| Note: Permission to use this article was generously granted by the author, Dr. Donald J. Boudreaux, president of the Foundation for Economic Education. Several of his essays are on line at the CEI. |
"NOT
ALL WANTS ARE EQUAL"
by
Donald J. Boudreaux
President, Foundation for Economic Education
Irvington-on-Hudson, NY 10533
presented before The Discussion Club, St. Louis, MO
March 4, 1999
I come today on
what very well might be a suicide mission.
It would certainly be a suicide mission in almost any other audience
outside of Cuba, North Korea, and mainland China. My mission tonight is to
discredit democracy. I dislike
democracy.
Winston Churchill
famously accused democracy of being the worse form of government "except
for all the rest." Churchill's
back-door endorsement of democracy, I think, is mistaken.
I will argue
tonight that while democracy is not the worst form of government...absolute
dictatorship, for example, is far worse than democracy...there is a form of
government that is far better than democracy.
But to keep your attention, I'll not spell out what this other and
superior form of government is until the end of my talk...although many of you
will likely soon guess what I'm driving at.
WHAT IS DEMOCRACY?
Democracy, of
course, is revered in the 20th century.
This is why I say that my mission tonight has something of a kamikaze
element to it: I'm attacking the form
of government that almost everyone in the United States assumes to be
responsible for our freedom and our prosperity.
I mean by
"democracy" nothing unusual:
a governmental system in which a large percentage of the adult
population have the right to vote for officeholders (and, sometimes, directly
for issues) and where such democratically elected governments are
sovereign...that is, where such democratically elected governments are largely
unconstrained by any legal authority other than that of the voters.
WHY IS DEMOCRACY SO REVERED IN THE 20TH CENTURY?
Most citizens
believe that democratic nations are free, and undemocratic nations are
unfree. America's participation in
World War I justified as the necessary means of making "the world safe for
democracy." Courageous citizens of
repressive foreign regimes are typically referred to by the American news media
as "pro-democracy protesters."
In the popular
mind, democracy is good. Period. But why?
Why is democracy so revered in the 20th century? One reason democracy is so revered today is
because we automatically, without thinking, assume that the only alternative to
democracy is some form of dictatorship in which one person, or one small
segment of society, enjoys unlimited power over citizens.
We think of
democracy as being the only alternative to communism and other tyrannies such
as that of Saddam Hussein. And, indeed,
if this were true, then Churchill's aphorism would be on target: democracy would be the worst form of
government...except for all the rest.
But again, as I will argue later, democracy has alternatives other than
dictatorship and totalitarianism.
However, the most
important reason why democracy is so revered today is that we citizens of
democratic countries are taught that democracy is government according to the
will of the people. And this is good: better to have 'the people' make their own
rules rather than to have these rules imposed by some outside force. The alleged beauty of democracy is that it
lets us choose just what laws are best for us, without any meddling from outsiders
or from kings, queens, and other dandies who get a charge out of lording it
over ordinary folk.
Democracy gives
people what they want, rather than force the people to be the pawns of kings or
dictators. I think this common view of democracy is sadly uninformed.
PROBLEMS WITH DEMOCRACY: THE THEORY OF PUBLIC CHOICE
Among economists and
political scientists, it is easy sport these days to point out lots of problems
with democracy...problems that far too seldom are noticed by other
citizens. James Buchanan, my former
colleague at George Mason University, won the 1986 Nobel Prize in Economics for
revealing many of democracy's inherent flaws.
Buchanan, along with Gordon Tullock, pioneered the field that is now
known as Public Choice economics. This
is a very rich research program, but two of its central conclusions are
relevant for my purposes here tonight.
These are, first, the special-interest-group effect, and second, the
recognition that voters are rationally ignorant.
The
special-interest-group effect explains the bulk of what government does...for
example, why government takes money from sugar consumers and gives it to sugar
producers, or why government forces New York City taxi-cab passengers to pay
monopolistically high prices to taxi owners.
The special-interest-group effect occurs whenever the costs of a
government program are spread widely...so that each person who pays the cost
pays only a small amount...and the benefits of this program are
concentrated...so that each beneficiary receives a substantial amount. The beneficiaries have an incentive to lobby
for the program while persons harmed by the program have no incentive to lobby
against it.
Consider sugar
farming. Uncle Sam restricts the
importation of sugar into the U.S., driving up the price that Americans pay for
sugar to about twice the world price.
Why? The reason that there are
far fewer sugar producers than there are sugar consumers. The gains to each domestic sugar producer
from this program exceed the costs to each consumer. Therefore, even though the total cost of this program are far
greater than the total benefits, the political dynamic is such that sugar
consumers don't lobby to abolish the program, while sugar producers scream
bloody murder whenever anyone even mentions letting more foreign sugar into the
American market.
The other main
pillar of Public Choice economics is the aptly named concept "rational
ignorance." Rational ignorance, at
root, is the idea that voters don't know enough about the candidates and
issues...and it's rational for them to be so ignorant.
Two facts of
reality combine to make becoming politically informed an irrational act. First, time is scarce. Whatever time you spend learning about the
issues and different candidates, you can spend earning a living, relaxing,
playing with your children or grandchildren...whatever. Second, your vote doesn't count; your vote
won't change the outcome of the election.
Because of that, why bother to spend anytime learning about what's at
stake?
Now, how many of
you have ever heard of the Federal Register?
How about the code of Federal Regulations? How many of you have ever bothered to read the United States
Code...or even know what it is?
The Federal
Register is a daily announcement of all prospective regulations promulgated by
Uncle Sam's bureaucracy. In principle,
the bureaucracy tells the people ahead of time what it's thinking of doing, the
people read these announcements, and then the people share their thoughts with
the bureaucracy. But the practice
differs dramatically from the principle:
virtually no citizen reads the Federal Register. Indeed, most citizens never heard of it.
The Code of
Federal Regulations is the compilation of all outstanding federal bureaucratic
regulations which have the effect of law.
This code is updated annually.
Currently, it takes up well over twenty feet of shelf space! Have you ever read any of the CFR? How many of you have ever even heard of
it? The United States Code is compiled
of all the statutes enacted by Congress.
It, too, is massive. How many of
you have ever read any of it?
These are all
statutes and regulations that affect how you live your life...how much you pay
for your food, how you can use your own property, how you can raise your
children, how you can spend your money.
And yet, few people even know where to look to see what their leaders
are doing to them. Why are people so
ignorant?
The reason is
perfectly rational: because no ordinary
citizen can individually affect that outcome of what the government does...that
is, because no individual vote counts...there is little reason for any
individual to spend valuable time becoming adequately informed. It would be irrational to become adequately
informed! It would be irrational for
each individual to take time away from matters that he can affect...raising his
children, advancing his career, visiting a sick friend, relaxing with an
enjoyable novel...and to spend this time on matters that he cannot affect.
The
special-interest-group effect and rational ignorance are two extraordinarily
powerful reasons why democracy is less desirable in practice than it might seem
in principle. As I see it, these
problems alone make democracy such a disgrace that no more really needs to be
said. But I want to say more...in part
because not everyone believes that the special-interest-group effect and
rational ignorance are severe problems, but also because I want to say
something original here tonight. Even
if the special-interest-group effect and rational ignorance did not exist, or
were just minor potholes on the democratic highway, there is another reason
that democracy is not to be trusted.
There is another reason...I think a vital reason and one that has gone
almost completely unnoticed...for why democracy can in no way be said to reveal
"what the people want." I'll
spend the rest of my time tonight explaining this serious but overlooked flaw
of democracy.
ANOTHER PROBLEM WITH DEMOCRACY:
IDLE WANTS
As I mentioned
earlier, more and more people believe that democratic outcomes are what the
people want. If the people vote for
candidates who support saving the spotted owl, for federal limitations of the
amount of water that we can have in our
toilet tanks, for antitrust prosecution of Microsoft, and for higher taxes, it
is because the people want these things.
The people might be wise or unwise in their wants, but hey, these are
the people's wants. And no one should
be permitted to stop the people from getting what they want. This notion is mistaken.
The problem is
that we use the verb "to want" in two subtly different ways. These different meanings are close enough
that we seldom realize the difference, and yet the difference is real. We are unsuspectingly misled by our own
confusion over the different meanings of the word "want." This failure to recognize the dual meanings
of the verb "to want" leads us to greatly overestimate the merits of
democracy.
Let me label each
of the two different meanings. One is
"idle wants"; the second is "serious wants." Each of us has idle as well as serious
wants...and for each of us our idle wants far outnumber our serious wants. You have an idle want whenever you desire
something for which you don't have to pay full price. In contrast, you have a serious want whenever you...you
personally...must pay the necessary price to acquire that something. Let me explain.
I often idly
inform my wife that I want a new Lexus LS 400.
She pays little attention. And
she often tells me that she wants a new Jaguar. I pay little attention.
Like everyone else, I am constantly saying idly "I want this"
and "I want that." Each of us
says these kinds of things all the time...we each constantly inform other folds
of our wants. "I want a Mercedes
or a Lexus." "I want to quit
this job and move to the country."
"I want to kill by boss!"
These wants might be real...but only in a sense. They are real, but idle. We express such wants so idly and frequently
because it is costless to do so.
Consider my
wanting a new Lexus LS 400, a car that costs well over $50,000. In my eyes, it's the most beautiful car on
the road...and, from what I've read about it, it's a remarkable piece of
automotive engineering. Now I'm not lying...I really do want that Lexus. But I want that Lexus only if I don't have
to pay $50,000 for it...that is, I want that Lexus only in the idle sense of
the word. If it would cost me nothing
to acquire a Lexus LS 400, I would snap one up pronto. But the serious sense of the word, I don't
really want a Lexus LS 400. You know
how you can tell for sure? I don't own
one!
The reason I don't
own this automobile is because I'm unwilling to pay the necessary price of
acquiring one. In fact, I really want a
used, two-year old Infiniti I-30...a nice car, but one that costs less than
half of what a new Lexus LS 400 costs.
Most of the time that I say I "want" something, I do so idly,
without intending to commit myself actually to acquiring that something. Clearly, no one is required to take these
expressions of wants seriously. (If I don't take it seriously enough to act on
it, why should anyone else?)
Only when I
actually commit myself to paying for what I say I want should you take my want
seriously. Only then are you justified
in believing that my want is more than just a whim or an idle fancy...that is a
want worthy of respect. I hope that none of you will disagree with me when I
say that a good economic system is one that attempts to satisfy as many serious
wants as can be satisfied, but which ignores idle wants. There are a number of
reasons why this is so; let me just mention one.
It is impossible
to satisfy all idle wants. And
attempting to do the impossible can only lead to disaster. The number of things that I would want is
vast if the price of everything were zero...or if I could somehow rope other
people into paying for all that I acquire.
But a fundamental lesson of economics is that nothing is free. If I don't pay the full cost of getting what
I want, then someone else must pay that cost.
If I, personally, were given the power to confiscate all the resources
in the world to satisfy all of my idle wants, I'd try to satisfy them all. But this arrangement would clearly be bad
for everyone but me. I'd use not only
my own resources in ways that I think best for me, I'd also use your resources
in ways that I think best for me. But,
of course, my using your resources in ways that are best for me is not good for
you. You and others will suffer from my
ability to confiscate your property.
A good
arrangement, therefore, is to leave every person free to use his own resources
to satisfy as many of his wants as possible, but without the power to force
others to subsidize his consumption.
Each of us will then satisfy our most urgent wants first, and leave our
most idle wants unattended.
This outcome is
just what is achieved by a free market:
because each person must pay for all that he consumes, each person
satisfies only his serious wants, and doesn't bother satisfying his idle
wants. Government, of course,
substitutes for the free market.
If the government
is a totalitarian dictatorship, the lucky few members of the ruling class get
to satisfy not only their serious wants, but many of their idle wants as
well...for the rulers can confiscate the resources of others to help satisfy
their own idle wants. Unfortunately,
democracy isn't as far from dictatorship as we imagine. Democracy encourages each voter to demand
that government try to satisfy many of his idle wants. Government will try, and fail...and louse
things up in the process.
GOVERNMENT BY SHOPPING-MALL SANTAS
I can better
explain what I mean by pointing out that voting booths are very much like
shopping-mall Santas...an ideal forum for expressing idle wants.
Every Christmas
season, each Santa listens to the wish lists of dozens of young children. Each of these children tell Santa what he or
she wants. But these are idle wants. These are wants that these children have
independent of the costs of satisfying these wants. No child...at least no normal child...considers and takes account
of all that must be sacrificed in order to satisfy his or her demand for
toys. Each child knows that whatever
Santa brings on Christmas morning will be paid for with other people's
money...either Santa's money or mommy's and daddy's money...but not the
child's. So each child on Santa's lap
is unconstrained in expressing wishes for all sorts of toys. It's easy to want lots of things if other
people will pick up the tab. Of course,
children on Santa's knee are harmless because each shopping-mall Santa
immediately forgets each child's wish list.
The demands that the little kiddies' put on Santa have no real consequences.
But imagine what
would happen if, next Christmas, all of the shopping-mall Santas kept records
of what each child says he wants. Then,
as Christmas approaches, all of these Santas assemble together and actually try...really
try...to satisfy as many of these wants as they can possibly satisfy. Well, Santas aren't miracle workers. They can's produce toys out of thin air, and
there's no army of elves waiting to produce these toys free of charge. So in our imaginary world here, let's also
give to these Santas the power to tax and to regulate. Being well-meaning folk, the Santas
sincerely aim to satisfy the children's wants.
So the Santas collectively start to tax and to regulate in ways that
produce all the new toys the children said that they want. The children get the new toys that they said
they want. But at what price?
It's one of the
indisputable truths of economics that getting more of one thing requires
getting less of something else. For
children to have more toys requires that fewer other things be produced...fewer
medicines, fewer automobiles, less leisure, fewer books, fewer concerts, less
on-the-job safety, fewer shoes, fewer computers. And the greater the number of new toys produced, the fewer of
these other things we can have.
As Thomas Sowell
reminds us, reality is not optional...it is inescapable. To produce more toys requires...necessarily
and indisputably...that fewer other goods and services be produced. It's easy to see that if all of the
shopping-mall Santas, with the power to tax and to regulate, got together and
tried to satisfy all of the expressed wants of the children, the economy's
output would be thrown way out of kilter.
We'd be awash in toys, but lacking too many of the other things
necessary to sustain our standard of living.
And note...not only would adults be worse off, but the children
themselves would be worse off even if each child got every toy he or she wished
for!
This is so even if
the Santas are all well-meaning servants of the children. The more diligently the Santas try, and
succeed, at satisfying the children's expressed wishes for toys, the less is
the availability of other goods and services of value not only to adults but to
children as well. The children might
have more toys, but they'd have fewer clothes, less health care, less
education, less food, fewer vacations, fewer television programs. I think that you'll all agree that the world
would be a far worse place if shopping-mall Santas tried actually to fulfill
the children's wishes as expressed on the Santas' knees. It would be a far worse place even though no
child lied when he told Santa what he wants for Christmas.
The problem is
that these wants aren't worthy of attention...they're idle wants. These are wants that each child has
independent of the cost of supplying these wants. Again it's easy to want things if other people will pay for
them. But the only wants worthy of
attention are those that each of us is serious about. And the only way to tell if someone is serious about a want...if
someone truly believes that satisfying the want is worth the cost of doing
so...is to have that person personally pay to satisfy his wants.
Now, hopefully,
you can see what I mean when I accuse democracy of being very much akin to
having shopping-mall Santas tallying up the wants of children and trying to
satisfy these wants. Each voter in a
voting booth is very much like a child on Santa's knee. Each voter expresses all sorts of wants for
things that will be paid for largely by other people.
Think about
it. Each voter has all sorts of
wants. Some of these wants are narrowly
selfish...for example, a retiree might want higher Social Security payments or
the President of General Motors might want protection from the competition
posed by Toyota and Honda. Other wants
are less self-centered...for example, a desire that Wal-Mart not force the
downtown general store of business, a desire that the bald-eagle population
increase, a desire that family farmers not be forced out of business by low prices,
a desire for American troops to keep peace in Kosovo, Somalia, and the middle
east.
Each of us wants
all sorts of things. We each have a
wide range of idle wants. But we also
have serious wants...true wants...wants that we're willing to pay for. These serious wants, of course, are far more
limited than are our idle wants.
Putting a price on wants is a way of limiting them.
Suppose that the
kind of car I drive is determined not by my individual choice but by majority
vote. Suppose also that automobiles are
paid for by the government out of tax revenues. You can bet that under these circumstances I'll vote that Don
Boudreaux be bought a new Lexus LS 400.
Why shouldn't I vote in this way?
The vast bulk of the cost of this luxurious new car will be paid for not
by me but by other people. And if each
of you is picking up part of the tab for my car, then I want only the best!
But is this a want
that should be taken seriously? Is it a
want that society ought to try to satisfy?
Of course not. This is an
unconstrained want. It isn't at all
akin to the kinds of wants that our
intuition tells us should be satisfied...namely, constrained wants. It is consistent with both justice and good
economics to let everyone fulfill each of the wants that he is willing to pay
full price to fulfill. But both justice
and good economics are offended when someone tries to satisfy any wants that he
has only on the condition that others pick up the tab. Regrettably, that's just what democracy
attempts to do: satisfy people's idle
wants. So this is the principal reason
why I so dislike democracy: its
government by shopping-mall Santas.
Democracy treats
us as though we are children on Santas knee.
It encourages each voter to express wants without that voter having to
bear personal consequences for expressing such wants. The one big difference between actual shopping-mall Santas and
politicians is that the Santas soon forget what each child wants and feels no
obligation to try to satisfy these wants.
WHAT'S THE ALTERNATIVE TO DEMOCRACY?
The mark of a good
economist is to always ask "as compared to what?" It's fine for me to stand up here and to
point out all sorts of very real problems with democracy, but even if you
believe every word I say, that is insufficient reason for you to endorse
scrubbing democracy. You must
know...and I must answer the question..."as compared to what?" What's the alternative to democracy?
As I said earlier,
if the only alternative to democratic rule were rule by an absolute monarch or
by a totalitarian dictator or oligarchy, then, despite its flaws, democracy
wins hands down as the best form of government. But totalitarianism is not democracy's only alternative: a much better alternative is governance
according to the rules of private property rights. If property rights are privately held, if they are secure, if
they can be exchanged voluntarily and on terms agreed to by the parties to the
exchanges, then society becomes largely self-governing.
Government need
not mandate things such as:
- how much
employers must pay employees
- what levels of
safety employers must supply
- how much rent
landlords can charge
- what prices
truckers, airlines, and taxicabs can charge
- how much can be
imported into the country
- what hours and
days retail stores can be open for business
- how much water
we are allowed to have in our toilet tanks
Indeed, nearly
everything that government does today is simply unnecessary...it is a
substitution of the rule of the state for the rule of the market.
I don't want to
debate just how much the market...private property...can substitute for the
state. Some people believe that
government is unnecessary even to supply courts of law and protection against
physical violence. Maybe these
"anarcho-capitalists" are right; maybe they're wrong. But one thing is certain: a system of secure private property rights
goes an extraordinarily long way toward eliminating the need for most of what
government now does.
So, yes, insofar
as we have government, it is best that it be manned by people chosen in regular
elections by citizens who enjoy a wide franchise. But this government should be severely limited in what it may do. Even when an overwhelming majority of voters
"want" something, that is no reason for government to try to satisfy
that want. To be worthy of being
satisfied, a want must be serious, but voters naturally express their idle
wants...wants that politicians try to satisfy but, being idle, should
not...indeed, cannot...ever really be satisfied.
I wish I knew how
best to keep government constrained to performing only that small handful of
tasks that most people regard as essential, but I don't.
But I do know that the most fundamental task
of practical politics (at least for those of us who cherish liberty) is to
dedicate ourselves to the task of keeping government limited to performing just
a few basic tasks...namely, to protecting us from physical coercion. If government does only this, it will do all
that it possibly can to promote a civil, prosperous and flourishing
society.
Thank you.