The Chamber of No
By Bryan Caplan
Once you agree that limited government provides valuable insurance against future bad policies, the next question is: “How can government be limited?” As my last post mentioned, there’s a standard list, with supermajority rules, division of powers, judicial review, and federalism at the top. But this is only the beginning. How about creating a special review board with the power to block (but not pass) legislation? Think of it as the “Chamber of No.”
If the Chamber of No were elected by the usual processes, its partisan composition would oscillate just like the rest of the government. But what if the Chamber’s members had long-terms appointments like the Federal Reserve Board – or lifetime appointments, like the Supreme Court? Activists would naturally complain about the “dead hand of the past.” But if you desire insurance against future bad new policies, the dead hand of the past is your friend.
But who should receive these appointments in the first place? Let’s back up a bit. Economists have a standard story about selecting central bankers. Since there’s a bias towards inflationary finance, even liberals have a good reason to favor conservative central bankers, often known as “inflation hawks.” As my old macro teacher Ken Rogoff explains in his famous article, “The Optimal Degree of Commitment to an Intermediate Monetary Target“:
It can be entirely rational for society to structure its central bank in such a way that the monetary authorities have an objective function very different from the social welfare function. Whenever a distortion causes the time-consistent rate of inflation to be too high, then society can be made better off by having the central bank place “too large” a weight on inflation rate stabilization. The model presented here may help explain why many countries set up an independent central bank and choose its governors from conservative elements of the financial community.
If you buy Rogoff’s logic for central bankers, who should staff the Chamber of No? Anyone in search of political insurance should want someone with a strong general inclination to veto new legislation. Who has that inclination? Not liberals. Not conservatives. Not socialists. Not populists. The correct Rogoffian answer in this case is… libertarians. Whatever your political views, the best people to protect you from future bad government policies is people ideologically committed to the idea that government policies tend to be bad.
To be fair, this doesn’t mean non-libertarians would want to appoint extreme libertarians to the Chamber of No. Rogoff explains why normal people wouldn’t want their conservative central bankers to be too conservative:
Although society does want the central bank to place a large weight on inflation rate stabilization relative to employment stabilization, society will not (in general) want the weight to be infinite. By having the central bank place an infinite weight on inflation stabilization, society could succeed in bringing inflation down to its socially optimal level. But the central bank would also end up responding very inappropriately to supply shocks, allowing them to pass entirely through to employment
The same logic holds for the Chamber of No: You want its members to be more libertarian than you, to bolster insurance against future bad policies. But if they’re too radical, they’ll veto everything – and few non-libertarians want that.