Anthony de Jasay uses the evocative metaphor of Ulysses bound to the mast, restrained by knots beyond his reach, and secured by his admonition to the crew to ignore his pleading. That’s the paradox of Ulysses’ command: “You must obey the following order: Disobey me when I order you to release me.” I found it strange, however, when de Jasay complains that “little or no awareness is shown of the ‘incentive-incompatibility’ of limits that would exert real rather than illusory restraint.” Really? I would have said that consideration is at the very heart of modern public choice theory.
The example of Ulysses/Odysseus is important, because it demonstrates just how complex the problem of commitment can be. Suppose the foremost rule of behavior is this: Obey the ruler. Suppose further that the ruler has no other constraints on his behavior. Would a self-interested ruler accept this situation? He would not, if he could help it. A self-interested ruler wants, in fact needs, the power to impose limits.
The first thing Ulysses does is bind himself, not to the mast but to a commitment to reward disobedience. More specifically, he gives up a significant power (the power to have his commands obeyed) in order to make himself better off. He must create in his men the expectation that they can disobey the command, “Release me! Untie me!” without fear of the punishment that would surely follow any other disobedience.
This incentive-compatibility of giving up power has been documented often, in the work of Robert Bates, Jack Knight, Douglass North, Barry Weingast, and others. Consider: Why was the English government able to borrow freely, financing huge capital expenditures on army, navy, and infrastructure while the French government was always cash-strapped? Paradoxically, the problem was that the French government was too… powerful! The French king could not order his subjects to disobey.
The English king had had power stripped away in two major stages. The first was the signing, under duress, of the series of documents (between 1215 and 1295 A.D.) called “Magna Carta.” These limited the power of the king, providing property and due process rights to the nobles. The second step was the reforms forced through by the remarkable person of Sir Edward Coke. Coke invoked Magna Carta, but in fact succeeded in making entirely novel claims that restricted the power of the king more than ever before. In 1628, Coke made the fundamental claim of English Whiggery: “Magna Carta is such a fellow, that he will have no sovereign.” After the second stage, the power of the king was limited by separation of powers, checked by the veto of the House of Lords.
How could the comparative weakness of the English king be a strength? North and Weingast (1989) document the point at length, but it can be summarized briefly: the English king, and therefore the government, could borrow money at reasonable rates from private wealth-holders. And private wealth-holders would voluntarily offer that money, and those rates, because the government had to pay the money back. The Sirens’ song in this case was debt default. If the king can renege without consequence, private wealth-holders disguise their wealth and withhold their cooperation.
And that is how the French government suffered the weakness of its strength. That weakness suggested the title of my essay: An omnipotent king cannot make a rock so big it can’t be lifted. With no Magna Carta to guarantee due process rights and protect property, nobles jealously guarded their wealth. No loans were available, and few nobles trusted the king enough to provide troops. With no House of Lords to veto regal decrees, the king could make no credible commitments. An all-powerful king can lift any rock, or legal impediment, no matter how heavy.
Knowing this, potential loan sources insist on usurious interest rates, or simply disappear as wealth is disguised and hidden from expropriation. Investment shrinks, growth evaporates. The first time wet weather ruins the wheat crop, the peasantry march ominously toward Paris, carrying pitchforks and muskets.
What I have tried to establish is the obvious, and in fact well-known, incentive compatibility of limits on government and selfish governors. There are two other problems to consider, and space constraints require that I be brief in considering each. The first is the problem of limited government, not just limits on government, which has been my subject so far. After all, de Jasay makes a narrower claim than I have attributed to him: he said limited government, in the sense of extremely modest goals and powers, is inconsistent with the self-interest of governors. There is quite a distance between the question he raised, and the question I have tried to answer.
The second problem is the making of commitments, the making of credible commitments, even in a world where genuine limits on government are desired. Is there any way to get there from here? That is, as a matter of pure political physics, of engineering, is there a means of making rocks bigger than a creative, and motivated, monarch can find a way to lift? This is different from the ex ante problem I have discussed so far. This is the ex post problem Ulysses faced after he was bound. His struggles were so powerful, his strength so great, that he broke through the ropes binding him to the mast. Fortunately for Ulysses, two of his strongest men caught him, and bound him with unbreakable chains. Notice the sequence of events: Ulysses gives orders that he is to be restrained. He tries to break free. His men obey the previous command, ignoring the current command (“Let me go! They are so beauuuuuutiful!”), and thwart him.
Limited Government, Not Just Limits on Government
De Jasay correctly notes the importance of rules on making rules, and notes that it must be logically antecedent. But I believe that his dividing line between conventional constraints and formal rule constraints is artificial. Further, I would say that conventions are the most likely source for the “first rule of rule-making.” The problem faced by most nations, it seems to me, is the gradual elimination of the conventional belief in limited government, and the increasing sense of hubris animating experiments in governmental rationalism. Restrictions on the domain of proper governmental control are being swept aside, precisely because there is no conventional belief (e.g., “the government that governs best, governs least”) in a minimal state.
And de Jasay’s pessimism is most clear, and (I believe) most accurately expressed when he addresses “the frontier between the ‘zones’ of individual and collective choice.” When I teach undergraduate classes, I spend a long time on this problem, and am amazed that students have never thought about it before. Most of us are used to property rights of the conventional sort, where some things are mine, and some things are yours. Brothers draw imaginary lines in the middle of the station wagon’s back seat, and a quick darting hand across the line draws a punch on the arm, until Dad yells from the front seat, “Don’t make me stop this car!” We are all used to property, the line between what is mine and what is yours.
But de Jasay nails the missing concept beautifully: where is the dividing line, the frontier, between what is mine and what is ours? This line is often invisible, the frontier unguarded and open to trespassers and smugglers. As de Jasay puts it,
To the extent that the collective choice rule can define or by a rule-change amend the frontier, its zone may encroach on the zone of individual choices, while the reverse is of course not the case; individuals have no rule-making power enabling them to encroach on the collective zone.
All that could possibly stand in the way is a social convention, a sense that the line between what is mine and what is ours exists, is real, and is important. It is this conventional understanding of the individual that stands most in danger today.
A brief example is useful at this point. It is one I often use, and comes from my 2000 book, Analyzing Policy. Imagine there are five citizens in a town, three of whom like very much to swim. The other two do not swim, and do not value access to a swimming pool.
At a city council meeting (all five citizens!), a proposal is raised: Let us build a municipal swimming pool. It will be financed at a tax of 1/5 of the cost for each citizen. And all citizens will have equal access to the pool, at all times.
The non-swimming citizens protest bitterly. A pool is not a public good. In fact, since its attractive nuisance status makes building a fence imperative, exclusion is nearly costless: just lock the gate. Pools, argue the “drys,” should be Buchananesque “club goods.” (Buchanan, 1965). No reason the pool should be municipal, and financed out of a general tax.
The “wets” caucus, confused. They only want what is good for all; how could anyone oppose something as wonderful as a pool? Finally, they realize that the “drys” are serious, and propose a vote.
“A vote? A vote?” the “drys” gasp. “Votes are to decide the quantities of public goods to be provided. We can’t use a vote to decide whether something should be publicly provided! That is…that’s theft!”
A majority of the city council (the three “wets”) tells the “drys” they have to shut the heck up, and quit whining. The question is called. Debate is closed off, by majority vote. And the “Build a municipal pool” motion passes the city council, by a vote of 3-2.
What is most appalling about this state of affairs is how often it happens, and no one is appalled by it, or even really notices it. This, if I understand aright, is de Jasay’s point. Notice what happened: a decision about what is mine, and what is yours (do you want to join a private club, which will provide a pool to its members?) is transformed to a decision about the level of provision of a public good (We are going to build a pool; you are going to pay 1/n of the cost; now, how big should the pool be? You get to vote, so it is fair!)
The problem is that I never had a voice in the transformation, and it is a profound transformation indeed, that took the decision about the pool from the private realm, where I have clear and defined rights, to the public realm, where I have diffuse and changeable rights. This frontier, where trespass and smuggling are the sine qua non of modern democracy, is undefended. We are the guards, and we are asleep on duty.
How Would Limits Work?
The way the problem is usually posed, there is a dimension of power government exercises over the people. At one extreme is the total absence of government; at the other is utter domination. A government design must choose the “optimal” level of power, recognizing that too little power may result in chaos and external aggression, and too much power in enslavement and repression.
But such a statement misses a fundamental result of Enlightenment thought, the value of separation of powers. A useful analogy might be a decision to use nuclear weapons in case of an attack by some foreign power. Authorizing such an attack might be too much of a responsibility for any individual, so a set of protocols are put in place to ensure there is no accidental or malicious launch. In particular, three different individuals, each with a separate “key” or encrypted launch code, might be required to activate the weapons.
The point is that this is a very powerful “government,” in the sense that it could marshal weapons of nearly unimaginable destructive power. But it would have great difficulty actually using this power, because each of three quite different people, representing different bases of authority, are required to use them. Still, if the different representatives were all agreed, enormous power would be wielded.
The separation of powers principle is universal, though it is often misunderstood. Why is government so often inefficient, and fractious? Because conflict is built into any system that uses separation of powers to limit government. And separation of powers is not just statically limiting, but also dynamically so. Each actor empowered to veto government action must have the power to chain Ulysses up if he breaks the bonds that have held him until now.
The danger to limited government, the threat to the Montesquieuan system of checks and balances, comes from an unexpected source. “Good government” types, people who want to improve the “efficiency” of government, are termites eating away at the walls that protect us from tyranny. And enormous damage has been done, in just the ways that Anthony points out. But I am more hopeful than de Jasay, perhaps because I see the first light of recognition in a lot of citizens’ eyes. The last thing you want is an efficient government. Our only choices are a truly weak, but efficient, limited government, or else a powerful government prevented by strong ties from using most of its powers, most of the time.
Buchanan, James M. (1965) “An Economic Theory of Clubs.” Economica 32: 1-14.
Charles Louis de Secondat, Baron de Montesquieu, Complete Works, vol. 1 The Spirit of Laws .
Munger, Michael C. (2000) Analyzing Policy. New York: W.W. Norton.
North, Douglass, and Barry Weingast. (1989) “Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century.” Journal of Economic History. 49, 4: 803-832.