Public Choice

The Stoat has reviewed his 2018 posts, and picked his favorite: The left has no theory of the behavior of government. I'm not surprised that he was proud of it because I found it really annoying, mostly because it took me forever to figure out what he was talking about.

What he was talking about was so-called Public Choice Theory, and it's not actually a theory the behavior of governments but a theory of government behaving badly. It's also an example of a well known phenomenon in political science and economics called the Principal-Agent (PA) problem. The problem occurs when the Agent, who is empowered to make decisions on behalf of the Principal, has interests that conflict with those of said Principal.

Libertarian types have seized on Public Choice theory because they, like Mr. Connolley, think that "Acceptance of this theory, of course, leads you to conclude that government should be minimised." I, and many professional students of Public choice theory, reject this.

As in other examples of the PA problem, the best defense is to minimize conflicts of interest between agents and their principals, or, in the case of government, between officials and their constituents. A key tool in that regard has been codes of ethics for agents, combined with strict enforcement of same.

One reason WC's claim that "the left has no theory of the behavior of government" is annoying is that Public Choice is not any ideology's theory, but just an attempt to apply some aspects of mathematical economics to the PA problem in the context of government. I'm not going to opine on whether that analysis has led to deep understanding, but the obvious result - that having an Agent with interests strongly in conflict with those of the Principal is hazardous for the Principal, has been known since ancient history, and probably long before any records were kept.


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