Caplan on the Myth of the Rational Voter
Jun 25 2007

Bryan Caplan, of George Mason University and blogger at EconLog, talks about his book, The Myth of the Rational Voter: Why Democracies Choose Bad Policies. Caplan argues that democracies work well in giving voters what they want but unfortunately, what voters want isn't particularly wise, especially when it comes to economic policy. He outlines a series of systematic biases we often have on economic topics and explains why we have little or no incentive to improve our understanding of the world and vote wisely. So, it's not special interests that are messing things up but the very incentives that lie at the heart of a vote-based system. This is a disturbing and provocative lens for viewing political outcomes.

Rodden on the Geography of Voting
Jonathan Rodden, political science professor at Stanford and a senior fellow at the Hoover Institution speaks with EconTalk host Russ Roberts about the geography of voting. The main focus is on the tendency of urban voters around the world to...
Caplan on Immigration
Bryan Caplan of George Mason University and EconLog blogger talks with EconTalk host Russ Roberts about immigration. Caplan takes on the common arguments against open borders and argues that they are either exaggerated or can be overcome while still allowing...
Explore audio highlights, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.
Econtalk Extra

Walter Williams on Life, Liberty and Economics

Professor, Radio Host, and Syndicated Columnist Walter Williams of George Mason University talks with EconTalk's Russ Roberts about his early days as an economist, his controversial view of the Civil War, the insights of Adam Smith and Friedrich Hayek, and...


Caplan on Hayek, Richter, and Socialism

Bryan Caplan of George Mason University and blogger at EconLog talks to EconTalk host Russ Roberts about two books: Eugene Richter's Pictures of the Socialistic Future and F. A. Hayek's The Road to Serfdom. Both books warn against the dangers...


Brad Hutchings
Jun 26 2007 at 4:06am

Russ, you should sell books. Bryan, I bought it through your site. I listened at the gym tonight and text messaged thoughts to my e-mail as I listened. Nobody there would have wanted to have anything to do with my picnic blanket… I have a couple of questions:

1. What do you think of the myth of the rational talk radio listener? Bryan brought up former California Governor Gray Davis toward the end of the podcast. The recall was totally talk radio driven, especially in the LA area by KFI’s John and Ken. Among other pet issues they have are anti-illegals (bad) and anti-carpool lanes (good). Recently, they had a contest for LA’s worst commute in conjunction with the Reason Foundation.

2. From my own academic experience, I find myself quite sympathetic to Michael Crichton’s skepticism/cynicism/suspicion of scientism (the belief that we should defer to experts in the name of finding truth) as expressed in the epilogue to State of Fear. I was fortunate to have an undergraduate class (1991) taught by Rowland and Cicerone (Nobel Prize winners fro UC Irvine for work on CFCs), and left with a profound distrust of scientists who seek to play in the political sphere. I see global warming as an attempted replay of CFCs on a bigger scale. And yet, Monday, global warming cheerleader in chief Al Gore lamented that scientists didn’t reach “consensus” fast enough for effective political action. Make a case that we would do well to trust economists more than we would atmospheric scientists ;-). I think a case lies in the economics discipline knowing what it doesn’t or can’t know, but I’m just the peanut gallery…

Steve Woods
Jun 26 2007 at 5:02am

Dear Russ and Bryan…thanks for a great podcast. As an ex-elementary school teacher that stumbled into the field of economics while teaching the history of money to 5th graders, I am now also among those who are frustrated by my “educated peers” who are completely illiterate about basic economics. Bryan’s comment that “economics must be fun” is relevant to me as I am currently reading Charles Wheelan’s book NAKED ECONOMICS, UNDRESSING THE DISMAL SCIENCE. If you’re looking for a book to enlighten the economically illiterate and keep em laughing at the same time, this is a definite must read or holiday gift to share with the masses. It’s the best intro to economics out there bar none. Steve Woods

Jun 26 2007 at 11:41am

Just to stir the pot a little….Bryan I enjoyed your book but honestly found it somewhat disturbing. Maybe the following best summarizes my intpretation.

Assume Bryan you are running for offcie. After reading your book this is what I would expect your first stump speech to be.

“Voters, you are illiogical in your voting patterns. So my policy will be to knock the democratic process down a notch or two and to put more of the decision making into the hands of the market (you know guys like Enron, Worldcom, Blackwater, Halliburton…) to help improve your life and to protect you from your own bad decisions. Now if you would all just vote for me…..”

Bryan Caplan
Jun 26 2007 at 2:44pm

Personally, I wouldn’t run for office.

If I were running, though, I’d try a friendlier sales pitch.

And if I were giving lists of firms to inspire trust, I think I could name hundreds of honest ones that satisfy their customers for every dishonest one that made headlines. 🙂

Jun 26 2007 at 4:28pm

I have a question about the argument against farm subsidies.

A farmer I know mentioned to me that you could only support a family with around 500 acres of land. He also mentioned that he knows a number of people that farm less than or equal to about 500 acres that work a regular job in addition to farming in order to make a living.

According to this same farmer, an arable acre of farmland costs $3000-5000. In essence, you are looking at a $1.5 million investment to start a profitable farm with the subsidy program in place.

I’m sure that there is a lot of abuse of the system and I tend to agree with your point of view against subsidies, however, I wonder what would happen to all of the land that is currently being used as farmland if the subsidies were to go away?

I tend to be pessimistic by nature, so I tend to adopt a Malthusian point of view. Smaller farmers (who don’t have $1.5 million or 500 acres) will lose their land and have to move into urban centers to work and drive up unemployment (temporarily) in those areas. Arable land will be bought up by developers and turned into commercial and residential properties around current urban centers. Large corporations and prosperous landowners will buy up the farmland left.

I guess I always believed that the argument for subsidy is that we are hedging our bet for the future, wherein arable land, water, and food will be scarce (again a Malthusian idea).

Mr. Roberts and Mr. Caplan, I’d love to hear your thoughts on these views.

Jun 26 2007 at 8:50pm

Russ: Asking people what is the change in our standard of living since 1900 typically gets median answer is 50% increase…..While ……it is easily at least 5 times higher, probably 10 times higher, could even argue 30 times higher…..”

And since the early 1900’s regulation, minimum wages, unions ect have all increased. Yet are standard of living has not stagnated and in fact has possibly tripled times ten? Looks to me like democracy and the voters have done pretty good for themselves.

Do you know of a control country that we could compare to that has had minimal change in regulation since the 1900’s? I’m thinking Brazil or Mexico have not had near as much regulatory change as us.

Jun 27 2007 at 2:26am

Despite not buying into many of the economic theories advanced in these podcasts, I generally enjoy and learn from them. That said, this particular podcast was a bit much. The contrast presented between the irrational voter and consistently rational economist was reminiscent of arguments in favor of papal infallibility: the pope can do no wrong when acting in his official capacity, and economists can do no wrong acting in theirs. Undue simplicity, isn’t it?

Having captured a slice of the economics’ podcast market, please don’t lose it by putting out a shoddy product.


Gerard D.
Jun 27 2007 at 2:48pm

I have thought of an argument that I would like to share in response to those who naysay against economic science just because its findings aren’t intuitive to those who lack economic training.

Take any other science, perhaps physics is a good example. Many of the findings in Einstein’s general theory of relativity are not intuitive. For instance, it violates common sense to think that one’s perception of distance and time might depend crucially on the observer’s relative speed. And yet, as impossible as it seems, this relationship is borne out with incredible precision in experimental data.

Even sciences less esoteric than quantum mechanics are teeming with other examples. Plate tectonics, germ theory, the role of a chromosome in reproduction were not immediately obvious. Each had to be ‘discovered’ through rigorous scientific investigation, and represent the forefront of our understanding of the causes of phenomena in geology, epidemiology, and genetics respectively.

If people can accept that the world does not always work in ways that are obvious or easy to understand, I would have hoped that they could take a similarly critical view of their predisposed beliefs when evaluating economic science.

Jun 27 2007 at 4:57pm


My post 3 up from here suggests that regulation of business was associated with increased living standards. I look to 30 other developed nations and many have even more regulation with as good or arguably better standards of living. It’s no wonder every time you go to our national parks they are filled with Europeans on yet another extended vacation.

The empiric evidence to me suggest democracy and mixed economies are as good as it gets. Likewise much evidence suggest laissez-faire economies frequently devolve into corruption or autocracy with a struggling/minimal middle class.

No Einsteins here IMO.

Gerard D.
Jun 28 2007 at 3:59am

In non-experimental settings (such as the performance of an economy) correlation (in muir’s argument the coincidence of regulation and economic growth) cannot be equated with causation due to the possible omission of other relevant variables that may reverse (or generally bias) the apparent effect of the variable of interest. Likewise, if we were to observe the opposite (i.e. the coincidence of deregulation and economic growth) this would not necessarily be indicative of correct policy either.

How do we reconcile this problem?

Fortunately, all is not lost in the search for economic truth because stylized versions of reality in the form of mathematical models can simplify such questions to their essential elements, and yield intuition as to what would be the most likely outcomes of real world events. This is the foundation upon which economists base their beliefs. It is the application of this mathematical rigour that separates economist’s viewpoint from the layman’s.

Jun 28 2007 at 7:59am

Bryan, I just finished the book. But to be honest, I was skeptical of your premise of “irrationality” and I still am. I know this is a hurried post but here is my criticism. You make the point that people have suboptimal economic biases. I agree. People also have suboptimal social biases (they fear others freedom eg religion, sex, social conventions etc). I think both sets of biases reduce to the typical social versus political behavior (a la Nock) the individual versus the collective (a la Rand) etc. I don’t think the causal explanation of why a person tends toward one view is “irrationality.” I think factors like noise (randomness), cost of information, sloth etc. with the basic assumption that people try to maximize perceived utility efficiently (a la Muth) is still a reasonable theory. Please resist the sirens song of behavioral finance (economics). And no I’m not a dogmatic believer in rational man…


Jun 28 2007 at 9:45am

“It is the application of this mathematical rigour that separates economist’s viewpoint from the layman’s.”

The layman living in his real world will be glad to hear of these successful models I’m sure.

Certainly communist run countries and dictatorships have improved the lot of their people as they evolved to democracies with less regulation. But was it the change in regulation or the democratic aspects that improved their lot? Likewise in industrial/ developed countries I can think of no countries with major trends in deregulation that have vastly improved their economies. ? Ireland? China? any others? Most/ actually all seem to tend toward mixed economies with little real variation or trending towards more and more deregulation.

Maybe America over the last 30 years has done so more then any others…and it seems we are quite unstable as a result.

Brad Hutchings
Jun 28 2007 at 3:27pm

muirgeo, you’re flying at 20,000 feet when the observable facts and conclusions to be made based on them are shoulder high. To compare countries based on regulation, how shall we quantify it? Number of words in legislation? Number of bureaucrats? Time required for people to comply? What proxy would you choose? Then what output would you measure? GDP? Debt? Trade balance? Finding a correlation would not necessarily prove causation. For example, you might find that freedom to trade with foreign partners is a far bigger influence on a country’s success than number of pages of regulation.

One thing you can do, however, is look at the specific effects of deregulation efforts of various industries. Take telecom. My grandparents (85-ish) still say “I’m on the phone long distance”, a holdover from distance-sensitive pricing which was determined by regulations, not cost structures nor people’s willingness to pay. In 1980, an hour of phone time between residents (vs. more expensive business plans, another regulatory pricing distinction) of Los Angeles and San Francisco cost more than $20, in 1980 dollars. Today, after phone deregulation, it’s closer to $3 in 2007 dollars for land line, and free for mobile non-peak. You’ll find similar comparative price reductions since 1980ish if you look at shipping, as the trucking industry was deregulated about the same time in the US.

Or you can look at failures. Free market types are still evaluating everything that was done badly with electricity deregulation in California from a decade ago. Many experts could point out 100 ways that it wasn’t really deregulation, but an attempt to create a complex market without letting that market find itself. Telecom, trucking, electricity… These are the shoulder high things where we can collect lots of data and make meaningful conclusions. At your level, it’s philosophical, best fought out over a few beers and with no sharp objects in the room.

Bruce G Charlton
Jul 3 2007 at 8:20am

This was very good, and mostly convincing. There are a host of extremely valuable and mind-changing insights.

The only big problem comes with the section in which both Russ and Bryan are rubbishing ‘democratic fundamentalism’.

If democratic fundamentalism is defined as believing something like ‘majority voting always gives the right answer’, or ‘majority voting is better than markets’ then these are obviously incorrect, but I believe you are setting up a straw man.

My feeling is that Bryan needs to work on a definition of democracy which better captures its excellence – because I think there is as much reason to be an democratic fundamentalist as an economic one – democracy and economics are both major success stories in human history (the other one is science/ technology).

A better definition of democracy would be along the lines of having non-violent mechanisms for periodically replacing government systems with another system having different methods and priorities, and probably also having a choice of putative goverments (eg. organized opposition parties).

(It is the replacement of political systems that matters more than the replacement of personnel – although both are usually necessary.)

To my mind, a proper analysis of democracy would conceptualize it as the same kind of process as economic markets – but much slower, much simpler, much cruder (because there are so few selections).

But I sense that the real purpose behind attacking majority-voting is to get politics out of the market – which is fine. But this is happening over the long term anyway, it is part of the evolutionary porcess of modernization (see Ernest Gellner’s work, and Niklas Luhmann) – modern societies have much more autonomous economies than did traditional agrarian societies (where the economy was regulated by the military and religions, both).

Therefore I think it is both tactically AND strategically a big mistake to attack democracy, in the way that Russ and Bryan do. Instead they need to focus on redefining democracy, and clarifiying its legitimate functions.

Ken Willis
Aug 1 2007 at 9:41am

I’m curious why the article “The Truths We Want To Deny” by Sharon Begley is included as something that adds to or supports or constitutes source material for the argument of the book. Begley’s article is a political diatribe trying to make the point that George W. Bush is in denial over the “evidence” that the Iraq war is hopeless. The so-called “evidence” she cites is not evidence at all but is rather political positioning advanced by the likes of Harry Reid.

Nothing she cites is probative of any “truth” being denied by Bush, nor advanced by Bush’s opponents. The main point of Begley’s argument is that Bush is a bum and JFK was a saint.

If Caplan’s methodology comes anywhere near Begley’s, then his book is certainly worthless. That he cites such a politically charged screed as either representative or as source material for the ideas in the book in not a good sign.

Aug 1 2007 at 12:33pm

Hi, Ken.

First, let’s make clear that Caplan doesn’t cite Begley’s article. The items in the list of additional related readings come from various sources, including Russ, me, and sometimes the guest. They represent a selection of related materials that Russ and I put together on the short notice between when a podcast is recorded and when it’s ready to go live on a Monday morning. In this particular case, I’m the one who added the Begley article link, and I’ll stand by it.

Begley’s article is primarily a report on some recent results in psychology that are directly relevant to the last ten minutes of the podcast. For example, from the article:

If you have a strong sense of self-worth and competence, your self-image can take hits but remain largely intact; if you’re beset by self-doubt, however, any acknowledgment of failure can be devastating and any admission of error painful to the point of being unthinkable. In their new book, “Mistakes Were Made,” psychologists Carol Tavris and Elliot Aronson argue that self-justification and denial arise from the dissonance between believing you’re competent, and making a mistake, which clashes with that image. Solution: deny the mistake.

This and work of other researchers cited such as Peter Ditto–the psychology literature’s results which are the main focus of the Begley article–is exactly the kind of lead someone intrigued by the last ten minutes of the podcast might be interested in exploring.

As a matter of journalism, Begley would have written a better article had she stuck to reporting on the science and not strained to apply her own psychological speculation about a politician. After all, she’s not a psychologist and not Bush’s psychologist. Screed, probably; ironic denial of journalistic bias, surely–even an example of exactly what the podcast is about; but it doesn’t obviate the value of the article in summarizing and naming the authors of the research.

At any rate, though, condemn me if you like, not Caplan.

By the way: The additional links associated with EconTalk podcasts are not passed through a political filter. That’s up to you, the reader. Distasteful links that are nevertheless relevant to the podcast are included. De gustibus non disputandum est.

Ken Willis
Aug 4 2007 at 9:56am

Thanks for the correction, Lauren. I feel better. I had already bought Caplan’s book and Begley’s article made me think I might have made a mistake. I started reading it and think it’s pretty good.

However, you would not have needed a political filter to screen Begley out. A common sense filter would have done. In this article at least, she showed herself to be an ideologue who taints her reporting with a kook left-wing agenda.


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Podcast Episode Highlights
0:36Intro. When economists try to explain bad policies, they look at special interest groups. Caplan's view: public opinion data suggests policies like the seal tariff are extremely popular. Not just special interest group. Big press conferences held by special interest groups suggests that they want votes. Special interests are not so much sneaking things past the voters as saying out of all the things the voters are willing to support, what helps them [the special interest group] the most. Persuade along the margin. So, democracy works well, politicians give voters what they want; but what people want is not really good, not even for themselves. Farm subsidies example: equally popular in farm and non-farm states. Pew poll suggested that people agree with statement that farm subsidies are necessary to guarantee the food supply. Economists, on the other hand, see farm subsidies as wasteful and unnecessary to guarantee food supply. Puzzle is: Why are economists not listened to? One hypothesis: people just haven't thought about it. But even when well-explained, economists' analyses are not persuasive or interesting to many people.
6:12Alternative hypothesis: People generally get some psychological benefits out of believing the world is the way they like to see it, they feel comfortable with that view, fit in with society; and to challenge that view would be painful for them. Minimum wage example: Economist at picnic explained why minimum wage might harm the very people it's trying to help by discouraging hiring, only to have fellow picnickers edge away from him. Why do bad ideas persist? Cover of book is bunch of sheep; Robin Hanson said that was too optimistic! Sheep could converge on good idea; but around the world and over time, there is a persistent tendency to select economically bad policies. Over time and across countries, stories seem very similar. Bastiat in France, Adam Smith in England, Böhm-Bawerk talking about interest during the ancient Israelites. Biological, evolutionary stories. Paul Rubin, Southern Economic Journal, "Folk Economics." Persistent anti-foreign bias. Not a large percent of U.S. budget, but evolutionary story may explain some of it. On the savannah, the appearance of another tribe--you'd have to be pretty naive to see that as an opportunity for advantages of more trading opportunities. What it realistically meant was competition over a fixed pool of animals in the short term; and the possibility of inter-group violence. Those concerns might evolutionarily overpower the gains from trade. But we've transferred that fear of foreigners in primitive conditions to the Toyota dealership, even though we don't think the Toyota dealership will put a spear through our windows. But the economic metaphor of stealing our jobs, stealing our wealth is used.
11:50Anti-market bias: General public tends to underestimate the social benefits of relying on the market. People look at the intentions and see that they are out to make money, they are greedy. This is true: waitress, business; but it's not what we want our mothers to act on. But what economists have been saying since Adam Smith is that we should think twice, just because someone's intentions are self-interested does not mean that the consequences for society will be bad. Competition forces the seller to become empathetic (while not necessarily sympathetic). Put yourself in the shoes of the person running a business. All the same, economists have a radically different view from the public at large. Make-work bias. Bastiat called it Sisyphism, after Sisyphus, Greek mythological figure, who was doomed in Hades to push a boulder up a hill, only to have it roll back on reaching the top. Sisyphus was fully employed. But it's not productive economically to see employment as better than production. In 19th century there was plenty of employment, long hours; but living standard was miserable. Even if we had redistributed the production of the 19th century economy equally with no loss on incentives or production, we'd still be tremendously poorer in the 19th century than today. Growth of the economy has much greater benefits than forced redistribution. If you go to a poor country in Africa, some people are much wealthier than others, but if you equally divided the produce, the people would still be extremely poor. Anything that lowers employment, though, is looked on by the public as bad, specifically trade and technology--which have widespread economic benefits.
20:29Pessimistic bias. Less evidence that it is cross-cultural, but in U.S. people tend to think the economy is in decline and will get worse, relative to what economists think. Russ: Asking people what is the change in our standard of living since 1900 typically gets median answer is 50% increase, with 10-20% of the audience thinking our standard of living is actually lower today. While this is actually a hard question to answer accurately, it is easily at least 5 times higher, probably 10 times higher, could even argue 30 times higher; but only 50% higher is a very downwardly-biased answer. Unreasonably pessimistic answer is reported by general public. But when the crowd is misinformed, aggregation methods of gathering information are biased. Betting markets—prediction markets—would give better answer because uninformed people would stay out of the market.
24:57Maybe economists are wrong. Maybe foreigners are dangerous, trade hurts our economy, employment is crucial, trade is a 0-sum game, etc. How do we know economists are right and the public is wrong? If that's what you think, go read an Econ 101 textbook. Anyone who, with a calm spirit, gives a basic economic textbook a fair reading would come away, would come away thinking otherwise. People don't even know what economists think. Why don't they know? So hyper, so upset that they are unable to sit and listen to someone else. Caplan exam question: Find one thing Caplan said that is least defensible and tell me why I'm wrong. When experts and laymen disagree, the expert is usually right is the presumption--auto mechanics. Not always true--astrologists. In the case of economics experts, there are two common theories about why economists should not be trusted: 1. They are rich, they are white, they are male, they have job security--self-serving bias; and 2. They are a bunch of ultra-conservative Republicans and therefore they think all these crazy things--ideological bias. Problem with these two stories: they are testable. Kaiser Family Foundation data set addresses self-serving bias: When you control for all these variables that you think will sway a person's beliefs (income, gender, race, income growth, etc.), belief gap between economists and the public is reduced by at most 18%. Ideological bias cannot possibly work because the typical economist is moderate Democrats. (George Mason U. is unusual.) The typical economist is in fact a moderate Democrat who thinks that downsizing is good for the economy, also that supply and demand determines the price of gas. Controlling for ideology slightly increases the gap between the economist and public because political views suggest economist should be anti-market, but he is not.
31:50Claim is that the study of economics and the identification of oneself as an economist creates a result that economists have very different views than the average person. Economists are much more likely to see the benefits of trade, immigration, markets, wealth creation and exchange are positive sum rather than 0-sum game. Question is: If voters have this world view that is very different from economists, biased, what does that imply for what politicians will support and put in place? Price controls after hurricane example. Public thinks we should impose price controls. You could give a lecture, showing supply and demand and how price controls create shortages and free market brings in needed goods. Politicians are more likely to look into the camera and say, "We must do something to keep speculators to keep from exploiting human suffering." When trying to win support, winning strategy is to say you favor what is desired by public and be very passionate about it rather than explain the economics. In private markets, say, market for cars, if I have four kids and I decide to buy a Cooper MINI I'd soon find that that was not so good for my situation, so I'd probably trade it in for a mini van. I'd learn from my mistakes. Isn't it the same in politics--politicians who pursue bad policies can be thrown out, election works as a form of competition so really stupid policies should be rooted out. Why doesn't that happen? Have to understand what politicians are competing about. Have first to understand who is responsible: Can scapegoat a politician who has very little to do about a particular policy. Politicians spend a lot of time talking about policies per se: legalizing drugs vs. crime rate example. If voters evaluate politicians based on policies they like or don't like as opposed to results, politicians will persistently deliver bad policies. Pharmaceutical industry example. Most Americans like pharmaceutical innovation for their health and the future health of their children and grandchildren; but they also like the government to regulate the safety of drugs. Claim is that most people prefer to give up the benefits because they just like the policy--the FDA. Gun control. "To the public, it appears that merely getting legislation passed equals a result." Politician who says he cares about results may only care about policy.
41:31Is it hard to get evidence on the efficacy of particular policies? Is real world just too complex? Not so. If world was so complex, rational strategy is not to be so dogmatically support a particular policy, but to be agnostic, to simply say you don't know the answer, not to scoot away on the picnic blanket in the face of discussion. History of ancient Assyria--if someone told me Babylon was the capital, I wouldn't say "You don't know what you're talking about." Even if it seemed that someone had an agenda, I wouldn't insist on believing the opposite; I'd just say that I'd have to think about it. In that kind of world, most voters--the unknowledgeable--would split 50-50, and policy would be determined by those who had read the economics textbook. But that's not what happens. People think they know the answer, vehemently, and generally they seem to gravitate toward the views that economists know are wrong. When debating with someone who disagrees with you, economists have to work hard to be civil and not offend the person. But why? Why isn't everyone just fascinated or interested in the discussion? Analogy between religion and politics: politics is the religion of modernity. Dogmatism. People get agitated if you try to find out beliefs. But this is not a good way to find out truth. The God That Failed, book of autobiographies of ex-communists. Koestler, Crossman. Everyone reports that it was painful to change their minds. Have to admit you were wrong. Psychological pain, psychological switching cost.
47:48Once you realize there is this psychological pain. Suppose a person could change policy. Trade-off could be weighed: higher standard of living vs. painfulness of change. Aside: people vote not just in their own self-interest, which would seem to be a good thing. Suppose surgeon believes he can operate well on people even when drunk. Gratifying belief but very high cost, so he'd probably ruin his career or revise his belief quickly. But voter--what are odds he will change the policy by changing his vote? Zero. In most elections, your vote doesn't matter much. Most elections are usually not a tie, so your vote is not decisive. Not like three people over lunch. Suppose there is a small chance you could improve your situation by being more rational about economics, but suppose it's psychologically painful, you could become a pariah--not a good deal, in terms of your self-interest. If you are completely rational about a subject, you are exposing it to reputation, taking risks. If you are unreasonable, your beliefs are safe. You don't have to worry about new facts coming along and proving you wrong. People are more open-minded, more reasonable about questions with high cost of being wrong. You have to keep an open mind on whether a block of stone will fall on you but immigration and open borders less critical. Pat Buchanan, blockading China. Not just complexity: you can't directly see it with your eyes, truth at conceptual level vs. perceptual level, Ayn Rand.
54:05Free-riding problem. I don't have the incentive to vote wisely, so I'm not going to vote wisely. Air-quality, masks, Cairo, Mexico City example. Suppose you see someone getting into a car and polluting. Does it make sense to say "You fool, look how much you are hurting yourself!" No. Quality of air depends on average, one person doesn't make much of a difference, tragedy of the commons, externality. "Irrationality is political pollution." One person doesn't tilt the scales, but if millions and millions of people do it, it affects policy. Losses are spread out over many people. If you had two countries, one with free trade mandated in the Constitution, the other puts it up for a vote, you could easily have people voting for protectionism, being unhappy with the results, and then fleeing for the country that has free trade. Mexico: Politician coming along proposing reforms to make it more like the United States is unlikely, but people would prefer to live in the U.S. Person is willing to vote for a society he wouldn't want to live in, and then physically turn his back on the society he voted for in exchange for a few thousand dollars. Psychological cost to bucking national traditions, turning one's back on what makes his country distinct, but is willing to move to make himself better off. I'm willing to move to the United States if it makes me rich, but to vote for a good policy that would only make me rich if everyone else voted for it is not worth it to me. Quite possible for a person to be quite rational in some areas of life--when there is not cost--but irrational in other areas of life. In those areas where putting on their thinking cap would not change the outcome very much, they indulge in irrationality.
1:00:22People are irrational about their economic world view, political system indulges it, and politicians cater to it because they want to stay in office. Why don't we have more protectionism? Why are we out of the stone age? Economy does grow every year despite lots of regulation and certainly by historical standards. Why are we over-achieving relative to what you'd expect a democracy to do? Voter turnout: those who vote are not representative of population. Age and education are good predictors of voting; but only education is a good predictor of thinking like an economist. (Note: Universities are not reliable samples for measuring education.) So people politicians have to appeal to are relatively reasonable. Second, there is something to view that if the economy tanks and there is a terrible war, it hurts politicians' popularity. Doesn't mean politician should adopt unpopular views. Have to strike a balance between doing what's popular and doing what works. Net effect of doing what voters ask for could be to hurt you. Nixon's wage and price controls hurt economic performance but the policy was extremely popular. Gray Davis, governor of California, gave people what they asked for but was thrown out. Side-agreements on laws may not be enforced.
1:07:30Market fundamentalism vs. democratic fundamentalism. Virtually every economist, no matter how free market, has lots of areas where ready to accept some form of government regulation. Democratic fundamentalists by contrast are eternally optimistic about virtues of government intervention and the opportunity to make things better. Market fundamentalism is a charge thrown at economists. Guilt by conceptual association, using the term "fundamentalism" suggests dogmatism similar to anti-evolutionists who are unwilling to look at scientific facts. Most market-failure arguments were created by economists. Relatively open-minded and self-questioning. Were an economist to say the solution to any problem is more markets, it would seem dogmatic. But democratic fundamentalism doesn't self-grade: when solution to any problem is claimed to be more democracy, the speaker gets a pass. Most egregious form is conceptual kind: by definition whatever democracies did is the best thing. What if two of the three people on an island vote to eat the third? burn all the food? Some democratic decisions are wrong. Must be some external standard. But democratic fundamentalists say: Democracy grades itself, whatever it did is the best thing by definition. William Grider
After 30 years of working as a reporter, I am steeped in disappointing facts about self-government. Having observed politics from the small-town courthouse to the loftiest reaches of the federal establishment, I know quite a lot about duplicitous politicians and feckless bureaucracies, about gullible voters and citizens who are mean-spirited cranks.
Up to this point we'd be with him. But he then concludes, paradoxically:
These experiences strangely enough have not undermined my childhood faith in democratic possibilities, but rather tended to confirm it.
How could that be? Strange but common view. Shouldn't your confidence in your views be undermined? Romance about democracy. We like the idea that it works well. That it works better than the alternative is not the point. What should be the scope of democracy? Which things should be decided democratically versus which left to individuals? The economist's alternative to democracy is limiting it, not diametric opposites of dictatorship or anarchy. Hayek, Walter Williams podcast: Every law Congress passes should apply equally to all members of society. What should we be doing differently as economists (or as everyday people)? We are not the best communicators. We may only have one or two minutes to speak, we are still not comfortable paring our arguments down. A lot of hemming and hawing about competition, but competition is ubiquitous and we should not be so hesitant. "On the other hand" is not the best way to communicate. "I think something that you probably don't" is possibly better phrase. Economics can be fun.

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