Predicting the future, even in a game with simple rules and few players is incredibly difficult, even for experts. We might imagine that convincing people of the truth of this apparently uncontroversial proposition would be easy. (Consider how frequently the predictions of the best and brightest fail.)
But we would be wrong. Politicians, bureaucrats, and other governmental actors regularly, if indirectly, claim the ability to predict the future, and we readily believe them. They claim to be able to see the future when they purport to know what will happen when they intervene in the operation of that most complex of all complex systems, society itself.
Legislators and administrators are too sure of their plans for the rest of us lowly subjects, who hold no power to make rules for others. And their plans suffer from still other flaws, among them a systematic blindness, not only to potential unintended consequences but also to other available options.
Too often, economists and other experts compare available market solutions, with their perceived failures, to government solutions — not as we actually find them, but idealized, freed from the kind of rigorous analysis applied to private sector actors.
Sound economic thinking — what economists Peter Boettke and Matthew Mitchell call “applied mainline economics” — asks simply that we be careful and consistent, to realistically consider existing alternatives rather than abstracting government away from the shortcomings and limitations of other human endeavors. Public choice theory “allows us to compare the actual performance of government with that of the market, neither of which is perfect.”
As Herbert Spencer observed of “the so-called ‘practical’ politician,” “The theory on which he daily proceeds is that the change caused by his measure will stop where he intends it to stop.”
Needless to say, it is remarkable how seldom the plans of politicians and expert bureaucrats stop where they are intended to stop. The incalculable dynamism and complexity of society make predicting anything beyond “proximate results” impossible. Lawmakers and regulators, assured of the wisdom of their plans, rule out the possibility of more remote repercussions, of the costs associated with those plans. Infected with this error, political and policy debates are missing a key piece of the puzzle of matching means to ends.
Boettke draws a distinction between the normative project of “economic institutional design” and means-ends analysis, whereby you “take the ends of the policy proponent as given and you assess the efficiency of their chosen means to achieving their chosen ends.” This simple pivot turns us away from inane partisan arguments, and toward considerations of worthwhile questions about choosing policies that are likely to achieve desired results.
This is not to contend that public policy debates could ever be value-free in the sense of hard sciences like mathematics or physics; politics and policy will and should always be the realm of normative claims and ethical considerations. But we should nevertheless, as Boettke counsels, take a policy proponent’s stated beliefs and goals at face value, challenging instead the ability of the remedy under consideration to accomplish the goal as articulated.
Public choice theory teaches that governmental actors are, in an important sense, no less market actors, at least in that they have their own incentives and are likewise constrained by information problems; they just exempt themselves from the very rules that make real free markets function effectively. That is, they are allowed license to coerce and compel, where individuals in free markets must bargain and trade.
Special interests know this and reorient their activities around political centers of gravity, seeking privileges. Aware that political power is often the straightest path to power in the marketplace and thus wealth, commercial interests — better organized and funded than the dispersed masses — focus their attentions on “performances of obsequiousness and supplication,” to borrow the words Philip J. Stern used in describing the rise of the British imperial “company-state.”
The government is not immune to such blandishing performances. Occupants of powerful positions within it are likely to be deeply implicated in the activities of powerful industries; indeed, that this is and should be the case is among the key assumptions of the modern administrative state.
Progressives have misapprehended the nature of both subject matter expertise and political power. That qualified, credentialed experts should, through scrupulously crafted regulations, execute the nation’s laws seems to them a no-brainer.
Progressivism is based in large part on the belief that such a sweeping delegation of the law-giving function is simply pragmatic: Trained authorities just know better. This seems to make sense on its face.
Yet there can be no view from without: Lawmakers and regulators cannot stand above and outside of society, the supposed mechanism upon which they propose to act, examining it impartially, objectively. As we have noted, they have their own motivations and incentives, like anyone else. Laws do not implement and enforce themselves, do not reflect some ostensibly pure embodiment of expert impartiality and scientific objectivity; if this was the true dream of the progressive administrative state, then the reality has been more susceptible to gaming and abuse.
These political and economic insights should change the way we think about good policy. We should ask what it is about the design of the proposed government solution that allows it to overcome the perceived problems with either the existing state of affairs or possible free-market reform measures.
Even assuming these other approaches are suboptimal, we should take seriously the possibility that a government failure in the subject area could be worse still. Taking this possibility seriously means studying and scrutinizing the empirical record of policies similar to those being proposed; it means not simply taking for granted the wisdom of our government overlords’ designs for society.
[Originally Published at Investor’s Business Daily]