In this article (for which the publisher charges a mere $36), he writes,
We can’t seriously think that people are narrowly and permanently self-interested, because the costs of enforcing agreements and constantly guarding against fraud or theft would be overwhelming.
This is from a symposium in Critical Review on the motivations of political actors, both ordinary citizens and leaders. A simple view is that people vote their self interest and political leaders act in their own self interest. An alternative simple view is that people vote in the public interest and political leaders act in the public interest.
We might grant the alternative simple view as describing the intentions of most political actors. Still, representative democracy may do a poor job of arriving at good results, because intentions do not necessarily map well to consequences.
Suppose we are looking at Energy Secretary Steven Chu’s granting of government-guaranteed loans to energy companies. As Robert Murphy explains, such loans are bad economic policy even if there are no defaults, and even if there was no political favoritism involved.
When political actors are motivated by the public interest to allocate resources, we should not jump for joy. Instead, we should shout in protest.
READER COMMENTS
Jack
Feb 7 2012 at 1:40pm
A simple reply to Munger is: Yes, everyone is permanently self-interested, but most people have *dynamic* self-interest. Why loot today and ruin a potentially lucrative long-term relationship? There is no contradiction here. Whether self-interest is more dynamic or more static depends, I suspect, on the quality of institutions. Cue Fukuyama’s Trust, and other similar arguments.
greenish
Feb 7 2012 at 1:52pm
The costs of enforcing agreements and guarding against theft are overwhelming.
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