Ideas of Interest From the Web: Values, Voting, and Corruption

~ Frederic Sautet ~

While the US was celebrating Thanksgiving last week, Europeans were reflecting on their values at the International Conference on the Values of Europe. I haven’t had a look at the data but this kind of research can be useful to understand better why many European democracies have been in one way or another mired in high unemployment/low growth situations since the late 1970s. The idea of course is that if voters have biased beliefs (i.e. biased values), this may generate bad policy in a majoritarian parliamentary democracy setting (e.g. Bryan Caplan’s view). Keep in mind that many intellectuals in France (and elsewhere in Europe) hold the view that the Welfare state model is not negotiable (even if it brings the rest of the economy down).

In relation to voters’ biases, check also this recent paper by Bischoff and Siemers, which tries to put together Caplan’s view and the idea of retrospective voting (i.e. voters punish the incumbent for poor and reward him for good macroeconomic performance). They argue that because voters not only hold biased beliefs but also vote retrospectively, democracies are bound to choose mediocre policies because parties always offer strategic mixtures of policies.

Finally, would there be a link between democracy, bad policies, and corruption? It all depends on the strength of the institutional framework in place. Check out the new Corruption Perceptions Index 2011 and its result map: Common Law and Nordic countries fare better than other democracies. Overall, corruption is least where institutions are most solid. Nothing surprising. But the index is based on perceptions. So I am not sure it sees continuous deficit spending, unfunded (pension) liabilities or poor procurement laws (among other things) as corruption. Depending on how one defines it; actual corruption may be much higher in Western democracies.

Comments

[Tyler Watts]

Fred,

Wouldn't you define corruption as "illegal plunder," whereas what happens in the western democracy/ social welfare state is "legal plunder" (a la Plunkett's "honest graft")?

So we can be pretty well non-corrupt, but nonetheless our welfare/ transfer/ legalized plunder schemes are still sinking our overall economic performance (e.g. my dad and his multiple thousands $ of USDA farm subsidies).

So yeah, my initial reaction is that bona-fide corruption might not be that important, or that big an indicator of economic weakness.

[Frederic Sautet]

Tyler,
Technically you are right, but what if legal plunder is contrary to the spirit of the Constitution? Is that corruption or not? Here I guess we can refer to the distinction between venal and systematic corruption (cf. John Wallis's work). Venal corruption is illegal plunder, but systematic is when corruption becomes legal and systemic. It implies some idea of law vs legislation I guess. It may be a matter of semantic, but I don't think so.
Fred

[Jake Roundtree]

I just took a look at Bischoff and Siemers abstract and it seems like their work completely ignores the public ignorance literature. First of all they the claim that policy makers face a trade-off: "offering popular yet economically harmful policies increases the chance of being elected today, but decreases the chance of re-election."

But how can we claim that they see this as a trade-off unless we also maintain that they know that the policies they are advocating are bad, which does not seem to be the case (I would like to see the empirical evidence that suggests otherwise).

And another note, since voters are ignorant of the policies that are passed, who passes what policies and what policies are responsible for the bad(or good) macroeconomic performance, then why should retrospective voting serve as a self-correcting mechanism....

[Casandra]

I am greatly amazed with your insight. This is an incredibly wonderful comment, thanks for sharing this.