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Why Economists Should Not Be Allowed to Vote September 29, 2007

Posted by Dwight and Lynn Furrow in Current Events, Dwight Furrow's Posts, Political Philosophy.
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Economist Bryan Caplan has written a book entitled The Myth of the Rational Voter: Why Democracies Choose Bad Politics , in which he argues that voters are irrational because they don’t think like economists.

According to Caplan, the typical voter favors government regulation of the economy to avoid economic bad times, is suspicious of excess profits by corporations, wants to protect domestic industry from foreign competition, and puts too much value on existing jobs. These are irrational beliefs because they violate economist’s faith in minimally regulated free markets.

So workers are irrational if they don’t want their jobs to go away, prefer to avoid the negative social consequences of recessions, and don’t like cheaters and thieves? There ought to be laws against economists making pronouncements about rationality, and perhaps more studies on the peculiar psychopathologies to which economists seem susciptible.

As Louis Menand writes in his review of this book, “Most people, even if you explained to them what the economically rational choice was, would be reluctant to make it, because they value other things—in particular, they want to protect themselves from the downside of change. They would rather feel good about themselves than maximize (even legitimately) their profit, and they would rather not have more of something than run the risk, even if the risk is small by actuarial standards, of having significantly less.”

Maximal economic efficiency is not the only thing we value–it is not irrational to value stability, risk reduction, or moral virtue.

If Caplan is the exemplar, contemporary economics is utilitarianism gone completely off the rails.

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Comments»

1. Huan - September 29, 2007

I actually don’t understand the whole ayn rand’s objectivism thing these guys have going on, i have little understanding of the economy. But if the market was free, doesn’t that just mean the class division is going to go out of control? That seems to be a contradiction for objectivism, for example the entry on poverty from a while back shows how even with regulations the system still creates consequences that makes objectivism apply to a limited group. That would defeat its point wouldn’t it?

2. Dwight Furrow - September 29, 2007

Huan,

Good question but the answer is very complicated. Someone like Caplan will argue that what creates class divisions are artificial barriers to people entering the market. With regard to international markets, policies such as tariffs, price supports, industrial policies and other regulations protect domestic markets from foreign competition, which keeps under-developed nations from competing and thus keeps them poor. Caplan is claiming that voters like these policies because they protect jobs, but from an economist’s point of view, they are inefficient because they don’t maximize growth of the world economy and don’t allow developing nations to increase their wealth.

The problem with this argument is that the absence of regulation doesn’t really help the disadvantaged. Free market competition creates winners and losers and the winners, because they have economic power, can shape the rules of the game in their favor so the competition is rigged. Thus, we need government regulations to prevent this kind of concentration of power. The issue is not free markets vs. regulation but who gets to make the rules.

It is a legitimate economic debate about how much regulation to have–some regulations do unnecessarily restrict access to the market and growth so good economic policy is a trade off.

In my comments I wasn’t really addressing the issue of what the proper trade offs are. I was simply pointing out that it is not irrational for voters to want security and risk reduction even if that means not maximizing economic growth.

3. Huan - September 29, 2007

Ya it seems to me that the whole winner loser thing makes objectivism and its free market completely flawed.
The whole domestic protection thing, does that work both ways? That seems to be a little unnecessary for under-developed nations..
Wanting to be protected losing jobs and corporate domination though..
I could easily say economists shouldn’t vote cause they screw over lives of poor folks like me 😀


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