Public Choice

Chapter 50: Public Choice

One of the key insights of liberal political theory is that a peaceful and prosperous society requires the rule of law to ensure accountability for actions.

Core Idea of Public Choice Theory

The people who administer the rule of law are human beings with their own desires and motivations.
Public Choice theory applies the same principles to governance as to a commercial society, structuring opportunities and rewards.
The people who run governments are similar to those who run businesses or households; some seek money, others power. Those who compete for power likely want to use it for something.

James Buchanan and Gordon Tullock

James Buchanan won the Nobel Prize in Economics in 1986 for his work on the implications of this insight.
Buchanan credited Gordon Tullock with the idea that "if there is value to be gained through politics, persons will invest resources in efforts to capture this value."

Key Points Regarding Tullock's Insight

  • Tullock did not claim everyone is selfish.

  • If power is valuable and people compete for it, they have their reasons.

  • The amount spent competing for power is limited by the value of the prize.

  • Increasing spending by candidates indicates that the "prize" of power is becoming more valuable.

Tullock's Perspective

  • Tullock's view is not necessarily pessimistic.

  • He questions what happens if political leaders are like everyone else, responding to costs and benefits.

The Role of Rules and Frameworks

Adam Smith highlighted the need for legislators to establish a framework of rules for civilized interactions in the marketplace.
Public Choice theory suggests that legislators themselves should operate within a similar civilizing framework of rules.
Instead of simply seeking "better people," the task is to design a framework that guides imperfect individuals to act in the common good.

Challenges in Political Philosophy

The rules of the game are built and rebuilt from within by the players themselves, who compete, negotiate, and compromise.

Risks of Overconfidence

In the marketplace, overconfidence is checked by trading partners who reject inadequate offers, limiting potential damage.
However, those seeking political power to achieve a vision may disregard the concerns of those who are unwillingly funding their dream.

Limits on Power

When individuals acquire the power to rule, what prevents them from pursuing personal agendas at the expense of others?

Constitutional Democracy

Buchanan and the Framers of the American Constitution believed that the constitutional aspect of constitutional democracy limits the actions of democratically elected rulers.
In a constitutional democracy, certain things are beyond the reach of majorities.
For instance, the winning party cannot eliminate the minority party's right to vote.

Rule of Law and Vigilance

Legislators must obey the law, but there is no guaranteed method to ensure this.
The Framers of the Constitution understood this and emphasized that eternal vigilance is the price of liberty.

Division of Power

The U.S. system divides power among the legislative (Congress with two houses), executive (President), and judicial (Supreme Court) branches to prevent any one branch from becoming too powerful.
Power is further divided between federal and state governments.
Freedom of the press, enshrined in the First Amendment, is intended to constrain even the highest offices.
These measures are designed to create a rule of law that imposes constraints on those in power.

Discussion and Exercises

  1. How does Public Choice portray politicians and government workers? What are their motivations?

  2. Why might a society wish to limit the actions that a government may take?

  3. Public Choice economics applies observations of human behavior in markets to political concerns. Should it? Are politicians motivated by the same sorts of things as everyone else, or are they fundamentally different?