Monday, May 14, 2007

Special Interests and Majority Mistakes
Mike Rappaport

Bryan Caplan seeks to reorient our thinking about why democracies adopt undesirable policies.  It is not just special interests, it is also that majorities are mistaken in their ideas about how economic policy should work.   His views are set forth more extensively in his new book, which is high on my reading list.

Here is an excerpt:

Keeping foreign products out is popular. Since 1976, the Worldviews survey has always found that Americans who "sympathize more with those who want to eliminate tariffs" are seriously outnumbered by "those who think such tariffs are necessary." Handouts for farmers are popular. A 2004 PIPA-Knowledge Networks Poll found that 58% agree that "government needs to subsidize farming to make sure there will always be a good supply of food." In 2006, the Pew Research Center found that over 80% of Americans want to raise the minimum wage. It is safe to assume, then, that few people want to abolish it. These results are not isolated. It is hard to find any "special interest" policies that most Americans oppose.

No wonder special interests so often get their way. They do not have to force their policies down the public's throat, or sneak them through Congress unnoticed. To succeed, special interests only need to persuade politicians to swim with the current of public opinion.

None of this means that special interests don't matter, but it does put their activities in a new light. Special interests do not have to sneak behind the majority's back; they just need to ask for the right favor in the right way. The steel lobby could have demanded a big handout from the federal government. But that would have struck many voters as welfare for the rich; steel-makers can't expect the same treatment as farmers, can they? Instead, the steel lobby took the crowd-pleasing route of blaming foreigners and asking for tariffs. Tariffs were less direct than a naked subsidy from Washington, but they enriched the steel industry without alienating the majority.

I think there is a great deal to this.  The job of special interests is to keep people persuaded of these mistaken policies, and to direct the government action their way in a manner that does not run up against  popular support. 

I might disagree with Caplan to a limited extent.  Suppose we could eliminate the power of these special interests (and also of ideological interests).   My guess is that people would be much more likely to become convinced of the correct theory.   There are loads of people who believe that the current recipients of social security are simply getting back what they paid in.  Without the special and ideological interests, there is much more chance they could be convinced that instead current social security recipients are on average receiving enormous subsidies from the young.

| Permalink

TrackBack URL for this entry:

Listed below are links to weblogs that reference Special Interests and Majority Mistakes
Mike Rappaport


Ordinary voters can, I think, be forgiven their occasional failure to conform to correct views. After all, many of them have never even heard of me, let alone know how to find out from me what they should believe. But most professional libertarian economists--including Caplan, I'm sure--have access to the Web, where my blog is easily findable using standard search engines. I even have an email address posted there, via which they can inquire about the correct answer to any question or the correct position on any issue.

Yet not only do many of them persist, inexplicably, in clinging to obviously mistaken views, but some of them even write entire books riddled with errors which they could rectify with a simple email to my address, asking me what the correct opinion is. What could possibly explain their failure to do so?

Posted by: Dan Simon | May 14, 2007 3:09:01 PM