Who Watches the Watchmen?
Matt Yglesias says he doesn't "get" why Tyler Cowen would describe public-choice theorem as important.
Here's why.
There's much more to public choice than a cynical assertion that politicians act in self-interested ways. Public choice (like so much else!) builds on an insight of the great economist Kenneth Arrow's that it's possible for a group of voters to confront a set of choices a, b, c where: a > b > c > a
Think of the children's game rock, paper, scissors, and you get the idea.
That may not look very exciting, but it's truly the E = mc2 of political science.
Think how often we talk of "what the people want." Arrow demonstrated that "what the people want" depends entirely on the order in which the choices are presented.
It's a familiar concept in primary elections. You can imagine for example the rank order Romney > Obama > Perry > Romney. Party activists worry about that rank order all the time.
The implication of this rank ordering is very radical though. It means that whether the Republican or Democrats win the above election depends less on what "the people" think about Democrats vs Republicans and much more on the decisions and actions of the smaller group who decide between Romney and Perry.
What is true in the context of a big general election becomes ever more intensely true in a legislative body.
Imagine somebody introduces a new highway bill. Imagine that the highway bill can be paid for in 2 ways, either with a new toll or a new gas tax. Now imagine the rank order
Highway Bill with Gas Tax > No Bill > Highway Bill with Toll > Highway Bill with Gas Tax.
If some small group can gain control of the congressional committee in which the choice is made between the toll and the gas tax, they aren't just determining the finance mechanism. They are determining the fate of the entire bill. The larger legislature is ancillary to the real action; control the agenda, and you control the outcome.
The next implication: politics is inescapably elitist and oligarchic. If you wish to understand "who gets what, when and how" (to adapt an old definition of politics), you need to study the behaviors of the small groups that control agendas, not the big groups that confront a pre-determined menu of choices.
Once you focus on that issue, the expectedly self-interested and self-seeking nature of political elites becomes much more than the ho-hum cynical truism dismissed by Matt Yglesias.
Suddenly a slogan like "economic democracy" (which once enjoyed a vogue as a euphemism for social democracy) is exposed as meaningless. Transferring decisions from the market to the legislature does not transfer decisions from the few to the many. It only transfers decisions from one type of "few" to another - a few motivated by profit to a few motivated by ... well that now becomes a very interesting question, doesn't it?
