Bryan Caplan is an economics professor at George Mason University in Virginia. Like most economists, he understands – and favors – free markets: Many minds operating individually tend to reward good ideas in aggregate. Quoted at length in this week’s Economist magazine, Caplan also susses out why voters, faced with the marketplace of ideas and ideologies represented by national elections, tend to choose so awfully. The reason of course is that most people are woefully ignorant about most things, but unlike the markets, where the “miracle of aggregation” rewards quality, “ignorant voters do not vote randomly.”
Caplan identifies four main biases which cause voters to unintentionally vote against their interest: An anti-market bias, an anti-foreign bias, what Caplan calls a
I just read an interesting paper (http://en.wikipedia.org/wiki/The_Market_for_Lemons) regarding the dynamic created when the seller has more information than the buyer (which seems to me to be the case nearly all of the time). The gist is that buyers, lacking information, will make the decision based entirely on some very visible criteria; for example, price.
I imagine voters suffer from the same effect.
The process attracts those too ugly for street-walking, but willing to set a price.
I’m beginning to think I must be an economist in my secret life. Free markets, collective choices, and the results of those choices on our lives are fascinating. How my decision to buy X over Y is personal to me, but reflects on a local, national, or even global market is amazing. I guess it’s one reason I like to know about things, all things.
Even people who make decisions on very little information can collectively make wise decisions in the marketplace.
However, the marketplace of ideas is another matter. Our politicians don’t want the individual to know the underlying relationships and cost/benefits because they want to make the best results of our decisions benefit them personnally, and not across the entire marketplace. That’s why it’s the evil oil company gouging the poor consumer, and not supply and demand. If our politicians really cared about the price of gasoline, they would reduce the taxes on a gallon of gas from whatever they are collecting.
That “profit” staggers in comparison to the oil companies’ real profits.
Anyway, my two cents….
I think you mean “George MASON University in Virginia.”
Sure did, I’ll make the change, thanks.
P-3W said “Our politicians don’t want the individual to know the underlying relationships and cost/benefits because they want to make the best results of our decisions benefit them personnally, and not across the entire marketplace.” I’m not sure that’s quite it. They know that most of us don’t know, don’t care, and won’t do anything to find out. Even if they wanted to do something, how would they go about such a daunting task? If 3+ dollars a gallon is not enough to motivate people to understand then what should/could the politicians do? Especially since half of us thinks that half of them are lying everytime their lips move.
That said, I do agree that it is discouraging that the government that does nothing to produce and supply gas makes more money off of it than the oil companies ever could. And then they bad mouth, or at least as the article points out, play along with bad mouthing. It is furstrating and makes me wonder when Atlas will shrug.
Perhaps I could have said that a little better. Politicians aim to benefit themselves in a variety of ways. I was thinking of the pending legislation doing away with secret ballots in voting to determine if a shop goes union or not and using card check instead, with the potential for intimidation and misrepresentation, a not uncommon thing in union history. This legislation is supposedly a payback for unions so they can add to their numbers in return for union support of the Democratic Party.
This also is a factor in the illegal immigrant becoming legal fiasco going through the process now in Congress. Supposedly all the new voters will be Democrats and cement their majority (since they can’t seem to win in the marketplace of ideas so well).
Sometimes, perhaps most times, politicians don’t really want us to know what they are doing. They seem to think they are above responding to the people who elected them in many cases. By limiting or rephrasing the argument to get the results they want, they can push people into one of the fallacious biases listed in the article, and therefore into the path of least resistance and their preferred outcome.
The howls from the legislators when people ask questions can be quite enlightening as to what their real fears are, or what they explicitly don’t answer. They don’t trust people to make individual choices that collectively add up to a common good. Those individual decisions are not made in a vacuum, but the people will come to similar conclusions from a variety of directions.
It’s really quite remarkable that it works at all, but it does quite effectively.
As far as $3 per gallon, I remember gas at $1.57 on base in 1978-9, equivilent to about $5/gallon now. My grandfather bought gas at $2.12 off-base, equivilent to nearly $7/gallon, using the CPI Inflation Calculator. Of course I remember gas wars in Chicago and prices down to 19 cents a gallon — approx $1.25 now. That puts gas prices into perspective for me, especally with the reports that people aren’t curtailling gas consumption at all.
Anyway. I hope I explained myself a little better this time.
I know I am not the brightest bulb in the chandelier but I do recognize when things are at work against my interests the vast majority of the time. If and when I do go against my interests on a given issue, it has to do with a greater principle. Having crossed the half century threshold it has become obvious how stupid the majority of mankind really is. The stupidity of your fellow citizens then is an occupational hazard of living in a democracy. (majority of fellow Lexlanders excepted)(This includes our buds from the Great White North. The exception, that is.)
Actually, generalizing from economics to politics, it seems to me that there is enough information out there to make at least as good a decision as the politicians do. We can ask for better information, but “public pessimism” takes over.
My viewpoint these days is that cynicism is merely a mask for laziness. A finely developed cynicism relieves one of the responsibility for learning any more about politics, the economy, etc. than you are fed in headlines and 30-second sound bites. That gives you plenty of time to make sure that you are up to date on American Idol and Paris Hilton, and you can dismiss what’s going on in the real world out of hand as being beyond your ability to learn about or do anything about.