Motorcycles, not Cars

Yesterday, in my Cost/Benefit Analysis course, I covered the highlights of public choice. One of the pieces I like to use is a short chapter from David Friedman’s modern classic, The Machinery of Freedom. The chapter is titled “And, as a Free Bonus.”

Here’s a key paragraph:

When you elect a politician, you buy nothing but promises. You may know how one politician ran the country for the past four years, but not how his competitor might have run it. You can compare 1968 Fords, Chryslers, and Volkswagens, but nobody will ever be able to compare the Nixon administration of 1968 with the Humphrey and Wallace administrations of the same year. It is as if we had only Fords from 1920 to 1928, Chryslers from 1928 to 1936, and then had to decide what firm would make a better car for the next four years. Perhaps an expert automotive engineer could make an educated guess as to whether Ford had used the technology of 1920 to satisfy the demands of 1920 better than Chrysler had used the technology of 1928 to satisfy the demands of 1928. The rest of us might just as well flip a coin. If you throw in Volkswagen or American Motors, which had not made any cars in America but wanted to, the situation becomes still worse. Each of us would have to know every firm intimately in order to have any reasonable basis for deciding which we preferred.

This was originally written, by the way, in 1973 or earlier, which explains the presence of American Motors and the absence of Nissan, Toyota, Honda, etc.

A student of mine, Kurt Celis, said that there was a problem with the analogy. A better analogy, he said, is that both of the major candidates for President are like motorcycle companies. So, for example, being a U.S. Senator is like producing motorcycles. In 2008, we got to choose between two guys who had been Senators (producing motorcycles.) We can look and see how good they are at producing motorcycles. But then, on that basis, we must decide how good we think they would be at making cars. In other words, the choice we must make is even tougher than David Friedman said.