Finding Public Choice Theory – Before I Knew the Name

When I first started putting the notes together for State Exempt (the book) a couple years ago, I knew I had to include a chapter on the drawbacks of using democratic elections to formulate policy and allocate resources. In particular, I felt like the problems of using majority rule in a dominantly two-party system were things that very few Libertarian works in general took time to cover. To my knowledge, a brief chapter from “The Machinery of Freedom” seemed to be the only exception (#32 – “And,  As a Free Bonus”), along with the less explicitly Libertarian work, “The Myth of the Rational Voter” by Bryan Caplan.


I decided early on that I would focus on two angles of electoral politics: from the voting end (irrational voters and rational ignorance) and the congressional end (two party drawbacks, prepackaged policy platforms, and the actual process of getting a bill passed).  From there I would finish it off in the second chapter by pointing out that the free market would not suffer from the same drawbacks.  My list of  advantages of the market over democracy highlighted the following advantages:


  1. Markets are not winner-take-all. Even if the majority of a given population choose to buy goods or services from one producer does not mean that everyone must have that preference imposed on them if they wish to take their money elsewhere. Voting and the resulting use of taxes does not have this trait; whatever 51% of the population says is final.
  2. Markets are not a package deal.
  3. Markets provide instant comparisons. As pointed out in the first point, markets are not winner-take-all. Unlike elections which
  4. Markets are more accurate and responsive. If in doubt, take a look at what happened in the 2000 elections.
  5. Markets allocate through true demand and not political privilege.


Of course – contrary to what I originally thought – an entire field exists for this angle of critique against government that I was previously unaware of: Public Choice Theory.


I saw the label maybe once or twice over a span of 2-3 years or so before I really knew what it was. From what I remember, I first encountered it on the Wikipedia page for Bryan Caplan, but never bothered to really look at what the label referred to until a month or two ago. Economists have obscure terms for just about any economic happenstance, so I thought this was unimportant for the subject matter I was writing about. But it turns out, just about everything I intend to write about in chapter two of “State Exempt” falls under the realm of Public Choice Theory!


This video gives an excellent primer on how Public Choice Theory explains the pervasiveness of high spending in the name of special interests:



In summary: Voters have little to gain from reducing spending and little influence to do so, while special interests have much more at stake and more say in a given area relative to the few voters who really know what the hell is going on. This applies to more than just higher spending; regulatory capture is another area as well. Now that I know the name for the study of this phenomenon, the chapter I intend to write on it should turn out a lot cleaner.


I suspect that my writing in this area will not be limited to a single chapter in my first book. It turns out another book I had in mind for publication about a decade from now could potentially play out as being a giant work on public choice theory altogether – only time will tell.


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