Tag Archives: democracy

Marketizing Democracy

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The Boston Review published a symposium on inequality. It features a lead essay by David Grusky and responses by several commentators. The Internet has assigned me to reply to Mike Konczal’s response, which I am happy to do.

Mike agrees with David’s point that there is an awful lot of “corruption, bottlenecks, and sweetheart deals” in our highly politicized economy, and that these generate inequality. However, he disagrees with David’s prescription:

But Grusky also thinks that a program to reduce inequality should embrace an authentic commitment to a competitive market economy, as if there were such a thing as a pure, competitive market economy, apart from law and regulation. Instead, we need to acknowledge that markets always depend on legal and regulatory choices, that different choices of laws and regulations lead to different outcomes, and that part of the point of democracy is to make those legal and regulatory choices well. We cannot take refuge in the abstraction of a competitive market economy. (emphasis mine)

Mike’s solution is “democratizing markets.” He wants us to make different legal and regulatory choices, especially about corporate personhood, debt and foreclosure, basic services, and labor policies. I don’t agree with his policy recommendations, but given our respective ideological commitments that is not much of a surprise. Instead of rehearsing familiar (and boring) arguments against these, I want to try to challenge Mike at a more fundamental level.

On Mike’s view, (part of) “the point of democracy” is to make good collective choices. If the same collective choices are made by plutocrats instead of by the median voter, they will not turn out as well for everyone. This is a common view.

To me, it is not an attractive one. This is not because I think that plutocrats should be making our collective choices for us (I don’t), or even because the median voter does such a terrible job (she does). It is because the point both of democracy and of reducing inequality should be to foster self-governance.

Let’s take the latter point first. A number of conservatives and right-leaning libertarians have argued that inequality per se does not matter; what matters is absolute poverty. This is not my view. Relative inequality matters to me insofar as it leads to some people being socially marginalized, even if material conditions are quite good. It seems to me that it is difficult to flourish if you are isolated; there is little for your autonomy to be about. Therefore, to whatever extent inequality causes social marginalization, I am against it. On the other hand, we can in principle imagine a social change which creates more material inequality but nevertheless decreases social marginalization; I would be in favor of this change. For instance, the increase in professional opportunities for women since the 1970s has dramatically reduced their social marginalization even as it increased material inequality through assortative mating, and on the whole this was a good change.

Our political institutions should also foster self-governance, and democracy as it is popularly conceived—majority rule—does not do this. It is a system in which we are all subject to an anonymous deciding vote, the median voter. If the median voter says I must give $1000 to Bill, it does not matter whether Bill is homeless or married to Melinda Gates: Bill and I are not relating to each other as free persons, and our relationship is not self-governing. Nor is our relationship truly self-governing if the median voter merely declines to intervene in it; she always hangs around like the sword of Damocles.

What would political institutions that foster self-governance—true democracy—look like? For one, the median voter would have no more power than anybody else merely in virtue of being at the center of an ideological spectrum. Instead of dealing with value pluralism through voting, true democracy would accommodate it by allowing people to self-select into one or more like-minded communities. These communities could develop their own collective decision-making methods, but they would at every moment be subject to each person’s willingness to remain in the community. Collective decisions, therefore, would be undertaken not for a fixed polity, but for a coalition of the willing. Communities, too, could relate to each other on whatever terms they both agree on, or they could choose to ignore each other entirely.

In its better moments, the Occupy movement thinks in terms similar to these. At less clearheaded times, it contradicts these ideas by making demands of people outside its coalition of the willing. Despite these contradictions, there is much to admire about Occupy’s voluntary efforts to supply basic services to the poor and marginalized. Mike points out that these services were made “universally and unconditionally available, rather than distributed through market logic.” The ironic punchline of this story is that at a deeper level, it is precisely market logic that distributed these resources. The logic of the market is like the logic of true democracy as I’ve described it above. At its core is accommodating value pluralism through freedom of association, rather than by forcing dissenters to submit. And as the Occupiers have shown, to whatever extent meeting the needs of the marginalized is an important part of our values, we can do it through voluntary association rather than through the conscription of unwilling participants.

So whereas Mike wants to democratize markets, I want to marketize democracy. I want to find ways for us to live together that create rather than restrict autonomy for each of us, and for our communities. I don’t think that such an arrangement would result in a utopia, and I can’t promise a particular outcome, such as a massive reduction in inequality, with certainty; when we relate to each other as free persons, by definition the outcome is open to surprise. But when I think about the litany of outrages that majority-rule democracy has wrought—the prison-industrial complex, immigration restrictions, the war on drugs, urban public schools, agricultural subsidies, and corporate bailouts to start—I am grateful that we have more markets and less democracy than Mike desires.

The Ethics of Not Voting

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Eric Crampton and I see politics from roughly the same GMU-trained, public-choice-heavy, anarcho-curious perspective, so it is no surprise that we are both practitioners of conscientious non-voting. Nevertheless, we disagree about the details; here is Eric’s case for conscientious non-voting. The purpose of this post is to express my ethical argument against voting and to persuade Eric that his claim that voting constitutes contractarian consent is both erroneous and unnecessary to establish non-voting as the best ethical alternative.

Ironically, the basis for conscientious non-voting is well expressed in Jason Brennan’s essay The Ethics of Voting (and presumably in his book of the same title). Brennan argues (rightly) that there is no duty to vote, but (more controversially) that if you are going to vote, you have a duty to vote well, in a manner that you justifiedly believe will promote the common good.

What is controversial about that second claim? It starts with this: in voting, there is not the usual link between action and outcome. As Brennan writes,

In a large-scale election, such as a congressional election in the United States, the probability that an individual vote will decide the outcome of the election is vanishingly small. You are much more likely to win Powerball multiple times in a row than to cast a vote that changes the outcome of a presidential or congressional election.

Consequently, on a purely instrumental basis, it does not matter in the least how you vote. Voting accomplishes nothing, so it is not immediately obvious how voting well or voting badly could have much ethical force. Indeed, if you are an act consequentialist, this is the end of the line: go forth and vote (or not) well or badly, for it makes no difference.

Nevertheless, most of us are not act consequentialists. For us, Brennan articulates a principle that may still have some application to our impotent voting behavior. He calls it the Clean Hands Principle:

One should not participate in collectively harmful activities when the cost of refraining from such activities is low.

For Brennan, voting badly is a collectively harmful activity. Therefore, he concludes that if you vote, you should not vote badly; you have a duty to vote well.

Here I will part ways with Brennan. Voting at all, at least in a political context, is a collectively harmful activity (in other contexts, e.g., you and four friends vote to decide where to eat dinner, it is not collectively harmful). In what way is it collectively harmful? Maybe it’s best to quote Brennan again:

Bad choices at the polls can destroy economic opportunities, produce crises that lower everyone’s standards of living, lead to unjust and unnecessary wars (and thus to millions of deaths), lead to sexist, racist, and homophobic legislation, help reinforce poverty, produce overly punitive criminal legislation, and worse.

How do we know that bad choices at the polls can do those things? We have evidence from every single election. Those policies that destroy economic opportunities, that produce crises, the unjust and unnecessary wars themselves, and so on—they are popular. They are the ideas that win every time.

What Brennan misses (at least in the essay; I have not read the book) is that the cause of all these harms is not just that voters make bad choices. That is a narrow perspective. It is that so many domains are subject to collective choice in the first place. The correct response to the question, “Shall we pass a law that destroys the lives of people who use drugs, especially if they are black?” is not merely “No,” but “Take your democracy and shove it.” Merely responding “No” is collectively harmful, because it fails to challenge the implicit proposition that the domain is rightly subject to collective choice.

When you vote in an election on an issue (or for candidates who can decide an issue) that should not be subject to collective choice in the first place, your vote makes no instrumental difference. It is therefore costless not to participate. By the Clean Hands Principle, you should not vote in such an election.

I believe that Eric would more or less agree with all of the above, but if I understand him correctly, he adds a superfluous element to his argument. That element is contractarianism. If I vote on an issue that is not rightly in the collective domain, does my vote help make it rightly subject to collective choice? Does my vote, my “getting my hands dirty,” constitute consent in contractarian terms?

I think it clearly does not. The simplest example is one in which dissenters misunderstand how improbable decisive voting is. Suppose that the question I cited earlier, “Shall we pass a law that destroys the lives of people who use drugs, especially if they are black?” is in fact at issue in an election. A minority of 30% oppose this measure, and half of these correctly believe drug use should not even be subject to collective choice. Nevertheless, the 15% of people who oppose collective choice for drug use incorrectly believe that there is a significant chance that their vote will be decisive. Since the vote is happening no matter what, they show up at the polls to try to avert disaster. Does their voting on the question on the basis of mistaken beliefs about their probability of success constitute consent? I believe it does not.

Another example is the case of the Hail Mary pass; it involves no mistaken beliefs. Suppose you arrive at home to discover that some gunmen have broken into your house and are about to execute your daughter. The gunmen offer you a proposition. They happen to have 100 dice with them; if you roll 100 1s, they will spare your daughter’s life. Now, you know very well that the odds of rolling 100 1s with 100 d6 is 1 in 6^100, a very large number, but you say a Hail Mary and roll them anyway. Are you therefore consenting to your daughter’s execution, or at least to the proposition that rolling dice is a legitimate way of deciding whether your daughter should be executed? Again, I think not.

Like most people, I believe that consent can be a source of obligation, including political obligation. But only real consent counts; if your disgust at political discourse and need for self-expression overcomes your desire to keep your Hands Clean, then yes, your hands are dirty, but no, you haven’t consented. Consent has to be intended. The fact that contractarianism in practice relies so heavily on unintended forms of (fake) consent means that we don’t really have to take it seriously as a source of political obligation.

Do Elections Matter?

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I am told that there will be an election next week. Actually nobody told me; it’s what I gathered from the yard signs. Elections, for me, are a spectator sport. I will probably be up all night watching the Prop 19 returns come in, but I haven’t participated since Bryan Caplan showed me the mathematics of voter decisiveness.

While I agree with Caplan and others that voting doesn’t matter, my own research (very much in progress, caveat emptor) is making me wonder whether it’s possible, even in theory, for an election to matter. We all know that an individual vote doesn’t change the outcome of an election. But does the outcome of an election causally change policy, or does it just correlate with policy change?

Increasingly, I think the latter. Here’s one thought experiment: what would policy in the US look like if it were an autocracy instead of a democracy and nothing else were different? That is, let’s impose a strong ceteris paribus condition and change the form of government from democracy to autocracy.

My tentative reaction is that everything would be roughly the same as it is now. Think about it in Coasian terms. Government policies impose negative externalities on some people. Those people have an incentive to bargain with other people in order to get that policy changed. That can be as simple as bribing the autocrat to change the policy, or as radical as a coup in which defectors from the regime are promised larger returns than they are currently getting.

As in any Coasian theory, transaction costs matter, and insofar as transaction costs prevent exchange, it is possible for the nominal form of government to make a difference. This is why the nasty autocrats are so nasty; they have mechanisms, based on ethnicity, ideology, or external support, of preventing the exchanges that would remove them from power. But in the US, transaction costs seem reasonable even if they are not negligible. Furthermore, transaction costs must be evaluated relative to the externalities to be addressed. Modest transaction costs mean only modest externalities remain. As the externalities increase in magnitude, holding transaction costs constant, the greater is the likelihood that exchanges will resolve them.

If the US were a ceteris paribus autocracy, with the modest transaction costs and wide distribution of power that now exist, we’d get basically the same outcomes we have today. I’m not saying it would be exactly the same, but it would be close. And if that statement is true, then it must also be the case that elections mostly just correlate with policy change, they don’t cause it. Changes in electoral outcomes reveal changes in constraints faced by the government, they don’t themselves drive the change in policy.

This is not just a semantic difference. It means that your opinion gets counted about the same whether you show up to vote or not. In the long run, it doesn’t matter if voter turnout is 90 percent or 10 percent, or if voter turnout is ideologically lopsided. The real constraint that the government faces is still the same. Elections don’t matter.

This is where I resist the urge to water down my conclusions with statements about how tentatively I hold these views. I hold these views. Tell me, is this my most absurd belief?

What Would Democracy Look Like if it Were Invented Today?

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The hung parliament in the UK is drawing attention to one of the Lib Dems’ demands, proportional representation (PR). I don’t have strong feelings about PR, but the issue does make me wonder what democracy would look like if it were invented today. So in the spirit of Robin Hanson’s Futarchy, I offer my vision of a more modern form of democratic governance. I should make clear that I am not offering this as a serious constitutional amendment, though I would not be opposed to some real-world experiments with it.

When democracy was invented, the world was very different than it is today. I can think of two differences that are particularly salient for purposes of creating a form of governance. First, interests were more regional than they are today. Second, the cost of communicating was much higher. These factors made sending regional representatives to a central legislature an obvious democratic strategy. This strategy seems to me to be completely unnecessary in the present age.

Start with the basic principle of one person, one vote, and direct democracy. Imagine, to begin with, that there is a web page that lists all the legislative issues on the agenda. Citizens could log in and vote on any of them. If there were 200 million voters, a bill would pass when it got to 100,000,001 votes (assuming a simple majority system—alternatives to this are beyond the scope of this post, but do not present a serious challenge).

Voting on all the issues would take a fair bit of time; most citizens would not be interested in sitting at their computers and voting all the time. In addition, there is a serious cost to becoming informed enough to know how to vote on specific legislation. Therefore, the web site could facilitate a proxy arrangement. Users could login to their accounts and designate someone else to cast their votes for them. All users would have a choice to keep their votes secret or to let them be publicly known.

People would specialize and compete in proxy services. That is, politicians would try to attract citizens by offering the particular set of policy values that they wished to vote for. If, at any time, a principal did not like how his proxy voted, he could log on to the legislative website and change or revoke his proxy designation. Everything would happen in real time; there would be nothing analogous to legislative elections. Politicians would feel constrained by their principals at all times; a single bad vote could lead to mass abandonment and irrelevance. Political feedback would be nearly instantaneous. After a speech, a politician could check his stats to see if he was gaining or losing principals.

Conditional on the premise that the majority should govern in the first place, I think this sounds like a reasonably attractive system. One might think of it as True Proportional Representation. This is, of course, a cursory sketch; there are many issues that remain to be discussed. For now, I will address just two of them. First, how would the quality of political discourse change? Second, how should proxies be compensated, if at all.

I think (but am not confident) that the quality of political discourse would improve. Right now, virtually no politician can win by telling the truth or saying reasonable things. Under this new system, there would at least be some market for truth-telling politicians. Furthermore, you would get a greater number of wonkish politicians who try to impress by their thorough command of the issues. Niche political markets would get serviced under the new system. On the other hand, this cuts both ways. People might proxy to circus clowns, porn stars, comedians, or radio DJs.

Finally, what should be the role of money in this system? Should money be kept out of it entirely? In this case, only the idle rich could serve as proxies. An alternative would be for the state to pay a salary to every proxy in proportion to how many principal-votes he casts throughout the year. When proxies lose principals, their salary would go down. When they gain them, their salary would increase. An even more intriguing possibility would be to allow any and all side payments and let the market determine compensation. Citizens could pay politicians directly for their services, or politicians could pay citizens to be allowed to represent them. Proxies could have a policy of negotiating a price for their votes and then distributing the proceeds to their principals. I think a lot of people would reflexively think of this as undemocratic, though it is hard to articulate why.

I can think of a number of reasons why True Proportional Representation might be a bad idea, but nevertheless I think I’d like to see someone try it. Most likely it is just trading one set of problems for another one. We might find, however, that the new problems are more tolerable.