do among grown ups is to provide the quote and the source. I didn't want to start a debate on the Nobel, you are the one who used a rather empty argument.

I also happen to think that Public Choice is way to narrow. North is right in his assessment of Public Choice, but, please, try to be a little more precise. It would help your case more.

"why do most Austrians fault the neoclassical paradigm for its failure to adhere to the principles of subjectivism and diffuse knowledge while endorsing Public Choice theory"

Well, it depends on the Austrian. There are Austrians, and there are ... I Well, I can not say because my comment will be deleted for mentioning certain names.

[James McClure]

Rafe,

He thought so...

[Peter Boettke]

Have any of you ever read James Buchanan, or Vincent/Elinor Ostrom? The idea that all they are doing is an appendage to neoclassical price theory is quite false.

I suggest very strongly that before this conversation continues that individuals should read Buchanan's work such as What Should Economists Do?, or Cost and Choice, or The Economics and Philosophy of Constitutional Contract; and Ostrom's The Meaning of Democracy and the Vulnerability of democracies. And also read Vincent Ostrom's essays on Epistemic Choice, and also Elinor Ostrom's "A Behavioral Approach to the Rational Choice Theory of Collective Action."

[Niko]

@Professor Boettke:

A good suggestion.

[car insurance quotes]

The political parties keep bickering back and forth it seems that it will be hard to find common ground until the 2012 election is over.

[austrian away]

Yes, Dr. Boettke has a point. What Buchanan has written is perhaps a bit different from what Public Choice stands for. Buchanan is great in Cost and Choice and What Should Economists do? And Dr. Boettke is right in asking us to read these pieces. But would Dr. Boettke also deny that Public Choice stands for this proposition: government officials are not selfless; indeed, they act to maximize their own self-interest which routinely results in logrolling, rent seeking, and agency capture?

[Roger Koppl]

"Public Choice stands for this proposition: government officials . . . act to maximize their own self-interest" Well, "stands for" is nice and vague and probably impervious to evidence. But in The Calculus of Consent, Buchanan and Tullock quite explicitly that the assumption of narrow self-seeking is *not* essential to their analysis. Their argument “does not depend for its elementary logical validity upon any narrowly hedonistic or self-interest motivation of individuals in their behavior in social-choice processes.” It depends only on the more mild “economic” assumption that “separate individuals are separate individuals and, as such, are likely to have different aims and purposes for the results of collective action” (Buchanan and Tullock, 1999, p. 3).

[Peter Boettke]

Matt,

It depends on the content of the utility function. To operationalize, the self-interest proposition has a certain content. But that can change. I recommend that you look at Michael Munger's recent contribution to JEBO on behavioral public choice, or for that matter the now classic work in behavioral public choice, Timur Kuran's Private Truths, Public Lies.

The sort of critique offered by many of the "critics" of public choice, are built on a rather caricature reading of public choice.

Is North's co-author, Barry Weingast, a sterile public choice theorist, or a great example of the new sophisticated institutional political economy that North is suggesting? Weingast's is best known for his work on structure induced equilibrium models of politics --- the industrial organization of congress, or perhaps his work on market preserving federalism.

How about the most recent work of Tim Besley --- e.g., Principled Agents, or Pillars of Prosperity? Is that public choice, or something else? Acemoglu? Robinson? Shleifer? Name me anyone in political science that has explained the working of government and its impact on the economic system that is more insightful than these guys, let alone more classic public choice folks such as Tullock, or Tollison, or Wagner or Holcombe.

BTW, Matt, I would be fascinated to hear your reaction to Wagner's two most recent books --- Fiscal Sociology, and Mind, Society and Human Action.

[austrian away]

Yes, I feel like I should put my tail between my legs now. I really don't know enough about the literature on Public Choice to be commenting in the way that I have. I just am naturally averse to any theory that suggests "intelligent design" is possible -- and I just always assumed that Public Choice looked at how self-interested politicians react and respond to certain incentives in order to maximize their own personal gains (whether it be more votes, changes in regulation, receiving government benefits, etc. etc.). I mean, I always associated it with the "concentrated benefits and diffuse costs" concept. Now, I know people like Boettke and Horwitz would be the first to criticize this theory if it *really* was about how politicians "intelligently design" the political process, so surely there is something more to Public Choice than that intuitive assumption. I just can't see what it is (or, again, why great scholars like Boettke and Horwitz are interested in this sort of thing). But I really don't know enough to comment on the literature.

[austrian away]

*** And just to clarify, *if* Public Choice is really about how politicians "intelligently design" the political process, the Austrian then has quite the burden in explaining how this is possible when bureaucrats cannot "intelligently design" a market economy. Or am I wrong in assuming that the "intelligent design" principle applies to Public Choice Theory?

I am sure that you could say that there is a difference between intelligent design and incentives, and that the political process merely creates "perverse incentives" for political actors, but if that were the case, why not just cite Alchian's 1950 paper and say, So what?

[Roger Koppl]

austrian away:

Buchanan and Tullock were saying that government officials are neither more selfish not less selfish than others. Or at least that is the default assumption until and unless satisfactory reasons are given to deviate from it. Thus their basic motivational assumption is consistent with the claim that the democratically elected representatives of the people have an incentive to concentrate benefits and disperse costs.

I'm not sure what you mean by "intelligent design" in this context, but I don't think any public choice or Austrian types attribute godlike powers to state actors. Maybe you mean that the array of programs, regulations, laws, governance rules, legal opinions, and so on all fall under one (selfish?) coherent plan? I don't think any Austrian or public choicer would say that either.

Your reference to Alchian escapes me. Certainly, details matter. Spinning out the consequences of dropping the assumption of asymmetrically selfless state actors is not easy. It is not all there in Alchian 1950. It is not enough to just say "incentives matter." That would be like saying you don't have to read all 13 volumes of Euclid's Elements, just the axioms.

[Steve Horwitz]

Public choice attempts to explain patterns of political outcomes as the unintended consequences of broadly (as Roger says - no more or less than the market) self-interested behavior under the sets of rules that define the political exchange process. There not even a WHIFF of "design" there, at least not at any level but the constitutional.

[austrian away]

Here is what a co-blogger of this blog once wrote:

"Politics, as Dr. Sautet writes, "is all about promises made and promises broken, vote trading, bureaucracy capture, self-interest, ignorance, and perverse incentives. Politics is done by interest, not by principles."

Now, if you want to understand this sort of thing in the context of institutions and rules, then you could, I suppose, take a very Popperian "unintended consequences" approach to the political process -- which is to say, people cannot *actually* achieve what they set out to achieve. That would be just fine. But don't Public Choice theorists place primary emphasis on "intentions" --- ie., political actors *intend* to make promises in order to break them in the future so that they can capture personal gains and disperse the costs onto larger, unorganized groups? That the political exchange process is all about "vote trading" "bureaucracy capture" and "self-interest" (all words by Sautet). That direct correlation between *intentions* and *results* is what is wrong with Public Choice. Now, if there were no direct connection, then we shouldn't care at all about what political actors actually *intend* when they engage in the political exchange process (and that is what I was getting at with my 1950 Alchian reference). But I don't think Public Choice theory would accept that argument -- doesn't the theory put primary emphasis on "intentions"??

[Steve Horwitz]

Read some public choice Matt. The foundation is "politics as exchange." The point was to show that political rules create a context for exchange that, in turn, produces patterns of consequences that are often socially harmful.

Take deficits. Public choice does not say that politicians INTEND to run persistent deficits. It says that they are vote seekers, and when vote seekers interact in a legislative context, they will support spending programs and hesitate to raise taxes with the UNINTENDED consequence being persistent deficits.

Politicians don't intend to create deficits any more than entrepreneurs intend to clear markets. They seek their own broad interests and their interactions under the set of rules and institutions produces patterns of unintended consequences that are more or less desirable.

[Roger Koppl]

What Steve said. Also, Matt, it sounds almost as if you're a little fuzzy on the idea of spontaneous order. I dunno, but sort of sounded like it. So . . .

Spontaneous order theory also places great emphasis on intentions. Each action aims at an end; the overall all result of many such actions in unintended. This notion does *not* require failure of any of the individual actions unintendedly generating the overall result. Example: In English, the word "surf" won out over "navigate" and "browse" to identify the activity of examining first one and then other web site. How did this happen? Well, no one commanded it. Each of us just chose, in each speech act nominating such activity, the word or phrase that seemed best able to communicate his or her meaning to his or her audience in the context of that particular speech act. For various reasons including chance, a point came at which "surf" was perceived as the common term, which perception strengthened the disposition to choose that word rather than a rival. It might have gone a different way. In Italian you you do not surf the web, you navigate ("navigare") the web. This is the story of the unintended emergence of a new meaning for the word "surf." At no point in this story of unintended consequences is it necessary to assume or imagine that anyone's communicative intentions were frustrated by poor choice of word. At every point in the story it was necessary to assume that communicators *intended* to convey the idea of examining first one and then other web site. So this story of unintended consequences puts "primary emphasis on intentions."

Does that make sense, Matt?

[austrian away]

Yes, thank you very much for the clarification.

And me "fuzzy" on spontaneous order stuff? I'd hate to think that! I have read SEVERAL times the opening chapters of Don Lavoie's book "National Economic Planning." I don't think anyone who has done that can ever be "fuzzy" on spontaneous order stuff. Let that be a note to everyone reading this blog. That is THE source to consult on spontaneous order. Don Lavoie sets it all out beautifully in the opening chapters of his National Economic Planning book.

[K Sralla]

"There not even a WHIFF of "design" there"

I agree in the sense you are responding to Matt, but certainly Buchanan and Tullock and Ostrom(s) all recongnize that if one desires to intentionally guide the trajectory of political outcomes, you can't change the nature of the actors, but must change the rules of the game.

In this sense, we must think about two kinds of rules, ie those that have evolved through what Hayek calls "group selection", and other rules that are intentionally designed with an intended effect in view.

Buchanan *is* mildly critical of Hayek in places for not being more proactive in "experimenting" with rules and regulations to intentionally change outcomes. When Boettke advocates a reverse revenue system or a constitional balanced budget amendment, these are certainly designed changes to the rule structure that tie the hands of the political actors.

In this sense, public choice and New Institutional economics does involve deliberately thinking about designed vs spontaneous rules and institutions, and what the possible outcomes of the rule changes might be.

Would you guys agree with this characterization?

[Roger Koppl]

Matt: I'm glad you are not fuzzy on spontaneous order theory. I was thrown off by your equation of "unintended consequences" with "people cannot *actually* achieve what they set out to achieve." As you know, given your understanding of spontaneous order theory, that's a false equation. So you didn't say what you meant. But then I don't know what you meant. You seemed to be saying that the idea of "unintended consequences" was somehow inconsistent with the idea that "political actors *intend* to make promises in order to break them in the future so that they can capture personal gains and disperse the costs onto larger, unorganized groups." (There's a side point about breaking promises that I'll slide over.) So I guess I just don't know what you meant by those remarks given that you were not confused on basic spontaneous order theory, which sharply distinguishes unintended consequences at the systems level from intended consequences at the level of individual action. Please clarify, Matt.

[austrian away]

Dr. Koppl,

I was trying to frame my questions in the context of certain quotes I have read in relation to Public Choice Theory (see Sautet and North's quotes above). So, the confusion really was a result of my trying to articulate an objection to Public Choice based on the quotes I provided above. I agree 100 PERCENT with your "false equation" statement. Still, the tone with all this Public Choice theory stuff has always seemed to me that we need to be wary of politicians -- and the political process -- because of their ability to manipulate "politics" in order to privilege their own personal interests. IF you ask the man on the street what Public Choice is all about, that is probably the response you will get, i.e., Politicians! All they want to do is line their own pockets! They don't care about the REAL americans, yada, yada, yada. I was trying to respond to that conception of Public Choice. But as Dr. Horwitz very helpfully pointed out, that is not a correct reading at all --- Dr. Boettke even referred to it as a "caricature." So, all I can say now, having not read deeply into the literature, is, Thank you for the clarification!

[austrian away]

*** And note K Sralla's comment above. I think it is very good. If I remember correctly, there is a great discussion in Malcolm Rutherford's book on NIE & OIE that discusses the differences between Hayek and Buchanan on exactly the point to which K Sralla refers.

[True Religion outlet]

A walk around the Eo estuary between Figueras and Castropol at high tide was very productive. There were a pair of Kingfishers flying up and down the shoreline and perching on the rocks. It is always unusual to see Kingfishers doing this as in the UK they are normally just seen on freshwater rivers and lakes. There were also Bar Tailed Godwit, Grey Plover, Greenshank, Curlew, Dunlin, Common Sandpiper, Little Egret, Mediterranean Gull and Peregrine Falcon.