Can Washington Change?

Jonathan Rauch says probably not. We asked a group of experts, inside and outside Washington, whether he's right.

From the August/September 1996 issue

(Page 2 of 4)

Susanne Lohmann
Modern democracies are trapped in a collective dilemma. In many cases, government policies are biased in favor of special interests at the expense of the general public. Pork- barrel politics can take on monetary form, as with subsidies or tax breaks, but they may also consist of market interventions, as with regulatory policy or trade policy. Such policies are often inefficient in the sense that the total losses imposed on the majority exceed the total gains enjoyed by the minority. While special interests form a minority on any one policy issue, just about every citizen is a member--whether active or not--of some special interest group on some policy issue; indeed, many citizens are affiliated with more than one special interest group. Each citizen prefers being favored by government policy even at the expense of inefficiencies imposed on the society at large. But, relative to the status quo involving inefficient government policies on all dimensions, each citizen would arguably be better off if government did not cater to special interests at all.

Voters clamor for government to streamline and reduce the scope of its redistributive activities. But any serious attempt to implement the expressed wish of the general public requires cutting the pet programs of special interests; and any politician who would do so can count on being dead on arrival at the polls. Yet in the aggregate special interests are the general public. Because voters are willing to punish government for doing what would appear to be good for them, it is hard to avoid the conclusion that special interest gridlock is due to some kind of voter illusion.

The persistence of this collective dilemma is puzzling. Political philosophers have threatened us with a tyranny of the majority--but we suffer under a tyranny of many minorities that sum up to The People. Still, it would seem that politicians should have incentives to act efficiently. Surely, if economists are correct in identifying the huge social dead-weight losses associated with political handouts to special interests, then an incumbent who eradicated such inefficiencies would preside over an increase in standards of living that would sweep him to re-election. If he is too short-sighted to follow this prescription, then it would seem that political competition should allow society to break free from special interest gridlock. Surely a political entrepreneur who stood for election offering to eliminate all the perks enjoyed by special interests would be elected unanimously. If not, why not?

Here's the problem: Special interests are better informed than the general public. Each voter knows how well off she is. She also knows that her wealth and well-being are affected by various government policies, but as a member of the general public she experiences policy consequences only indirectly, as mediated by complex social and market forces. As a special interest, however, she is very well informed about government policy. Now suppose the government implements a policy that amounts to taking away $1.00 from the general public and giving 90 cents to special interests, with 10 cents standing for the social dead-weight losses of redistribution. As a result, the incumbent's electoral support increases. Why? The general public notices that it is worse off by $1.00, but it is unsure whether to blame the government or other forces. The special interest notices that it is better off by 90 cents, and it can assign the political responsibility for its good fortunes very precisely. At the margin, the government loses some electoral support among the general public, but this loss is outweighed by votes gained among special interests. Thus, we end up with a society in which each voter gets 90 cents on the dimensions of public policy where she is a special interest and pays $1.00 on all policy dimensions where she is part of the general public.

Now we can see why political competition is impotent. The general public cannot effectively monitor whether a political candidate who promises to eliminate the policy bias toward special interests will keep his promise. Once elected, he shares the electoral incentives of his predecessors to favor special interests who are better able to monitor his performance.

Are there any solutions to the problem of special interest gridlock? Proposals for reform are often directed at real or perceived deficiencies of the political process, political institutions, or political elites. It is useful to note, however, that pork-barrel politics occurs across the world in countries with different poli-tical systems and political cultures. It makes little sense to explain special interest handouts with, say, a corrupt Congress responding to campaign contributions when similar pat-terns of government policy are observed in countries where monetary contributions to political candidates play an insignificant role, in some cases because campaigns are publicly financed. Instead, I propose that the problem lies with The People themselves. A proposal for reform that does not come to grips with the informational asymmetry between the general public and special interests is unlikely to succeed. Overcoming this asymmetry is not easy, and perhaps impossible. We are not talking about simply producing a 10-second TV soundbite--"The government is taking away $1.00 from you and giving 90 cents to special interests."

The reason why we have representative democracy in the first place is because government policy is complex. The People, who do not have incentives to become informed about complex policies that marginally affect their lives, delegate political decision making to elected representatives. On any given policy issue, there are some people-- special interests--who have a greater stake in the outcome, and they have incentives to become informed and monitor the government's performance. In response, the government has incentives to favor special interests at the expense of the general public--not to speak of the inefficiencies created by such redistributive policies. Special interest gridlock is an integral part of representative democracy. It is here to stay.

Susanne Lohmann is an associate professor of political science at UCLA.

William H. Mellor III
It wasn't long ago that libertarians were rightly lauding James Buchanan's Nobel prize and the insights he provided through public choice theory. His insights, of course, demonstrated the insatiable and self-enhancing nature of government. Likewise libertarians have long appreciated F.A. Hayek's and Milton Friedman's prescriptions for non- governmental social organization. That Reason chooses to dedicate much of an issue to the question of "Can Washington change?" reflects the fact that twice in the past 16 years, libertarians have been seduced with the prospect of fundamental change brought about through the electoral process.

In each instance--the Reagan administration, in which I served, and the 1994 elections--all of our zealous intentions and wishful thinking couldn't overcome the incentives and institutional inertia we were all aware of at the outset. For example, while I was in the Reagan Energy Department, we dramatically reduced energy regulations, but it was clear to all concerned that we were never going to be serious about dismantling the Energy Department despite all the vaunted rhetoric. And when the Republicans finally had a shot at ending welfare, they produced a bill over 400 pages long, ultimately driven more by block-grant hungry governors than by sound welfare policy. It should therefore not be surprising that the answer to the question "Can Washington change?" is basically no. Washington is what it is--same as it ever was.

There will continue to be opportunities in Washington to limit the federal leviathan in specific ways, and there may be possibilities for Berlin Wall like breakthroughs on issues such as Social Security. But the more propitious focus for libertarians should be away from issues defined by Washington politics and on such matters as establishing a rule of law conducive to a society of free and responsible individuals. Whether the issue is economic liberty, property rights, or the First Amendment, the Constitution provides the means to check Washington's real-world impact. At the same time, policy prescriptions for the state and local level should be a priority not merely as a matter of devolution, but to restore responsibility and accountability in the government closest to the people. And again, the Constitution properly construed should check grassroots tyranny and provide a legal climate in which individual liberty can flourish in communities built around voluntary associations, religious and secular.

Finally, we should take heart in the force of our ideas and principles, which, despite what may be happening in Washington, are indeed still resounding around the world with unprecedented vigor. For two centuries, the United States has been the world's beacon of liberty. That role was not created by, nor can it be preempted by, Washington.

William H. Mellor III is president and general counsel of the Institute for Justice.

Grover G. Norquist
The Republican victory of November 1994 has mortally wounded the welfare/warfare state, just as the hairline fracture in the Berlin Wall in the fall of 1989 doomed the Soviet Empire. The Republican Congress passed a seven-year budget plan that spends $300 billion less in the year 2002 than Bill Clinton asked for. That $300 billion in reduced spending (at an average salary or grant of $50,000 per person) translates into 6 million more Americans who, in the Republican future, will be in the private sector. In Clinton's future, those 6 million people would have been government employees or recipients of government loans, grants, or welfare. This demographic shift moves 6 million Americans from dependence on the federal government--where they have what Marxists call "objective class interests" that make them Democrats--to the private sector, where, as taxpayers, their objective class interests make them Republicans.

Since the Democratic Party is the party of government, it should be relatively painless for the Republicans to reduce government spending, downsize government, and lay off Democrat precinct captains. True, Bill Clinton has vetoed much of the Republican legislation in 1995 and 1996, but despite the Clinton veto pen, Republicans have kept the budget on its glide path to balance in 2002, cutting $42 billion from the budget in 1995 and 1996 combined.

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