Bastiat, Mises and the Median Voter
Follow this link to a paper by Bryan Caplan and Ed Stringham that won $25,000. Any paper that wins $25,000 is worth, at least, a quick look.
In the article, the authors make the case (a pretty convincing case) that Bastiat and Mises were both ahead of their time in relation to public choice economics. Basically, these guys believed that the public was susceptible to holding incorrect views on economics. It’s worth a read.
NM
February 17th, 2007 at 3:54 pm
Norbert,
While Mises and Bastiat are correct on the public’s lack of understanding about complex public issues, this is hardly out of line with what I would call mainstream or traditional public choice theory. Anthony Downs, one of the fathers of modern public choice, along with Duncan Black, James Buchanan and Gordon Tullock, wrote in 1957 about what he called “rational ignorance.” When something affects most people (certainly more than oneself), and no one person has much chance of changing the situation by their own actions, actions, including becoming informed on issues so as to make better informed public decisions, suffers from the classic “free-rider problem.” Check out my course note on Democracy at http://www.nicholls.edu/mcoats/note16.htm.
Economics often involves complex ideas. When some policy proposal benefits someone at another’s expense and it is crystal clear who is being hurt and who is gaining, people grasp the idea immediately and the grab of money or power is likely to fail passage. However, when it involves a more complex chain of events or involves even the simplest economic theory, such as that of Supply and Demand and Price Controls, the most people (the public) seldom sees beyond how they are immediately affected.
Ninety percent of the public is for hikes in the minimum wage, yet its harmful effects on the poor are known by just about all economists. Almost all economists agree about the harmful effects of minimum wage and the public is fooled by their so-called leaders. On the causes of global warming, or even if it exists, is far more controversial among climatologists, and the public lines up behind the hack who proclaimed himself the inventor of the Internet, Al Gore. And the evidence about the effects of minimum wage increases is extremely strong. What happens is that people’s perceived self interest gets in the way of an honest weighing of the logic and the evidence.
MC
February 17th, 2007 at 9:28 pm
I should have pointed out in my earlier comment here, that this was exactly my point in my post about “Chavez’s Chicanery.” Chavez is doing a remarkable job fooling the Venezuelan people who have very little incentive to become schooled in market economics, instead believing in the make-believe land of Marxists. It fits with their worldview and the world is flat.
MC