Democracy is Overrated…

1. Democracy is Overrated… X Michael Munger Duke University November 7, 2005

2. Key Elements of Public Choice • Methodological Individualism • Aggregation • Consequence, not Intention • Disagreement • Self-interest • Institutions and Organizations

3. THE Key Element • Difference between Samuelsonian “public goods” problem and the problem of making choices collectively • Information, tastes, and culture • Institutional design • Collective choices

4. Collective v. Public

5. I. Information, Tastes, and Culture “The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate "given" resources—if "given" is taken to mean given to a single mind which deliberately solves the problem set by these "data." It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.” (F.A. Hayek, 1945, AER).

6. “The” Right Thing • There may not be any one right thing to do. It depends. • It is the nature of collective choices that they are unitary: One defense budget, one standard for pollution, and so on. • Asking “What Will We Do?” begs the question. The real question is… Why Do You Think There is a ‘We’? • Buchanan and Tullock’s “Two Levels”: Can’t let the majority decide what the majority gets to decide

7. My Plan + Your Plan  Our PlanSocialist Calculation Debate “This is not a dispute about whether planning is to be done or not. It is a dispute as to whether planning is to be done centrally, by one authority for the whole economic system, or is to be divided among many individuals. Planning in the specific sense in which the term is used in contemporary controversy necessarily means central planning—direction of the whole economic system according to one unified plan. Competition, on the other hand, means decentralized planning by many separate persons. The halfway house between the two, about which many people talk but which few like when they see it, is the delegation of planning to organized industries, or, in other words, monopoly.” (Hayek, 1945).

8. Coherence and Legitimacy Can a group of people who disagree come to a consensus? How would this work? Why would we believe that the “consensus” is any more than an imperfect choice? Do the choices of majorities tell us anything about “the right thing to do” in the face of disagreement? Is there such a thing as “the majority,” which we just have to discover through voting or some political process? I want…you want…what do we want?

9. Institutional Design • Institutions are the humanly devised rules of the game that shape and direct human interactions. • Institutions reduce uncertainty by shrinking the choice set of all of the “players.” If the rules are not formalized, the players spend too much time arguing over the rules, and less time in productive activities. The actual choice of institutions, however, is hard, since there are countless ways of choosing. What makes some institutions better than others? • In particular, is democracy a “good” institution? How would we know? What are the alternatives?

10. Step back for a moment….The Fundamental Human Problem(according to Munger) How can we construct or preserve institutions that make individual self-interestnot inconsistent with the common good?

11. Two Approaches • Madisonian “Ambition must be made to counteract ambition…” • Rousseauvian Transform the self, solve the problem of amour propre. Inscribe the law on the hearts of men. Some preferences are better than others.

12. Origins of Markets • Differences in endowments • Differences in preferences • Technical cost conditions (div of labor, economies of scale, increased dexterity, innovations in tool design)

13. Origins of Government Institutions • Disagreement/exchange (B&T) • Capture gains from trade by reducing transactions costs • Make public goods possible

14. Origins of Government Institutions What if we all wanted the same thing? Would government even be necessary? It would. Because we do all want the same thing: more…. On disagreement, Charles IV: “My cousin Francis and I are in perfect accord—he wants Milan and so do I.”

15. Madisonian Institutions • Markets—Smith’s baker • Politics—Federalist #51: Men are not angels Men are not ruled by angels “Ambition must be made to counteract ambition…”

16. Democracy Unbound….Rousseau But it is asked how a man can be both free and forced to conform to wills that are not his own. How are the opponents at once free and subject to laws they have not agreed to? I retort that the question is wrongly put. The citizen gives his consent to all the laws, including those which are passed in spite of his opposition, and even those which punish him when he dares to break any of them…. (From The Social Contract)

17. Democracy Unbound…. When in the popular assembly a law is proposed, what the people is asked is not exactly whether it approves or rejects the proposal, but whether it is in conformity with the general will, which is their will…. When therefore the opinion that is contrary to my own prevails, this proves neither more nor less than that I was mistaken, and that what I thought to be the general will was not so. If my particular opinion had carried the day I should have achieved the opposite of what was my will; and it is in that case that I should not have been free.

18. Loyal Opposition? This conception of democracy is logical. The actions of government are driven by the people; the general will is sovereign. Opposition to the general will is treason, and must be punished. No need for two parties: only one general will. All those countries with “Peoples’ Democratic Republic of ___” were not perversions of democracy, but examplars. That is what pure democracy, with no limits on scope, looks like. Cannot be otherwise. Democracy, in and of itself, is an attractive concept that must constitute a recipe for tyranny, unless the scope of collective sovereignty is strictly limited.

19. Che Guevara’s “Man and Socialism in Cuba” (1965). Society as a whole must become a huge school....We can see the new man who begins to emerge in this period of the building of socialism. His image is as yet unfinished; in fact it will never be finished, since the process advances parallel the development of new economic forms. Discounting those whose lack of education makes them tend toward the solitary road, towards the satisfaction of their ambitions, there are others who, even within this new picture of over-all advances, tend to march in isolation from the accompanying mass. What is more important is that people become more aware every day of the need to incorporate themselves into society and of their own importance as motors of that society

20. Collective Choices‘What is truth?’ said jesting Pilate, and would not stay for an answer. True Statements? Democracy means: “rule by the people” Democracy is the best form of government The many are wiser than any one person Morality is defined by majority—Democracy is a means of discovering truth

21. A movie: Pure Democracy in Action

22. Central Questions: Can reasonable people differ? Can a reasonable person oppose gay marriage? Can a reasonable person be pro-life? Is it possible to support the war in Iraq? What is the basis of disagreement— • Chocolate vs. Vanilla? In politics, values. Are they primitives? Deliberation won’t help. • Different information sets? Evidence about causes, different understandings of means-ends relations. Deliberation might help. Is there a “fact of the matter”?

23. Central Questions: Is it true that the many are wiser than any one? Many people have argued this claim…. “For it is possible that the many, no one of whom taken singly is a sound man, may yet, taken all together, be better than the few, not individually, but collectively.” (Aristotle, Politics, Book I, Chapter 11) Some important analytical support, under some circumstances. Condorcet’s “Jury Theorem,” for example.

24. Central Questions: The real problems of democratic choice: • Scope of government/collective power: the Buchanan problem • Information of time and place: the Hayek problem • Coherence and legitimacy: The Condorcet / Arrow problem

25. Scope What can government decide? How would we decide what government can decide? What do I get to decide, by myself? What things does my family get to decide? Suppose a group of people want to decide something for me, for my own good? Can they do that? How could I stop them?

26. P.J. O’Rourke—Information and Scope Problems of MR Now, majority rule is a precious, sacred thing worth dying for. But—like other precious, sacred things, such as the home and the family—it's not only worth dying for; it can make you wish you were dead. Imagine if all of life were determined by majority rule. Every meal would be a pizza. Every pair of pants, even those in a Brooks Brothers suit, would be stone-washed denim. Celebrity diets and exercise books would be the only thing on the shelves at the library. And—since women are a majority of the population, we'd all be married to Mel Gibson. (Parliament of Whores, 1991, p. 5).

27. James Buchanan: Like Hobbes, too much liberty? “What should government be allowed to do? What is the appropriate sphere of political action? How large a share national product should be available for political disposition? What sort of political decision-structures should be adopted at the constitutional stage? Under what conditions and to what extent should individuals be franchised?” (“Politics Without Romance.”)

28. Coherence and Legitimacy Can a group of people who disagree come to a consensus? How would this work? Why would we believe that the “consensus” is any more than an imperfect choice? Do the choices of majorities tell us anything about “the right thing to do”? Is there such a thing as “the majority,” which we just have to discover through voting or some political process? I want…you want…what do we want?

29. Problem of the U.S. in Iraq

30. Democratic Choices: War in Iraq You’ve got to help me out here…play along! Preferences and beliefs, on the little card. REALLY! Accept the premise, and act like those are your preferences. Three choices: No war: N Aggressive war: W Police/political means: P

31. Choices: War in Iraq One possibility: isolationist variant of Powell doctrine N > W > P We should not get involved. But, if we do, we should go in with overwhelming force. Worst thing is to expose our troops/workers in a limited police action, depend on the U.N.

32. Choices: War in Iraq Another possibility: Rummy World W > P > N Iraq/Saddam is an imminent threat, will develop WMD. If not war, then must vigorously pursue sanctions Worst thing is to do nothing, relax sanctions and let Iraq become nuclear power

33. Choices: War in Iraq Final possibility: Prudent Dove P > N > W Let sanctions and inspections do their work, because Iraq is a potential danger to its neighbors and the world We have no good claim to just war, so next best is to do nothing Worst thing is to use war against a nation that has made no overt attack on the U.S.

34. Choices: War in Iraq So…we have disagreement • Prudent dove wants to use P, police action • Rummy wants war • Isolationists would prefer to stay far away from foreign entanglements, so do nothing.

35. Choices: War in Iraq Let’s use “democracy,” the pure kind where the people make the choice directly. First, let’s decide whether to use force, or do nothing…. Vote P vs. W to decide which activity is better, and then vote that against N. That way, we are comparing the best “do something” against “do nothing.”

36. Choices: War in Iraq Consider what just happened. Simply by changing the order in which we consider the alternatives, I could generate as the “winner” any one of the three alternatives. Choosing the agenda, then, is tantamount to choosing the outcome. Is this just a conjurer’s trick, or does it tell us something about democracy?

37. Choices: War in Iraq If there are three (or more) alternatives, and there is disagreement, then democracy may be radically indeterminate. More simply, there is no correct answer to the question, “What do the people want?” In fact, some majority opposes every alternative.

38. Choices: War in Iraq Here is the problem: I/P Rummy Prud Dove N W P Best W P N Middle P N W Worst Majority preferences: W > P > N > W Endless, infinite cycling over alternatives. Not a tie, but a literal perpetual motion machine

39. But this is nonsense: meetings end That is what should terrify you: meetings end, and things get decided. The point is that we are rarely presented with three or more alternatives. We usually are presented with two. How are those two chosen? The “Lawson Revolution”: coalitions form, charismatic people take power. Not the will of the people, but the force of will of some demogogue or tyrant If the rules matter to this extent, that means that procedures, not preferences, determine outcomes. And elites control procedures….

40. Democracy works fine…. So long as everyone agrees But if there is disagreement, and at least three alternatives, then a majority opposes every available choice. So, democracy fails us when we need it most! Since some choice has to be made, we are left with an outcome that is either • Imposed (tyranny) • Arbitrary (random or procedure-driven) In either case, “democratic choice” is chimerical Dictatorship with the trappings of democracy

41. The worst of all worlds Democracy without constitutional liberalism… 1. Rule of law, protections of property and liberty 2. Limits on scope of issues within the jurisdiction of collective choice… Democracy without these is the most terrifying kind of tyranny you can imagine. Americans, and the West, are confused about “good government.” The key is constitutional liberalism, not democracy.

42. “Stability” is a variable Politics in nations are not always stable • Different nations have different institutions • Those institutions are more or less effective at different times • How do U.S. institutions serve to make our political system more, or less, stable? How do the institutions of other nations solve this problem, differently?

43. In our example, Iso-Powell was the culprit… Utility Prudent Dove Rummy Iso-Powell N P W Intensity of War Effort

44. Cannot Rely on the Conditions of the MVT to Turn Up by Chance Institutions shape the choices nations make. But: • Preferences aren’t single-peaked • Issues are not always one-dimensional • Democratic institutions are likely to fail when we need them most…

45. Three “Histories” • Plato • Shakespeare • Plutarch

46. Plato: Democracy Means Tyranny “Democracy is precisely the constitution out of which tyranny comes; from extreme liberty, it seems, comes a slavery most complete and most cruel….When a democratic city gets worthless butlers presiding over its wine, and has drunk too deep of liberty’s heady draught, then, I think, if the rulers are not very obliging and provide plenty of liberty, it calls them blackguards and oligarchs and chastises them…and any who obey the rulers they trample in the dust as willing slaves and not worth a jot.” (Republic, Book VI, 560a-564b)

47. Shakespeare’s Tragedy of Coriolanus: Act II, Sc 3 BOTH CITIZENS. The gods give you joy, sir, heartily! (Exeunt citizens) CORIOLANUS. Most sweet voices! Better it is to die, better to starve, Than crave the hire which first we do deserve. Why in this wolvish toge should I stand here To beg of Hob and Dick that do appear Their needless vouches? Custom calls me to't. What custom wills, in all things should we do't, The dust on antique time would lie unswept, And mountainous error be too highly heap'd For truth to o'erpeer. Rather than fool it so, Let the high office and the honour go To one that would do thus. I am half through: The one part suffered, the other will I do.

48. ARISTIDES: FROM PLUTARCH’S LIVES [Aristides] being surprised and asking if Aristides had ever done him any injury, "None at all," said he, "neither know I the man; but I am tired of hearing him everywhere called the just." Aristides, hearing this, is said to have made no reply, but returned the sherd with his own name inscribed. At his departure from the city, lifting up his hands to heaven, he made a prayer (the reverse, it would seem, of that of Achilles), that the Athenians might never have any occasion which should constrain them to remember Aristides.