Voters As Mad Scientists

Bryan, your link ought to go to some actual analysis explaining why European labour market regulations are “grotesque”, but it actually goes to a link to you, saying the same thing, somewhere else. This ouroboros of reference is unconvincing to say the least.

I also note that you appear to be telling GMU students that “generous unemployment benefits with long duration” constitute a labour market regulation. They clearly don’t. They’re a government subsidy to idleness, but that’s not the same thing as a labour market regulation at all.

By the way, you appear to be claiming that the US unemployment rate is “less than 5%”. The BLS figure for March was 5.2% and the ILO figure for February (comparable with European numbers) was 5.4%; close, but both these numbers are greater than 5%.

You also refer to “[European] enormous and persistent unemployment rates of 10, 15, or 20%” and this is wrong by significant amounts; the actual figures are 8.0% in Italy, 9.8% in France and 9.7% in Germany (ILO measure). Looking at the more regulated social welfare states of Europe, the Netherlands was on 4.7%, Denmark on 5.0% and Sweden on 6.5%. The only major European economy for which your statement is even nearly true is Spain (10.3%) and Spain has a known and large fraud problem which biases the unemployment number up. Japan, a regulated labour market if there ever was one, has an unemployment rate of 4.6%.

It is possible to have a debate about the merits of different labour market arrangements, but it would really have to start from a position of basic accuracy about the figures.

Well presumably their unemployment isn’t involuntary then; if someone has managed to work the system to pay them to stay at home, then I doubt that they would describe this as “grotesque”. For what it’s worth you can add another thick half percent to the US figure for people who aren’t in the labour force because they’re in prison; that’s what I’d call “grotesque”.

By the way, while I do not doubt in the slightest the figures dsquared quotes, the ILO web site makes it awfully hard to find individual countries’ unemployment rates; I could not find the French, German, and Italian figures he cites although it was easy to find averages across the EU.

I’d have to see some awfully compelling data to convince me that people aren’t self interested when it comes to voting. How could such a claim be squared with any of the findings of the Public Choice school?

What does strike me as likely:

1) An analysis of self interest can’t be confined to dollars when regulation of the activity of others is an option. Dollars are a proxy for economic self interest because there aren’t many other choices available. However, it would be a very high dollar value for a NOW member to trade away access to abortions.

2) Self interest reflected in voting habits follows dollars more closely at low income levels than high income levels. This is just to say that there is a diminishing marginal value of dollars relative to other regulatory, er, opportunities as one has more dollars.

3) The two party, winner take all system confuses analyses of voting for self interest to a great degree. I may hate everything else about a candidate, but if the other guy is trying to ban private ownership of firearms, I will do whatever it takes to keep him out of office. I am being self interested when I do so.

I’m inclined to believe that SIVH is false. The “rational” voting choice is to stay home, since the odds that your vote will make a difference are infinitesimal. So if you bother to vote, it’s most likely to be out of a sense of duty, and for a cause of some sort. Not necessarily a good cause. Ethnic hatred, of immigrants or minorities, is a frequent bad cause for turning out to vote.

If people ever behave as “rational” voters, their votes are probably a secondary, rather than a primary, effect of their interests. Thus, to take the case of Jason Lignon, I would guess that Jason probably believes, not only that it is in his self-interest to own a fun, but also, rightly or wrongly, that he has a constitutional and/or natural right to own a gun. If he owned a gun from self-interest but believed that it was morally wrong, something he was ashamed of, and that a universally gun-toting society would be a bad thing, he probably wouldn’t announce his gun ownership in the comments of a blog. And in the voting booth, I suspect he would vote against gun-rights candidates, or at least be more likely to do so. In fact, Jason Lignon may own a gun because of his moral beliefs as much as because of his self-interest. If he thought gun ownership would help protect him but was nonetheless bad, he might choose not to own a gun.

It’s the same on economic issues, and, worse, on ethnic and communal issues. If I am rich, I am likely to rationalize my wealth by adopting pro-capitalist beliefs, according to which property is a natural right, and my economic activities benefit others. If I am welfare-dependent, I am likely to rationalize my dependency on a welfare check by adopting beliefs about the dysfunctional and exploitative nature of pure capitalism. If I am a Serb, I am likely to accept historical narratives which vilify the Croats. We vote based on beliefs and values, but to some extent we adopt beliefs and values which are self-serving and serve to justify and legitimize whatever lives we have chosen.

If people voted “rationally,” (including if interests give rise to self-serving beliefs and values, which in turn motivate the voter) it would create problems for democracy, first because redistribution is virtually always in the interests of the median voter, second because majorities have little incentive to respect minority rights. So it’s good news that SIVH does not hold. Yes, there is a possibility of mad scientist voters; but there would be if SIVH held, too.

Michael Barone’s essay on “The Trustfunder Left” is a good portrayal of one group of mad scientist voters. Barone writes:

Examining the political map of America, as I am obliged to do as I write the chapters of “The Almanac of American Politics 2006,” reveals a previously unidentified segment of the American electorate, one which has been growing for some years now but has reached a critical mass and become a major force in one of our two great political parties: the trustfunder left.

Who are the trustfunders? People with enough money not to have to work for a living, or not to have to work very hard. People who can live more or less wherever they want. The “nomadic affluent,” as demographic analyst Joel Kotkin calls them.

These people tend to be very liberal politically. Aware that they have done nothing to earn their money, they feel a certain sense of guilt. At the elite private or public high schools they attend, and even more at their colleges and universities, they are propagandized about the evils of capitalism and globalization, and the virtues of environmentalism and pacifism. Patriotism is equated with Hiterlism.

Most socialist leaders and thinkers, including Marx and Engels, Lenin, and Rosa Luxembourg, have been from the middle class or the aristocracy. Osama bin Laden, whom Niall Ferguson calls an “Islamo-Bolshevist,” follows the same pattern. Living on unearned wealth themselves, they consider all wealth unearned. And in order to assuage their guilt, they embrace self-confessedly generous, idealistic causes.

Analysis of SIVH, I think, leads to an appreciation of why Christianity is correlated with democratic capitalism. For Christians, moral judgment should be pointed inwards as much as outwards. “Judge not,” said Jesus, “that ye be not judged.” A Christian is forever reminded that he, too, is a sinner. He is exhortation to introspection, to doubting his own rightness. This interferes with the process by which we let our self-interest invade our beliefs and values.

To reiterate, people vote based on beliefs and values rather than self-interest; but in order to justify themselves, they are likely to form beliefs and values that correspond to their self-interest. A Christian, aware he is a sinner and exhorted to judge not, is less likely to form beliefs that justify his class interests. This is especially important among the poor, lower middle class, etc., who are less likely to blame the rich for their problems, or demand redress from the government, and more likely to look inward for the source of their problems. It is no accident, then, that democratic capitalism has always flourished most, and continues to flourish most, in Christian countries.

(1) You omit the possibility that voters might be thoroughly selfish and hopelessly confused intellectually. (2) The idea that the rational selfish thing to do is not to vote assumes that there is no utility value in voting.

“you can add another thick half percent to the US figure for people who aren’t in the labour force because they’re in prison; that’s what I’d call “grotesque”.

1. You assume that the people in prison would not have jobs if they were not in jail. In fact at least half of them would.

2. The murder rate has halved since 1981, with simillar trends for other violent crimes. But as usual the left only has sympathy for rapist, murderes and terrorist, and non for their victems. No wonder Hillary wants to give the vote to violent criminals, she is pandering to her political base.

“Well presumably their unemployment isn’t involuntary then”

The incentive structure that makes work unprofitable (taxes, subsidies and regulations) is enforeced through coersion. The same people would of course like to work if the state had not put a massive wedge between their output and what they got to keep. So clearly this IS involuntary.

The slums of Paris and Stockholm are soon riveling the american innder cities, and Europe didn’t need 400 years of Slavery and Segregations to get there. Just the collective stupidity of socialism.

Unemployment numbers are certainly hard to compare (even though OECD prints something they call “standardised unemployment rates”). But if we look at employment, the figures for the regulated social welfare states of Europe (i.e. Scandinavian countries) are at least as high as US figures (Swedes has a higher employment rate than US as one example).

Thus, I wish could see some compelling evidence that regulated labor markets is the answer to european unemployment, but…that is quite hard (as confirmed by several OECD papers). It is more likely to affect flows into and out of unemployement rather than levels.

Bryan and Jason

With regard to:
The two party, winner take all system confuses analyses of voting for self interest to a great degree.

This is true but not nearly half of the issue. Bryan’s Vietnam example illustrates that. If we want to answer questions about intentionally self-interested behavior we have to also acknowledge the differing types of complexity involved in voting behaviors (personality, prioritization, ignorance). My primary problem with trying to discern patterns reflecting SIVH is that voter reasoning is replete with the informal logical fallacy of Argumentum ad Hominem Circumstantial. Our representative democracy (AKA democratic republic) substitutes candidate preference for policy preference.

A logical exception is when voting on ballot initiatives. If we want to free ourselves from personality preferences and prioritization of issues in evaluating voter behavior we should focus on these types of elections. You might want to skim “Citizens as Legislators” and “Polycentricity and Local Public Economies”. Both help to describe how individuals and communities address collective needs/problems; not necessarily how they vote for representatives. They are, in fact, distinct behaviors.

It seems to me that you would have to deconstruct a vote into the issues at play in each voter’s decision-making process, evaluate their individual issue preferences and priorities, and then reconstruct their preferences into a voting behavior to complete the analysis in representative elections. I haven’t been convinced by any such reassembly that I’ve read that this has ever been done successfully.

Admittedly without any proof to speak of, my own explanation for voting shorthand (ad Hominem) is that voters are progressively isolated from the full and direct impact of their voting decision. The degree of impact the voter anticipates has something to do with the quality and quantity of information they seek and therefore the reliability of any SIVH analysis.

A game that politicians play (this is confessionary) is to elevate an issue to a higher arena (one with a broader constituency) than it might appropriately deserve in order to change the dynamics of voter behavior. It backfires when you hit a nerve on a particular issue. A good current example can be found in the extensive threats to use ballot propositions by Governor Schwarzenegger. Again, speaking solely from personal experience and observation, the more often this occurs, the less involved and therefore less concerned voters seem to be. Oddly, those who don’t vote seem to agree when they express fatalism or indifference. It’s easier to get reelected when your participatory constituency shrinks and your informal job description becomes clearer. You may want to reexamine notions of voter sovereignty and voter intent. I voted for a write-in candidate for president in 2004. It was ideological, fatalistic, and if you asked me, self-interested. But, you could produce respectable arguments to each of those adjectives.

I’m sure glad I chose physics over econ or poly sci. Trying to determine whether voters are selfish or unselfish seems impossible to me. For example, a citizen votes on a bill concerning socialized mental-health care:
1) Does this person vote yes because they care for the mentally ill or they think that the streets would be safer for them?
2) Does this person vote no because they don’t want their taxes to increase or because they think that the government will likely do more harm than good?

If asked, would this person even tell the truth about why they voted they way they did?

Heck, every four years I vote for president knowing that my vote will have no effect on the outcome, but I do it anyway. I can barely discern why I vote the way I do, much less figure out why others vote the way that they do. IMO, most voters have no real idea of the consequences of their votes. Without economic literacy, how can any such person cast a “reasonable” vote–one that has an overall positive result.

Here’s an odd real-life example: A tenured professor of physics who is a Democrat. She favors Social Security, nationalized health care, etc. She also thinks that it is immoral for couples to have more than one child. Huh? This from a mathematical physicist? She is obviously an economic illiterate, since the decline in population would be so precipitous as to make these social programs totally untenable. Her views are contradictory at the least!

How do these voter theories deal with such ignorance? Isn’t the ignorance much more important than voter self-interest, so much so as to make the question irrelevant? A little help here, please. I think I need it.

Tom,

Re; Of course, if the wealth gap grows, their happiness goes down, even as their income goes up.

Interesting statement, but it doesn’t match my experience. Sure, I’d like to have as much money as Bill Gates, but the fact that Bill has more than I do doesn’t change my happiness level one way or the other.

The reason your statement interests me is that you prefix it with the words “of course”. The assumption that inequality is a source of unhappiness is very common among the left leaning crowd. I’m wondering what you base it on.

Tom West says:

‘And to those who would complain that this philosophy would leave us all lower standards of living, may I remind you that you probably *aren’t* actively unhappy that all of our standards of living aren’t twice as high as they are now.’

Let me assure you I AM actively unhappy. The great 20th Century experiment in economies run by governments has left the entire world with perhaps one-half or less of the wealth we would overwise have had. Been to Africa? Been to Russia? Been to Latin America? They could use it.

“Regulated labour markets (potentially) stop people from working when they want to. Social welfare states pay people when they don’t want to work. It’s not the same thing at all.”

1. You are wrong. Let me repeat: The welfare state does not “pay people when they don’t want to work”, it artificially reduces the the profitability of work and induces people not to (want to) work.

The same people would like to work in a envirement where the value created by work was not nulified.

2. Early retirement is roughly the same as long term unemployment in many countries in Europe (Scandinavia, Holland, Italy, Greece). People simply go from longterm unemployment to early retirement afte rsome time. We are not talking about sick people or those who have saved enough to enjoy their 60s as in the US. Most of the increase in early retiremtn in Sweden is 40-50 year olds who have been out of work for long times.

3. If people cared more about relative position than absolute income we would not observe Mexicans flooding the US, we would see american or at least Hispanic americans moving south. People obviously prefer to be lower class in America and own two cars rather than being upper middle class in Mexico and own one.

As usual the liberals are decoupling their political views (cheap to be wrong, everyone one bears the costs) from their private behaviour.

4. That people are not substancially happier now than 100 years ago is not a mysteri. We are genetically designed not to be happy for long periods. Happiness is mainly a ratio of outcome and expectations, with Mean Reversion. The refugee in Sudan who finds an extra piece of bread is probably happier than most of you reading this post, for a time.

Happiness is therefore the wrong measure of utillity. What matter is “being well off”, in the sence that you rather want to be one than the other.

Bill,

Well said.

Tom,

Okay, I will concede that inequality does cause a measure of happiness, as jealousy is certainly a form of unhappiness.

So which is the more appropriate response?

a. Accept the existance of inequality and responsiblity for one’s own actions. Study the methods used by those with more and try to emulate them.

b. Allow the jealousy to persist. Assign responsibility and/or blame for the inequality to those with more, or to society in general.

Personally, I choose option a. But the truth is that option b seems to work for a lot of people. It has resulted in “progressive” taxation which helps them to meet their “needs”. Perhaps it even helps them to achieve greater happiness, though it seems to me that the “success” of jealousy results only in the persistance of jealousy.