Bastiat’s Bastions

Andrew Napolitano has an article in the Wall Street Journal today titled: Most Presidents Ignore the Constitution. The article analyzes several of the constitutionally unfriendly actions of past presidents and notes “In virtually every generation and during virtually every presidency (Jefferson, Jackson and Cleveland are exceptions that come to mind) the popular branches of government have expanded their power.” I may have to take issue with Jefferson being an exception (I was born in Louisiana), but that’s another post.

Anyway, the article brings up specific aspects of the Constitution which show how concerned the founders were with economic freedom. Napolitano writes:

There is no power in the Constitution for the federal government to enter the marketplace since, when it does, it will favor itself over its competition. The Contracts Clause (the states cannot interfere with private contracts, like mortgages), the Takings Clause (no government can take away property, like real estate or shares of stock, without paying a fair market value for it and putting it to a public use), and the Due Process Clause (no government can take away a right or obligation, like collecting or paying a debt, or enforcing a contract, without a fair trial) together mandate a free market, regulated only to keep it fair and competitive.

When the government does enter the marketplace, we lose some of the basic protections we were guaranteed in the Constitution and we frequently end up with bad economic policies. The really interesting question for me is this: Why does the public regularly elect (and re-elect) officials who enact bad economic policies and/or chip away at the Constitution?

Napolitano seems to think (and I’m not quoting him) the answer lies in the “pigs at the trough explanation,” whereby voters send to Washington those politicians they believe will bring the most tax dollars home for them. Regardless, I thought of another explanation from Bryan Caplan’s Myth of the Rational Voter.

Caplan’s research uses data from the Survey of Americans and Economists on the Economy. The survey asks both economists and members of the general public an array of questions on how the economy works. There are significant disagreements between professional economists and laymen (on 33 out of 37 questions).

Caplan is simply verifying what most economics professors understand quite well: many people have no idea what good economic policies are. Students enter economics classes with severe biases against sound economics (war is good for the economy, protectionist policies protect jobs, etc). These biases, consequently, lead to popular support for policies that most economists would deem (economically) harmful. It’s at least plausible that the same phenomenon occurs in regard to our Constitutional protections.

In other words, it’s possible that voters don’t throw out politicians who chip away at the constitution because they don’t realize the benefits of our constitutional protections. Just as few people understand the importance of opportunity costs unless they study economics, few recognize the significance of the Takings Clause unless they study the philosophy behind the Constitution. By not fully understanding these ideas, the public makes it fairly easy for politicians to push “popular” policies. Just tell the people we need more financial regulation, they really don’t know what credit default swaps are anyway.

The only hope that Caplan’s work offers is that most politicians aim to sound more populist than they really are. Thus, Obama does not really want to redistribute too much wealth because he knows that sort of policy will kill the incentives needed to generate wealth in the first place. Any politician who, for example, calls for Constitutional guarantees for a job or a living wage, doesn’t really want to go that far because they realize the economy will suffer (and then they will be judged poorly).

I’m very much convinced that few people can describe what a socialist economic system is (based partly on my informal polling of many college students). And I’m very much convinced that even fewer people understand that socialism fails as an economic system because of what it does to economic incentives. I just hope that Caplan is right and the current crop of politicians doesn’t really want to go as far as they say. If you’ve been reading any of my recent posts, you’ve probably guessed that I’m not exactly convinced yet.

NM

This entry was posted on Wednesday, October 29th, 2008 at 7:58 pm and is filed under General, Political Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.