Tuesday, January 22, 2008

Politicians are irrational actors trying to pander to irrational voters

As I understand Tyler's worldview, he thinks individuals are a whole lot more rational and economically capable than I do. I think folks, in many circumstances, need a bit more help, and that, as beings fairly aware of our own irrationality, lapses in long-term attention, and assorted other deficits and shortcomings, we often smartly conclude that the whole is stronger and wiser than the one, and build communal institutions that sacrifice some autonomy but create structures better fitted to the messy and occasionally disappointing ways in which we actually engage the world.
This comes out strongly in health care, which is where I also tend to interact with the libertarian view the most. As far as I can tell, most libertarians appear to believe that if you just rip away all cost insulation, forcing individuals to pay costs they can barely burden, that threat of financial ruin will sharpen their minds and lead to better health decisions. I tend to think it will just lead to their financial ruin, and because most of us know that we're not nearly as assiduous as we should be about saving for retirement and putting money in our health savings accounts, we're wise to understand that we do a poor job planning for risk, and so should preemptively enter into agreements that radically reduce the level of insecurity in our lives. If we can add in some incentives and penalties encouraging smart behavior and discouraging poor decisions, that's all for the good.
But it is, at base, a disagreement over the likely behavior of humans, and how we should respond to it. The Cato employees of the world -- Tyler is not one, incidentally -- simply have a much more optimistic take on the individual's mastery over his sphere. We are, with a bit of an assist from price signals, doctors, stockbrokers, bond traders, pension planners, and much else. I on the other hand, see more in the way of frailty and shortcomings, and am instead deeply optimistic that our self-knowledge of those vulnerabilities allow us to stand together and protect each other against not only the vicissitudes of a dangerous world, but occasionally, against ourselves.
All that said, it is Martin Luther King Jr. Day, and Tyler is right that there is much more that unites us than divides us. Kung pao, for instance. And that ain't no small thing. Posted by Ezra Klein on January 21, 2008 10:53 AM TAPPED Beat the Press Ezra Klein
A very good post. On the specifics: relative to most libertarian economists, I am more likely to think -- or should I say admit -- that human beings are irrational, even when the stakes are high (see the self-deception chapter in Discover Your Inner Economist). But, relative to social democrats, I tend to think that politicians are irrational actors trying to pander to irrational voters and that it can't be any other way. I am much less optimistic about democracy as an instrument for fine-tuning good policy or for that matter as a medium for enforcing progressive sentiments.

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