The Worst… Is The Best We’ve Got

Bryan Caplan wrote, what seems to be, a very interesting book, in which he tries to explain “why democracies choose bad policies.” A review of the book appeared at the Economist.

ANYONE who follows an election campaign too closely will sometimes get the feeling that politicians think voters are idiots. A new book says they are. Or rather, Bryan Caplan, an economics professor at George Mason University, makes the slightly politer claim that voters systematically favour irrational policies. In a democracy, rational politicians give them what they (irrationally) want. In “The Myth of the Rational Voter”, Mr Caplan explains why this happens, why it matters and what we can do about it.

The world is a complex place. Most people are inevitably ignorant about most things, which is why shows like “Are You Smarter than a 5th Grader?” are funny. Politics is no exception. Only 15% of Americans know who Harry Reid (the Senate majority leader) is, for example. True, more than 90% can identify Arnold Schwarzenegger. But that has a lot to do with the governor of California’s previous job pretending to be a killer robot.

Many political scientists think this does not matter because of a phenomenon called the “miracle of aggregation” or, more poetically, the “wisdom of crowds”. If ignorant voters vote randomly, the candidate who wins a majority of well-informed voters will win. The principle yields good results in other fields. On “Who Wants to Be a Millionaire?”, another quiz show, the answer most popular with the studio audience is correct 91% of the time. Financial markets, too, show how a huge number of guesses, aggregated, can value a stock or bond more accurately than any individual expert could. But Mr Caplan says that politics is different because ignorant voters do not vote randomly.

Instead, he identifies four biases that prompt voters systematically to demand policies that make them worse off. First, people do not understand how the pursuit of private profits often yields public benefits: they have an anti-market bias. Second, they underestimate the benefits of interactions with foreigners: they have an anti-foreign bias. Third, they equate prosperity with employment rather than production: Mr Caplan calls this the “make-work bias”. Finally, they tend to think economic conditions are worse than they are, a bias towards pessimism.

At his blog Bryan explains:

More educated people think more like economists; in fact, more educated people pretty much have more reasonable views across the board. Furthermore, by a happy coincidence, more educated people are more likely to vote.

Every now and then, I get depressed when I read about how utterly stupid a lot of people are. Lets face it, many people go out there and vote, but have no idea what and who they are actually voting for and, more importantly, why. They go out and vote, but do not think things through.

Then I repeat Churchill’s famous words (also quoted in the review at the Economist, which gives me the impression that more people struggle with this issue), “democracy is the worst form of government except for all those others that have been tried,” and I feel better again.

In the end, Western democracies have fared quite well, to say the least. The democratic system has its own problems, of course, but it is the best system mankind ever came up with.

I encourage you all to read the entire review at the Economist – I haven’t read the book myself yet, but it’s on my to-buy-and-read-list.