The Answer May Be Libertarianism

The editor of Cato Unbound has asked for a “summing up.”

In my opinion, Bryan Caplan has his finger on the most important, and neglected, issue in political theory. But he has misconstrued what is revealed by his own data, and has therefore concluded that the problem he’s analyzing is democracy.

His data, like a wealth of data compiled by political scientists, demonstrates not “irrationality,” but ignorance: in this case, ignorance of economics. But simple, ubiquitous, politically disastrous human ignorance doesn’t constitute an argument against democracy unless the alternative is rule by elites. And despite my request for one, Caplan has provided no reason to think that ignorance will not afflict elites as well as the mass public.

Some of the best-educated people I know are among the most economically illiterate. And from the perspective of any given school of economics (or any other discipline), even the consensus of “experts” in that field may be woefully ignorant. Moreover, since political psychology has shown that the better informed someone is, the more dogmatic he tends to be, the ignorance so often displayed by “experts” is particularly incorrigible and thus very dangerous, unless the experts in question happen to be dogmatists of the truth—which, in any given case, is unlikely.

The problem, then, is not democracy, but any system of government in which political decision makers are expected to master the complexities of modern civilization—which human brains were not equipped to grasp. It’s not democratic decision making, but political decision making of any kind, that will tend to be an exercise in “stumbling in the dark” (as Ludwig von Mises characterized what economic decision making would look like under communism).

The answer, then, may be to maximize the “rule” of markets.

Markets place far lower cognitive demands on people than do attempts to regulate markets. The key to markets’ epistemic advantage is that consumers can migrate from one product to another based on the feedback they get from consuming the products. This process of experimentation doesn’t require particularly well-informed or logical theorizing on the consumers’ part.

If I don’t like ice cream Brand A, I don’t need to have a theory about why it tastes bad. I just need to be able to try Brand B. But if the government tries to improve on Brand A, the political decision maker—whether the voter or an “expert” legislator or bureaucrat—has to have the right theory about how to make the best ice cream. This is too much to ask of any given human being. Markets throw fallible entrepreneurs’ different theories of what makes for the best products open to a process of competition in which the consumers is king—but in which consumers don’t have to be knowledgeable or logical kings in order to rule well.

However, consumers still need to have some information (namely, about which brand pleases them), and some logical abilities (so they can judge whether their displeasure with Brand A was caused by the product itself or by some other circumstance). Those are pretty easy requirements for consumers to fulfill, but a greater difficulty is that as private decisions get less repeatable than are purchases of ice cream (for example, when people choose which career to embark upon, how much to save for retirement, or which house to buy), the advantage of experimentation will diminish, because there will be fewer opportunities to experiment. Also, there may be systematic psychological biases, such as those discovered by “behavioral economics” (which is really psychology applied to economic decisions), that to some degree nullify the advantage of experimentation.

I state these qualifications because, too often, arguments for markets are made dogmatically, and I don’t want that to happen to the ignorance-based argument. That said, the ignorance-based argument[1] seems to be very strong—and precisely because of the point that Caplan gets wrong.

Despite the fact that individuals make many terrible mistakes in their private decisions, there’s no group of decision-making “experts” whom we could trust to improve on these mistakes. Rule by psychologist-kings would be no more desirable than rule by economist-kings. So as long as we have reason to think that in their private decision making, people’s reliance on the feedback from their decisions will be less cognitively taxing than political decision making tends to be, then I think we have a supremely realistic case for libertarianism.

Notes

[1] Presented more fully in my “The Epistemology and Politics of Ignorance,” Critical Review vol. 17, nos. 1-2.

Also from This Issue

Lead Essay

  • The Myth of the Rational Voter by Bryan Caplan

    In this month’s lead essay, George Mason University economist Bryan Caplan argues that voters are not just ignorant, they’re irrational. According to Caplan, when the cost of holding irrational beliefs is low—as it is in religion and politics—we should expect a lot of irrational belief. “Even when his views are completely wrong,” Caplan writes, “[the voter] gets the psychological benefit of emotionally appealing political beliefs at a bargain price.” But the low personal cost of irrationality has a high social cost. Caplan provides statistical evidence of voters’ “systematically biased beliefs” in economics, and argues this undermines the electorate’s ability to implement good policy. Caplan suggests we should rely “less on democracy and more on private choice and free markets,” in addition to several other provocative reforms sure to make civics teachers blanch.

Response Essays

  • Outsmarting Democracy? by David Estlund

    In his reply to Bryan Caplan’s lead essay, Brown University political philosopher David Estlund argues that neither of Caplan’s proposed alternatives to democracy, markets and experts, satisfactorily correct for the problem of voter irrationality. With respect to experts, Estlund observes that political questions are moral as well as empirical: “[M]aybe … my morally wise mother would perform better overall than the economists. That settles nothing, since there is no entitlement to rule others based simply on the fact that you know what is best.” As far as markets go, Estlund says “Voters and market actors are the same people, so we should expect the charges of ignorance and irrationality to be leveled against people in both guises… In the aggregate many market mistakes, like voting mistakes, affect everyone.”

  • Caplan’s Republic by Loren Lomasky

    University of Virginia political philosopher Loren Lomasky compares Caplan’s criticism of democracy and defense of expertise with Plato’s argument in The Republic, while noting that in a modern system of representative democracy, voters choose among candidates, not policies. “If voters are as intellectually maladroit as Caplan suggests,” Lomasky writes, “then they are incapable of mastery of their elected representatives,” who are thus left with a fairly free hand to set policy. “What [voters] can do, though, is ‘throw the rascals out,’” and that, Lomasky argues, is good enough.

  • Irrationality, or Just Plain Ignorance? by Jeffrey Friedman

    Jeffrey Friedman argues that Caplan’s charge of voter irrationality relies on the unrealistic idealizations of economic theory and that “[v]oters who don’t understand economics because they haven’t been exposed to it, or because they’ve been exposed to it but have found it tough going, aren’t irrational; they’re just ignorant.”

The Conversation