(Not) Disproving Public Choice

Last week, the Blogger Still Known As Publius wrote a nice piece arguing that the potential-to-likely passage of net neutrality, a public health care option, and energy reform disprove, or at least have a strong potential to disprove, public choice theory.  Unfortunately, I must respectfully dissent. 

First, a quick primer on the relevant portions of public choice theory for the uninitiated.  Here, Publius is correct that Conor’s passing remarks provide a good summation:

I wish that progressives would realize that parties with a narrow vested interest in a legislative outcome are always going to enjoy an advantage over the diffuse interests of the populace, and especially that portion of the populace that is without power.  Community organizing is never going to change this basic fact, nor is any campaign finance reform that passes constitutional muster, nor is a bigger Democratic majority in Congress.

Although not all public choice theorists are libertarians, all (or at least almost all) libertarians are public choice theorists.  Indeed, some version of public choice theory, intentionally or unintentionally, lies at the heart of just about any of the myriad strains of modern libertarianism.* So whether public choice theory holds up to scrutiny is pretty important to both vindicating and undermining libertarianism.

Publius’ argument is that, although public choice theory should be taken seriously, the passage of net neutrality, a public health option, and/or energy reform would be inexplicable under public choice theory because the benefits of each would be spread out diffusely, while the costs would be concentrated on a handful of narrow interests. 

Unfortunately, this completely misunderstands public choice theory and also assumes that no narrow interests benefit from the aforementioned agenda, regardless of whether one thinks that agenda is still good policy. 

Publius places particular emphasis on the push for a “public option” in health care in his post, stating “It’s not only good policy, its enactment would vindicate the idea of government.   That is, it would restore some faith in the idea that our institutions can serve the broader populace’s interests in the face of these structural obstacles.”  Leaving aside the question of whether it is indeed “good policy,” a question on which there is honest disagreement, this ignores the context in which this is all occuring (not to mention the fact that it seems increasingly unlikely a public option will actually pass). 

Specifically, health care reform is an issue that has a huge and direct marginal effect on the average voter – this is not an issue of some giant agribusiness getting some tax dollars that it doesn’t deserve.  As such, it is an issue that has over time generated a vocal grassroots movement of voters for whom health care reform is a make-or-break issue.  In other words, it has generated a narrowly focused special interest group whose currency is votes in addition to money – much like the NRA.   I suppose that one could say that the broad-based coalition that has grown up on health care actually represents the “public interest” because of its diversity.  I think that’s debatable, but even if that’s true, it would mean that, in order to overcome narrow special interests, you need to create a passionate and broad-based coalition of many single-issue voters.  Obviously, the number of issues on which this is possible is very few, and it’s kind of the exception that proves the rule – in order to overcome wealthy and narrow interests, you need to create a narrowly focused but broad-based interest group of your own.  And all this says nothing about what the legislative and regulatory details of a public option will look like if it ever gets through Congress.

The Waxman-Markey energy reform bill is even easier to explain with public choice.  First, the bill involves sizable public works projects, always popular with labor unions, not to mention legislators who get to take responsibility for “bringing home the bacon.”  Second, Publius is assuming that no big business interests will benefit from the bill as it is structured and that it will in fact have a significant environmental benefit.  But here’s what Greenpeace and most of the environmental interest groups on climate change had to say about the bill: “While science clearly tells us that only dramatic action can prevent global warming and its catastrophic impacts, this bill has fallen prey to political infighting and industry pressure. We cannot support this bill in its current state.” (My emphasis).  The group also calls the bill “counterproductive” and provides myriad examples of how the bill benefits industry groups, including coal plants.  Pretty much public choice theory in action!

Net neutrality legislation, however, is probably Publius’ strongest case study.  It’s an issue that relatively few voters care about, much less know much about, and has not begun to affect many Americans’ internet service.   But even there, you’re not looking at a simple issue of “the public interest” versus “big business,” at least not unless you don’t consider Microsoft, Google, and Amazon “big business.”  On top of that, we should remember that so far as I can tell, network neutrality is not currently on Congress’ radar – vague pronouncements of support for “network neutrality” give no details about what would hypothetically become law – and the devil is in the details (see, e.g., energy reform bill, above).

And “the devil is in the details” is the most important part of all this.  On many, even most issues, you’re going to have narrow special interests on both sides of the equation, and you’re going to also have broad but mostly disinterested public sympathies on both sides.  After all, the “public interest” is rarely easy to define.  What public choice theory would postulate is that even where legislation broadly fits within one legitimate conception of the “public interest,” the details will most likely specifically benefit the narrow interests that supported the legislation.  They may also be structured to minimize damage to narrow interests that are nominally supposed to be hurt by the legislation.  Of course, all of this says nothing of the issue of regulatory capture once the legislation is enacted. 

This isn’t to say that “good” legislation is impossible, at least not if “good” simply means “better serves a legitimate conception of the public interest than no legislation.”  It is, however, to say that narrow interests will always have an advantage over the broadly defined “public interest” and there is no way to create laws that don’t disproportionately benefit some narrow interest group.  There may be ways to mitigate these interests by giving them less to play for or dispersing their potential gains amongst a wider number of players, but so long as government has power, narrow interests will both seek to protect themselves from that power and use that power as a sword against their rivals, and those interests will always have an advantage over the disinterested public caught in the crossfire.

*This is why I don’t remotely understand claims byFreddie and E.D. that libertarianism, like Marxism, is too idealistic to work in the real world.  Setting aside that there is no “one true” libertarianism – compare and contrast, e.g., self-described “libertarians” Glenn Reynolds and Bill Maher – a political philosophy that is rooted in deep cynicism of human nature (with the recognition that those with power are still human) is not remotely idealistic.  Such a philosophy need not require any “purity” to “function” (even if there was such a thing as “pure” libertarianism), only a healthy skepticism of the ability of the powerful to rule in the best interests of their subjects.