The Myth of the Rational Voter: People Vote Like Idiots, and Why

I’ve recently finished reading The Myth of the Rational Voter: Why Democracies Choose Bad Policies which builds a framework for understanding why the electorate commonly vote for such idiotic proposals, especially related to economics. The author, Bryan Caplan, delivers a wonderfully well researched book that is engagingly written, a tough tasks for what is actually an economics book. He tears apart rational voting theory, the idea that the idiots balance out and smart people make the last few % points of decision, and explains an economic take on why voters make poor decisions.

Bryan Caplan explains that in voting most actors are rationally ignorant and rationally irrational. Without going through all the analysis most people are rationally ignorant because they make a rational decision to forgo the effort required to fix their ignorance since voting has such a small expected payoff. People are rationally irrational for much the same reason, taking an easy or socially accepted position rather than figuring out the correct solution out of a rational lazyness. Basically, since we understand that our vote counts so little we make little effort to make vote in an intelligent way.

I highly recommend picking this one up, it will give you a whole new set of tools in understanding politics and participating in debate and it is an incredibly interesting read.

1-2 Knockout: Krugman: Sixteen Years (of Intellectual Dishonesty)

Sometime around 5am this morning (sleep is for the weak) I read a week-old post from our favorite economistliberal acolyte, Nobel Laureate Paul Krugman.  Beginning his career as a caterpillar economist (churning out paper after paper by candlelight from the drafty Princetonian economics basement) he apparently cocooned sometime ago and morphed into a beautiful butterfly (aesthetically pleasing, but lacking substance or utility) for the NYT and democratic party.

via 1-2 Knockout: Krugman: Sixteen Years (of Intellectual Dishonesty).

Principles for a New Republican Platform

After the results of the last US election the GOP is forced to reconsider the constitution of their platform. There are some in the party who want to push further towards social conservatism, anti-intellectualism, and libertarianism. I think this is a major mistake. This strategy will only lead to further defeats as the American people reject the politics of exclusion, folksy-ness, and any kind of ideology. The American people need a pragmatic, centrist party, that is based on sound intellectual and economic principles. 

I propose the following principles for a revitalized and reformed Republican party:

1. Individual responsibility, risk taking, and ownership in all aspects of life.
2. Government should only provide services unable to be provided by the general market
3. Limited government intervention in business, life
4. Highly effective, well managed, and open government
5. Strong military for defensive purposes
6. Open and Free Trade
7. A minimum standard of life in the United States

Individual responsibility, risk taking, and ownership in all aspects of life.

This principle has been a core of Republican policy and thought since the beginning. The only person fully qualified to make decisions for you, is you. You should also have ownership and control of the aspects of your life including retirement savings, health care choices, education, employment, hobbies, and even sexual partners.  A belief in individual responsibility and ownership should also include a right to privacy. If we trust people to make the right choices, we shouldn’t have to look over their shoulder to double check.  People should, additionally own their personal information and have the ability to control that information at their discretion.

Government should only provide services unable to be provided by the general market

This principle is an extension of the general Republican belief in limited government with a Libertarian/economic flavor. If the free market can provide a service, such as mail delivery, education, issuing home loans, or providing annuities, then the free market should be in charge of these items. This does not limit a government from helping people with these services, it just requires the government execute these services through the open market. 

Providing such services that are deemed necessary for the entire country through  a competitive open market function would align service with incentives resulting in higher quality service at a lower cost. A government service spends public money to provide the mandated level of service, increased services does nothing for the department or the people executing the service. Spend that money on a private company to provide the same service and a profit motive will drive the provision of service and an increase in the quality of services provided. 

A simplification of the role of government would also allow it to be more effective in responding to issues and changes in the country.

Limited government intervention in business, life

Limited government is a core Republican value and I think should be a core Republican principle for crafting policy. I believe, as do many Republicans, that the role of government in day to life should be minimized, and doing so will result in smarter policy, cheaper government, and more effective services provided. 

Highly effective, well managed, and open government

The latest Republican leadership seems to have tried to sell limited government by running the place so poorly. It is not necessary to prove that large government is bad by making the government bad. While I, as a Republican, believe we should minimize government, I still think the remaining apparatus should be as well managed and effective as it can be. Government has become a quasi-welfare in its own right with large benefit packages, high wages, and unrivaled job security. Government operations should be managed in the same way that a publicly traded company is and offer comparable wages and benefits. Additionally, the operations of government should be as open as possible so that the people can know where their tax dollars are going and what they’re buying. Thanks to modern technology this is not an overbearing requirement.

Strong military for defensive purposes

America’s stature in the world is supported by its unrivaled military capability and this should continue. We should avoid involving ourselves in foreign entanglements, but we should be able to project power and operate around the world without equal. This can be accomplished with smart and well focused defense spending and a focus on modern military technology.

Open and Free Trade

Open and free trade enriches America and endears us to foreign countries. It should be the foundation of the Republican party that we should strive to have open and free trade with any country willing to reciprocate with us. Larger markets for American goods and cheaper goods from foreign countries increase our standard of living and the economy of both countries.

A minimum standard of life in the United States

This principle is not at odds with the others, no matter how loudly Republican stalwarts say it. Ignoring the calls of Americans to provide social safety nets will eventually relegate us to a permanent minority party status. We must find a way, guided by the principles above, to provide a safety net for income, retirement, and health care. 

Income – This can be provided through an insurance program that pays a minimum level of income while a person is unemployed.  Welfare must be backed up through incentives and programs to return to employment.  Could be provided through payroll taxes, open market insurance bids, and state run offices to distribute and motivate the unemployed. 

Retirement – A similar program to the above should be used to provide conditional annuity-style products for retirees who have been wiped out of their personal savings (401k, IRA, etc). Social Security style benefits would be provided only if personal holdings could not provide income and support and, being run by individual companies (through a bid process), the money stored for these programs would be properly invested instead of laundered through the Social Security administration. 

Health Care – Individuals should be motivated to obtain personal health care by removing the tax benefit of corporate health care and replacing it with an income tax rebate and penalty if a minimal level of insurance is not held by people making a certain amount of money. An open bid process would be used to provide coverage for low or no-income Americans by health insurance companies. An open bid process would place the administration of such programs in private hands, and force them to compete to provide the mandatory level of services, saving the American people and driving insurance and providers to lower costs and increase quality. Individual, rather than corporate, health insurance will foster competition and increase pressure on providers to compete on features, quality.

 

I welcome any feedback on these principles, please leave your thoughts in the comments.

A Sign of the Times

Seen at a local Kirkland’s store that is most likely going out of business.

Some manager most likely decided that they needed a bullhorn, purchased it with company money, and is now trying to sell it on the floor …and it has already been marked down once. Demand destruction is going to wreck havoc on any company relying on yuppie purchasers and housing decor or supplies.

No Free Lunch

Everyone understands the concept of “No Free Lunch” in their everyday life, but that common understanding does not seem to extend to public and social policy. All policy has a cost or side effect, many of which are unforeseen, that is a result of the impact of what people want and how the policy changes that.

For example, we should discuss the impact of government programs to help the poor. We all understand that these costs are paid out by taxes, but there is another effect. These programs reduce the number of independent charities that do similar work, even though there is no real competition in the “free help” market. Why? Because when people are prompted to donate money for a program that works along side a government program they balk. They’ve already paid their fair share for that cause through taxes. The end result is that money dries up for independent charities and there is an overall reduction in the amount of aid given to the poor.

Another example, lets say we want to put people who are not traditional home owners in to homes. A government program is setup to encourage lenders to make loans to people with stated income, poor credit history, and without adequate money to make a full down payment. Such a plan has costs that are all to apparent now. Easy credit to those who don’t deserve it has led to huge increases in home prices, then defaults, and the inevitable crash.

A final example is price controls for items such as rent and commodities. Price floors or ceilings affect the efficient allocation of resources. The people directly involved in such controls, such as farmers or renters the benefits seem grand and free. However, such programs impact everyone else leading to higher costs for food and less housing availability. They directly bias the market against new entrants or competition, hurting everyone. While such programs are free on the federal balance sheet, they turn in to a tax on all of us for the goods we need and use on a daily basis.

All programs have risk, which is why economists have been developing systems for avoiding and predicting the risks associated with new programs.  It is important to remember that all programs have costs, even if it isn’t apparent in the game plan to begin with.

An Open Letter to my Friends on the Left

An Open Letter from Dr. Horwitz at St. Lawrence University:

To call the housing and credit crisis a failure of the free market or the product of unregulated greed is to overlook the myriad government regulations, policies, and political pronouncements that have both reduced the “freedom” of this market and channeled self-interest in ways that have produced disastrous consequences, both intended and unintended.

An Open Letter to my Friends on the Left.

He is against the bailout, which I support, but he makes some great points about the “freedom” of the housing market. I’ve said before that I support some kind of bailout, just so we don’t see companies unable to make payroll in the coming weeks, but we don’t need to prop up the housing market or banking systems. Just provide the necessary, temporary, liquidity to maintain low-level lending.