If self-styled public choice theorists took things like this more seriously, I think people would take them more seriously.
When was the last time you heard a politician give a stump speech promoting deficit spending? Both parties right now are taking distinctly anti-Keynesian positions - either they're promoting spending cuts and tax increases or pure spending cuts.
I take the point of public choice theory seriously. I think we do need to explain political behavior on the basis of the incentives of politicians (chief among them being the incentive to get re-elected). I wish self-styled public choice theorists would take public choice theory more seriously.
Wednesday, July 6, 2011
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Public choice theory really doesn't have anything specifically to say about Keynesianism per se. So the question is, who in this process is jostling not to get their pet program gored or to not see their portion of the tax code that benefits them saved?
ReplyDeleteI seriously doubt any economic philosophy would be at all useful in such considerations; public choice is about horse-trading, all-pay lotteries and that sort of stuff.
"...either they're promoting spending cuts and tax increases or pure spending cuts."
In a very modest fashion; mostly they are arguing over very limited cuts and/or tax increases (and even there you will see interested parties trying to get exemptions, etc.).
re: "Public choice theory really doesn't have anything specifically to say about Keynesianism per se"
ReplyDeleteGary, meet James Buchanan. James Buchanan - Gary Gunnels.
Of course it has something to say about Keynesianism, both in the formal academic literature and in the more informal blogging of economists who identify themselves as public choice theorists.
You know, I recently read a "intro. to public choice theory" type book (not the actual title - the actual title started out with _Government Failure_) and Keynesianism really wasn't mentioned in any significant way as I recall. I do remember one brief mention, but it was in praise basically.
ReplyDelete"pure spending cuts"
ReplyDeleteSure they are...
http://www.zerohedge.com/article/38-billion-cuts-make-353-million
To anonymous, Gary, and anyone else whose brain is remotely near this line of argument: the fact that these spending cuts might not please you absolutely doesn't change or invalidate my assertion that politicians show no interest at all in increasing the deficit through tax cuts and spending increases.
ReplyDeleteMy assertion has been that a public choice theorist who claims that Keynesianism is somehow God's gift to politicians is a doing poor public choice theory. I would also agree that any public choice theorist who claims that libertarianism is somehow God's gift to politicians is also doing poor public choice theory.
My point is that nobody is claiming the latter to my knowledge, and Nobel laureates have claimed some version of the former.
Presumably Daniel refers to James M. Buchanan. Who wrote Democracy in Deficit: The Political Legacy of Lord Keynes. and not president James Buchanan.
ReplyDeleteargosyjones,
ReplyDeleteYou can read it here: http://files.libertyfund.org/files/1097/Buchanan_0102-08_EBk_v5.pdf
From the intro. (written in 1977 - thirty-four year old book in other words):
Democracy in Deficit led the way in economics in endogenizing the role of
government in discussions of macroeconomic theory and policy. The central purpose
of the book was to examine the simple precepts of Keynesian economics through the
lens of public choice theory. The basic discovery was that Keynesian economics had a
bias toward deficits in terms of political self-interest. That is, at the margin politicians
preferred easy choices to hard ones, and this meant lower taxes and higher spending.
Thus, whatever the merits of Keynesian economics in using government fiscal policy
to “balance” the forces of inflation and deflation and employment and unemployment
in an economy, its application in a democratic setting had severe problems of
incentive compatibility; that is, there was a bias toward deficit finance. And, of
course, there is no need to reiterate here the evidence in the United States and
elsewhere for the correctness of the Buchanan insight on Keynesian economics. It is
all too apparent that the thesis of this book has been borne out.
The intro also talks about monetarists, FWIW.
Daniel,
At best you can say that right now they aren't; that this is the political rhetoric of the moment. Of course these days Keynes' presence is far less felt - meaning that his influence has diminished. During some periods, in other words, Keynes may have been such a gift. Now, with the public much more concerned with deficits, that is less the case presumably. Context probably matters in other words.
Anyway, I'll take Buchanan's work out for a spin today.
Daniel,
ReplyDeleteDo you have any numbers from similar surveys from back in late 2008, or early 2009? Obama promised the moon to the people. this survey just reflects public frustrations at the result of the last stimulus.
This survey doesn't prove that promising to cut projects and transfer payments in a candidates constituency is a good strategy for the coming elections.
Stimulus gave a great covert to spend some 4 trillion of money that the government didn't collect in revenue. Obama and his stimulus was extremely popular in the early days of his presidency.
I think we do need to explain political behavior on the basis of the incentives of politicians (chief among them being the incentive to get re-elected).
Exactly! 4 trillion and counting.
Subhi -
ReplyDeleteYa, this sort of thing changes over time. In late 2008 and early 2009 we definitely had a focused political establishment. I'm not sure what the public sentiment it was at that point. Clearly it was controversial - how the numbers shook out is not something I know.
re: "This survey doesn't prove that promising to cut projects and transfer payments in a candidates constituency is a good strategy for the coming elections"
Well, no. But let's think here. Why was this conceivable in 2009? Because of the truly extraordinary circumstances. Think back to 2004, 2000, 1996, 1992 - and midterms - particularly those during a weak economy. Was "I'm going to increase the deficit" a rallying point? Of course it wasn't. Generally speaking it seems entirely safe to say that:
1. Politicians pursue pet projects: i.e., they try to win the concessions they can from appropriations, but
2. Politicians oppose Keynesianism. They generally don't accept large increases in deficit spending during downturns. It is more feasible on occassion but usually must be through either tax cuts (ie - framed as supply side) or "automatic stabilizers" (ie - removed as a political decision).
These patterns seem fairly clear to me.
re: "Obama promised the moon to the people."
I hear this said. I simply don't understand it. The only places I ever read or heard that Obama said things would be fantastic and sugar and spice and everything nice under Obama was from conservative and libertarian outlets trying to accuse Obama supporters of hype. I found the campaign itself and other Obama supporters I know to be very sober. Of course he's a candidate to be proud of. Of course he's exciting. I don't know what you mean by "promised people the moon" (of course he promised all kinds of stuff - but no more than any other candidate ever does).
"I found the campaign itself and other Obama supporters I know to be very sober."
ReplyDeleteOf course you did.
"...(of course he promised all kinds of stuff - but no more than any other candidate ever does)."
And every candidate promises the moon.
Here the National Journal tracks two hundred of the promises Obama made: http://promises.nationaljournal.com/
This doesn't include every promise he campaigned on obviously; just two hundred of them.
Gary -
ReplyDeleteThe point is politicians of all stripes make promises that ought to be white noise to people, and I think to a large extent are white noise.
The fact that Obama participated in this time-honored tradition doesn't demonstrate Subhi's implication that he "promised the moon" in any meaningful sense, unless Subhi just meant "Obama talked optimistically in the vein of all candidates".
This meme that Obama was practically hypnotic is silly.
Daniel,
ReplyDeleteObama was mostly slick in his promise of authenticity; still, he barely won what should have been a landslide election. But yes, he promised the moon, and continues to do so. Just like W promised the moon during every state of the nation speech he gave every year.
And just like Ron Paul promises the moon and just like Gary Johnson promises the moon.
ReplyDeleteIf you are simply saying presidential candidate think they're awesome, will tell you that they're awesome, and make lots of promises. I have said this multiple times.
Obama hardly distinguishes himself on this. Lots of people act like Obama supporters were brainwashed. The claim is absurd.
Actually, at least in the case of Johnson, that isn't so. That's one of the great things about the guy actually (though I disagree with him on plenty of matters).
ReplyDeleteWell, since I am not a party person, but an independent, it is somewhat hard for me to fathom being the 'supporter' of a politician to start with. Being a 'supporter' of a politician is almost so outdated it shocks me sometimes; it is a bit like thinking that you have two choices Coke or Pepsi.
1. Party's got nothing to do with it. I'm not a party person either. I find it bizarre that people can have that sort of group identity. I think you can still say "this guy would do a decent job", though.
ReplyDelete2. Of course Johnson makes all kind of promises. Are you kidding me? His and Paul's are probably the most radical and least likely to be kept promises that are being made (depending on how cognizant their promises are of the limitations that are going to be imposed on them by Congress).
Anyone who dug into Obama's agenda would realize fairly quickly that the guy was your standard issue Democrat.
ReplyDeleteNo, Johnson doesn't really make promises in the way most politicians do. He doesn't make claims like "I'll create millions of jobs" and that sort of thing (which Obama did claim).
If you think a real withdrawal from Iraq and Afghanistan, a balanced budget amendment, block grants for medicare/medicaid, simplifying the tax code, decriminalizing marijuana, etc. to be radical I guess so. But those ideas have been out in the open as proposals for decades. Johnson's promises are fairly humble in comparison to Obama's - Obama (like Bush) makes claims about changing the entire energy infrastructure of the country, etc.
^^LIKE^^
ReplyDeleteClearly it was controversial - how the numbers shook out is not something I know.
ReplyDeletehere is a news link from December 2008. 56% were supportive of stimulus.
Politicians oppose Keynesianism.
Support for stimulus amongst politicians is actually stronger than the support from general public. Bush stimulus was passed with 81/16 in the senate. Obama stimulus passed 61/36.
Majority of the Obama stimulus was government spending. Current federal budget is more than double the last Clinton Budget, that's barely 10 years time. Original 2001 Bush stimulus was tax rebates handed over to consumers, that could hardly be called a supply side stimulus. Politicians of all hue have a penchant for spending, stimulus gives them one big cover spending, no two ways about it.
This post is a joke, right? Every time a candidate/politician promises spending without simultaneously proposing a cut or hike is a promise for deficit spending. The 2008 campaign was full of such, on both sides. For that matter, so was 2006, 2004, 2002, 2000, etc.
ReplyDeleteJust because a candidate doesn't say, "I promise to spend more than we take in," doesn't mean they're not promising deficit spending. I suspect voters know it, and mostly don't care (e.g. virtually all the rhetoric around war appropriations). The fact that voters apparently care now (which is interesting in a whole host of ways) is likely temporary.
Yeah Daniel, I think Public Choice would say that politicians would promise to get tough on the deficit--just as soon as this crisis is over, honest!--and get the debt ceiling raised. So they could continue to engage in unprecedented peacetime deficits.
ReplyDeleteIt's kind of funny that you are claiming the politicians are opposed to deficit spending, when the deficit is $1.6 trillion. When they balance the budget, then we'll talk.
Yeah Bob, I think Daniel went for too much a priori and too little empirical evidence.
ReplyDeleteBob -
ReplyDeleteRight. They're going to run deficits. But the point is this - a good solid public choice theory would tell us that:
- Politicians will be all talk when it comes to austerity because it gets votes
- When it comes to action, politicians aren't going to often implement Keynesian policy, because it doesn't serve their own interests and it has the chance of hurting them at polls.
Right?
This is not what some people claim. Many claim that:
- Keynesianism is good at the polls, and
- Politicians do Keynesianism while in office.
This doesn't seem to be borne out by the evidencce, and it doesn't seem to make sense according to basic public choice theory.
re: "It's kind of funny that you are claiming the politicians are opposed to deficit spending, when the deficit is $1.6 trillion. When they balance the budget, then we'll talk."
They are worrying about the deficit at a time that they shouldn't be, and they're doing it because they think it appears responsible to voters (and probably many are genuinely worried about the deficit). Despite the size of the deficit, they are rolling back a very modest Keynesian stimulus that is two years old, which the Democrats got pummeled for in the polls.
What you guys seem to continually misunderstand is that I'm not saying austerity is good for politicians either. It's not. But neither is Keynesianism.
What's good for politicians is: (1.) talking like you're pro-austerity, and (2.) acting like you're anti-Keynesian and anti-austerity.