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Nicholas Kristof on Bryan Caplan
Yet while crowds may be good at making predictions, they’re often lousy at recognizing their own self-interest. That problem is explored in the best political book this year: “The Myth of the Rational Voter: Why Democracies Choose Bad Policies.”
Here is the gated NYT link.
Posted by Tyler Cowen on July 30, 2007 at 10:43 AM in Books | Permalink
Comments
Why is it that articles in praise of something (a book, a record, a movie) are invariably more bland than those critizicing them?
Posted by: Melvin at Jul 30, 2007 11:13:49 AM
I agree with Melvin- Louis Menand's article, though a flawed critique, was more interesting to read.
Perhaps in positive reviews, critics focus too much on the author's opinions and not enough on their own, and in doing so tend to undermine their writing style.
Posted by: Dan at Jul 30, 2007 11:45:34 AM
Caplan needs to explain how the dumb, easily led voters are able to make intelligent choices when it comes to the marketplace.
Isn't the basic axiom of the free market that all parties will act to maximize their benefit?
If this isn't true then it implies that markets need controls so that the sheep can be protected from doing harm to themselves. Logic says that this can't be one of the parties to the transaction. So letting the market sort things out is logically inconsistent.
Posted by: robertdfeinman at Jul 30, 2007 12:29:04 PM
Robert,
This is a good critique of the apparent dichotomy between "smart market actors" and "dumb/irrational voters." I believe Caplan makes a good stab at explaining why we are so good in our market dealings, but bad when voting. He deems the phenomenon the "near neoclassical demand curve", and the basic intuition is that irrationality is an economic "good", and where consuming this irrationality won't cost much (such as in voting where votes don't count much) we will consume more of it.
Posted by: Jim Outen at Jul 30, 2007 1:06:07 PM
Maybe some of the posters/bloggers who have read this book can help me out. I have read reviews/summaries of this book, I've heard Caplan talk on Econtalk about the book as well. I found most of interesting and I found his argument quite persuasive. I "buy" it.
Yet (or perhaps, therefore...) I don't feel compelled to purchase the book. ... Unlike Bottom Billion by Collier, I am not as intrigued by the details and nuances of Caplan's arguments.
Is it worth it? Is the irrational voter argument worth a book or a newspaper article?
Posted by: Christopher at Jul 30, 2007 1:12:38 PM
Caplan needs to explain how the dumb, easily led voters are able to make intelligent choices when it comes to the marketplace.
Oh, okay. He did that in MotRV.
Next?
Posted by: Person at Jul 30, 2007 2:59:49 PM
Caplan restates the Platonic position on social structure. Every age brings back the same arguments dressed in the latest fashion.
The fundamental philosophical division is between those who are elitist (and authoritarian) and believe in the benevolent king model and those who think that the people should guide the own destiny (the democratic model).
Historically there have been very few examples of a successful benevolent ruler. Even if one exists for awhile there is no mechanism in place to ensure that his successor will be another one. The transition from one ruler to another is an arbitrary process which depends upon external factors like a suitable heir or a stable powerful faction. Since there is no rule of law (law being the arbitrary dictates of the ruler) there is no standard succession.
Democracy suffers from a deficiency, but it's not the one that Caplan thinks. The population may be ignorant or easily led, but the interests of the majority have a better chance of leading in the right direction (eventually) than the arbitrary decisions of a ruler. The deficiency is that there is no way to prevent the dictatorship of the majority. The US has been better than many other societies in that its divided, indirect government makes it harder for excess to happen on the spur of the moment.
Even so the record has not been good. The existence of slavery, the near elimination of the Indian population, and the internment of the Japanese-Americans are all examples where the rights of minorities were trampled on. Can a mob be stopped by legal restrictions when it insists on running off a cliff? Ask those in Iraq.
As I said I have never seen a mechanism proposed that will absolutely guard against this overreach. That democracy is imperfect does not mean we should support authoritarianism instead.
Posted by: robertdfeinman at Jul 30, 2007 3:37:19 PM
Mr. Feinman,
Caplan does not suggest authoritarianism instead of democracy. Have you even read the book? How then are you able to make such sweeping generalizations about it?
Posted by: Captain Hook at Jul 30, 2007 4:01:05 PM
Caplan needs to explain how the dumb, easily led voters are able to make intelligent choices when it comes to the marketplace.
Ever heard of the tragedy of the commons? Or seen the data showing ~50% differences in water consumption rates between appartments that are individually vs. proportionally metered? There are myriad examples, both theoretically well-understood and emperically verified, of non-market decision-making leading to Pareto-inefficient outcomes. Voting is simply a poor framework for making decisions that involve trade-offs.
You write a nice homage to Democracy, robertdfeinman, but surely you don't advoate voting as the appropriate framework for deciding, for example, how much steel the U.S. should produce? Assuming you aren't an unrepentent central planner, you must believe there are some decisions that are better-made by the market. How do you decide which decisions should be made by which framework?
Posted by: David Wright at Jul 30, 2007 4:02:39 PM
robertdfeinman, did you even read Bryan Caplan's explanation of "rational irrationality" that underpins the book? You act like you've got some excellent grasp of Caplan's Plato-descended political philosophy, but it appears you haven't even read Caplan's arguments.
Caplan is not primarily arguing against democracy in favor of philosopher kings, but in favor of the market and restrictions on the ability of the government to interfere with it. The Constitution of the United States placed a great many restrictions on the government, and created an unelected Supreme Court that would be largely immune to democracy, even though back then the majority of the population could not vote and furthermore the electoral college system prevented simple majoritarianism. Caplan's point is that this was not unfortunate undemocratic elitism, but actually a good idea.
Posted by: TGGP at Jul 30, 2007 4:05:11 PM
If the public are considered to be sheep than who is the shepherd?
Sorry, you either trust/accept/yield to the wisdom of the public, imperfect as it may be, or you favor the wise ruler model.
I'll refrain from a discussion of how markets can be all wise when the actors are sheep. Free markets are an ideological dream, in the real world those with the most power/knowledge/wealth have an advantage. You can acknowledge this and then try to come up with mechanisms to ameliorate distortions or you can believe in the tooth fairy, your choice.
Posted by: robertdfeinman at Jul 30, 2007 4:33:05 PM
"You write a nice homage to Democracy, robertdfeinman, but surely you don't advoate voting as the appropriate framework for deciding, for example, how much steel the U.S. should produce? Assuming you aren't an unrepentent central planner, you must believe there are some decisions that are better-made by the market. How do you decide which decisions should be made by which framework?"
That's a bit of a straw-man argument, I'm sure Robert as well is aware of the textbook advantages of the free market. But, those textbooks also mention a myriad of cases in which the market doesn't not efficiently produce goods. No one is suggesting government planned production of goods like shoes or steel. But 'goods' like rule of law, basic health care, etc have to been produced as well. I think the question is not so much whether government failure exists, but for what goods gov't failure is large or small relative to market failure.
Yes, this is textbook stuff as well. But if Caplan lashes out at the irrational voter and there is a consensus among economists that the market can't produce everything (I think there is), then the natural conclusion of his book is the philosopher-king model (for producing public goods) Robert is talking about. Or does Caplan actually suggest a anarcho-capitalist society?
Posted by: JSK at Jul 30, 2007 4:34:22 PM
"You write a nice homage to Democracy, robertdfeinman, but surely you don't advoate voting as the appropriate framework for deciding, for example, how much steel the U.S. should produce? Assuming you aren't an unrepentent central planner, you must believe there are some decisions that are better-made by the market. How do you decide which decisions should be made by which framework?"
That's a bit of a straw-man argument, I'm sure Robert as well is aware of the textbook advantages of the free market. But, those textbooks also mention a myriad of cases in which the market doesn't not efficiently produce goods. No one is suggesting government planned production of goods like shoes or steel. But 'goods' like rule of law, basic health care, etc have to been produced as well. I think the question is not so much whether government failure exists, but for what goods gov't failure is large or small relative to market failure.
Yes, this is textbook stuff as well. But if Caplan lashes out at the irrational voter and there is a consensus among economists that the market can't produce everything (I think there is), then the natural conclusion of his book is the philosopher-king model (for producing public goods) Robert is talking about. Or does Caplan actually suggest a anarcho-capitalist society?
Posted by: JSK at Jul 30, 2007 4:40:03 PM
Caplan argues that the public should defer to the experts, like economist, to make decisions rather than democracy. But given the record of experts, like economists that strongly argued that the 1929-33 economic collapse should have been be allowed to run its own course or who advised the Fed to raise reserve requirements in 1938, why should people in a democracy defer judgment to such experts? Surely, anyone and everyone can make their own list of policies advocated by so called experts that turned into disasters. And there are plenty on both sides of the political spectrum. After all one of Caplan's prime examples of experts "knowing" the correct policy is the minimum wage --where at best what Caplan claims to "know" is highly questionable.
Posted by: spencer at Jul 30, 2007 4:44:10 PM
Markets, even with power asymmetries such as when some have more "power/knowledge/wealth" may still outperform democratic decisions making processes in some instances.
Caplan talks about how we should trust economists more than the public when considering economic questions, but he does not endorse the benevolent king solution (in my recollection). Instead he stresses that we should decide where the market shows relatively better performance, and where democracy has comparative advantage in deciding policy, instead of blankly assuming democracies are always superior.
Posted by: Jim Outen at Jul 30, 2007 4:53:51 PM
"But given the record of experts, like economists that strongly argued that the 1929-33 economic collapse should have been be allowed to run its own course..."
It would have been better had we let the 1929-1933 economic collapse run its course. This means no Smoot-Hawley, no bank holidays, no nothing. Just let the 1920s malinvestment caused by a huge expansion of the money supply work itself out. Instead, we got the New Deal, government intrusion into all aspects of the economy and our lives, a prolonged depression only broken by the stimulus of war, a neutered constitution and an authoritarian 4 term president. Boy those silly economists like Hayek and Mises who saw the world as it is...
Posted by: joe at Jul 30, 2007 5:20:22 PM
Robertfeinman, you write like you are some sort of democratic centrist and Caplan is some sort of radical ararcho-capitalist. But in fact you are proposing the radical solution, a democracy stripped of all extra-democratic constitutional constraints. And Caplan is merely proposing a marginal expansion of the large sphere in which we already let markets, rather than voting, make decisions.
Posted by: David Wright at Jul 30, 2007 5:31:33 PM
OK, I haven't read the book but my first response to the buzz is as follows:
1. Who claims that the voter is "rational?" The issue is not even on the table. Democracy is not based on voters' "wisdom" but on the fact that every other system is even worse. Starting from such a premise that we have democracy because the voter is rational seems a sure way to get to whatever conclusion you like.
2. Who says that it is irrational to vote for programs (via surrogates in legislative bodies or through bond issues) which provide individual benefit by transferring costs to the commons? Sounds quite astute to me from the individual's perspective and is what every person in business tries to do in just about every transaction: minimize costs by transferring costs to others.
Please remember that (taking a bond issue as an example) no one asks the voter anything more than a "yes" or "no." There is never a (second) question asking whether the voter believes that the measure is a socially-beneficial one. As with every other personal decision -- whether market or not -- the question is only "Do you want to buy?"
Posted by: David Sucher at Jul 30, 2007 5:43:54 PM
One of the problems in deferring to "experts" is that in many cases there is no consensus as to what to do.
Let's take a non-economic example - treatment of illness. There would be no need for second or third opinions if diagnosis and treatment were clear cut, but they're not. In many cases the information needed to make the best decision is unknowable. This leads the common "I trust my doctor". What happens when the doctor says "we could try A or B, you decide"? We are not experts so on what basis do we make a choice?
In the case of public policy choices there is even less agreement. Not only do people not agree about what course of action to take in the future they can't even agree on which actions in the past were responsible for the subsequent events. Did the change in tax rates produce a rise or fall in economic activity, or was some other factor responsible? Did our siding with foreign leader X cause the subsequent problems/solutions or were their other factors that were more important?
So what is to be done? Once again I point to imperfect democratic structures. We delegate the setting of policy to elected officials. They, in turn, delegate the enforcement of these policies to (usually) appointed officials. All of these people can make mistakes, be corrupt, or be politically motivated. People are like that.
The issue is how to remedy things when they get off the rails. The best way is to allow the people to replace those who no longer best serve the public's interests. Lately we have see this become increasingly more difficult.
The cost of running for office has gotten so high that normal folks can't afford it. Those who can are either independently wealthy or plugged into the corporate sector. The consolidation of the media means that the number of places that a candidate's voice can be heard has declined. To reach voters now means TV. This is very expensive.
We have moved from one person one vote to one dollar one vote. This doesn't bode well for the future of real democracy.
Posted by: robertdfeinman at Jul 30, 2007 5:44:41 PM
@Jim:
"Markets, even with power asymmetries such as when some have more "power/knowledge/wealth" may still outperform democratic decisions making processes in some instances."
Yep, but by saying this you also imply that collective decision making, even when it is plagued by voting cycles and the influence of special interest groups, may still outperform markets. Your (and mine, for that matter) insight isn't really new, and that's my (superficial) option about Caplan's book: what he's saying isn't really new. Arrow's impossibility theorem anyone?
@David:
"Robertfeinman, you write like you are some sort of democratic centrist and Caplan is some sort of radical ararcho-capitalist. But in fact you are proposing the radical solution, a democracy stripped of all extra-democratic constitutional constraints."
I don't believe Robert is actually proposing something. I think he means that Caplan, by emphasing voter irrationality, is implicitly proping up the age old idea of the philospher king.
"And Caplan is merely proposing a marginal expansion of the large sphere in which we already let markets, rather than voting, make decisions."
Haven't read the book, but could you name an example.
Posted by: JSK at Jul 30, 2007 6:48:22 PM
Ah, after some googling I found some of Caplan's proposals...
[quote]Another way to deal with voter irrationality is institutional reform. Imagine, for example, if the Council of Economic Advisers, in the spirit of the Supreme Court, had the power to invalidate legislation as "uneconomical." Similarly, since the data show that well-educated voters hold more sensible policy views[13], we could emulate pre-1949 Great Britain by giving college graduates an extra vote.[14][/quote]
Yes, giving 'smarter' people more (political) power than average folk. That sounds pretty philosopher-kingish to me. Guess you were right, Robert Feinman.
Posted by: JSK at Jul 30, 2007 7:02:10 PM
I have an idea. If there is a problem between competing "experts," let's just let the voters decide which one is "super-expert."
Posted by: David Sucher at Jul 30, 2007 8:25:00 PM
There are times when I wish I had the knack, or perhaps the chutzpah, to comment knowledgeably about books I haven't read. It must be nice to know, a priori, that the criticisms I have of the brief synopses of the author's arguments I read about on a blog are necessarily unanswered in the book itself. Indeed, they must be, since I can't think of anything the author possibly could have written to answer them!
Posted by: asg at Jul 30, 2007 8:27:44 PM
@David: I noticed that on blogs, sarcasm is a sign of having nothing sensible left to say.
@asq: I quoted the author literally. It appears Robert had the right idea about his book, so far as I am concerned.
http://www.cato-unbound.org/2006/11/06/bryan-caplan/the-myth-of-the-rational-voter/
I hope you don't mind me being critical of what the author himself says about his own book.
Posted by: JSK at Jul 30, 2007 9:55:36 PM
Well its clear, the gulf between blogger and posters is getting larger every day. Now people are having discussions on a book that they make no bones about not having read! Wow! Some googling here, reading an exerpt here and viola--brazenly discussing a book that has not been read. This perhaps goes to the heart of Kaplans arguments. People vote for candidates
and policies of whom they know little about (o.k. maybe the read a snippet on google or a soundbite by the candidate). Based on some of these posters--kaplan is right. Me and TC will take 30 votes each and JSK gets minus-2. Feinman gets minus-5 for not reading the book and obfuscating.
Posted by: Robert C at Jul 30, 2007 10:28:19 PM
