Recently I wrote this post on public choice theory were I suggested that often it is applied very inconsistently. Gene Callahan has a post on the same theme. It's too good to quote selectively:
"Libertarianism Calls for Bigger Government... or so a libertarian argument I just ran across implies!
The argument was against supporters of Keynes. I ran across it in private correspondence, so I can't point you to where to find it, but it runs as follows (Argument A):
1) Keynes's supporters say that his policies don't necessarily call for bigger government; instead, Keynes said governments should run surpluses in good times and deficits only in bad times, a recommendation which is entirely size neutral.
2) However, Keynes's advice was unrealistic; knowing public choice theory, we can see that, in fact, governments will love running deficits and hate running surpluses, and so will only pay attention to half of his advice.
3) Therefore, in fact, Keynes's prescription calls for more government.
So, let us apply this to a libertarian policy stance (Argument B):
1) Libertarians say that the market should decide both when a firm should grow large and when it should fail. No one should step in to bail out market losers, no matter how big they are nor how many people they employ.
2) However, their advice is unrealistic; knowing public choice theory, we can see that, in fact, governments will happily allow businesses to make profits and grow large (profits can be taxed and large businesses are great campaign contributors, etc.), but will be very reluctant to allow them to fail.
3) Therefore, in fact, libertarians' prescription calls for larger government.
Folks, it is the exact same argument with closely analogous specifics filled in differently in each. I don't see how anyone can buy A and not also buy B. (Well, except for the fact that they like the conclusion of argument A and don't like the conclusion of argument B!)"
I've never understood why some people seem to think that public choice theory and the economic incentives of politicians introduces such an obvious counter-argument to [fill in the blank] policy. What's worse is that when the present the argument, they treat the other side like freaking five year olds with no concept of market efficiency or the problems with planning.
What's most amazing to me about macroeconomic stabilization policies in particular is that we've had over a half century now of actually somewhat poorly executed macroeconomic policy making, and things are pretty good in the United States. We are a vibrant, innovative, constitutionally limited market democracy. We have major problems but somehow macroeconomic stabilization policy - with all the public choice warts which I've never denied exists - still seems to be doing pretty well.
Do we have a counter-factual? Do we have a successful constitutionally limited market democracy that is doing equally as well that has completely eschewed macroeconomic policymaking? Not that I'm aware of.
So please, don't treat me like a child when it comes to the economics of government intervention 101. I know the implications of public choice theory. My claim - the claim you have to choose whether to disagree with or not - is that macroeconomic stabilization works in theory in a frictionless model, it seems to work well enough in practice, and our experience with it including all the public choice problems that come with it seems to be quite good. What's the counter-argument?
Simply pointing to the reality of public choice problems and government failure is not a reason not to do it. When I point to "market failures" (I hate the term - but you know what I mean), do I present it as a reason to abandon markets? No, of course not. I'm a pro-market economist. One can recognize market failures without abandoning the market. For some reason some people have this idea in their heads that simply recognizing government failures implies the obligation to abandon government.
"What's most amazing to me about macroeconomic stabilization policies in particular is that we've had over a half century now of actually somewhat poorly executed macroeconomic policy making, and things are pretty good in the United States. We are a vibrant, innovative, constitutionally limited market democracy. We have major problems but somehow macroeconomic stabilization policy - with all the public choice warts which I've never denied exists - still seems to be doing pretty well."
ReplyDeleteOr alternatively those policies haven't been nearly as destructive as would be needed to knock the train off the tracks so to speak. Governments can do lots and lots of stupid things and yet an economy lurches and wheezes on.
"Do we have a counter-factual? Do we have a successful constitutionally limited market democracy that is doing equally as well that has completely eschewed macroeconomic policymaking? Not that I'm aware of."
Probably not, but that really doesn't tell you anything by itself either. This is an exceedingly weak argument at best.
For Callahan's syllogism, I don't doubt it. Madison noted during the debate about the Constitution (I think in the Federalist Papers) that conundrum of government is that it supposed to regulate the activities of the people while at the same time regulating itself. This just seems to be a species of that dilemma. Surely though it is the case that this problem merely becomes more manifest and more difficult to square the larger the government becomes, which seems less a knock against libertarianism and more of a knock against those with a different vision.
ReplyDeletere: "Governments can do lots and lots of stupid things and yet an economy lurches and wheezes on."
ReplyDeleteLurching and wheezing is not how I would describe the post-war U.S. economy. I might use those words for the Soviet economy or the Somali economy.
re: "This is an exceedingly weak argument at best."
What are you talking about? I never made an argument in the sentence you quoted, so how could it be weak?
re: "that conundrum of government is that it supposed to regulate the activities of the people while at the same time regulating itself."
The Madison-Jefferson solution being, of course, a government that is regulated by the people, by the states, and by "itself" in the sense of constitutional checks. Self-regulation poses interesting questions, but it's not a game-stopper. We see all sorts of solutions to these principle-agent problems. The strange thing is that for some people when the principle-agent problem is in the government they go into weeping-and-gnashing-of-teeth mode and consider it hopeless. These problems are very common and are solved by all sorts of social institutions that have evolved precisely to solve them.
"Lurching and wheezing is not how I would describe the post-war U.S. economy."
ReplyDeleteI can imagine a far more robust economy without the series of burdens which was placed on any number of areas of endeavor. We should have had the cellphone a decade or more before we did, just as an example.
Fine, you didn't make an argument; then it simply isn't a very useful observation.
"The Madison ... solution being, of course, a government that is regulated by the people, by the states, and by 'itself' in the sense of constitutional checks."
Madison always admitted that the chief limit was that politics was a bounded enterprise that left most of social life alone. Yet that is exactly the sort of advice that has been continually ignored to much embarressment. Thus you have the current administration claiming that they can constitutionally limit the amount of salt intake of the public through processed, etc. foods.
"The strange thing is that for some people when the principle-agent problem is in the government they go into weeping-and-gnashing-of-teeth mode and consider it hopeless."
Or alternatively they recognize that some things are beyond the scope of human beings, except by not going there in the first place. Men are not angels before they enter government certainly, but neither does government make men angels either.
re: "Men are not angels before they enter government certainly, but neither does government make men angels either."
ReplyDeleteWhich is precisely why we reject political institutions that require them to be angels to work.
"Which is precisely why we reject political institutions that require them to be angels to work."
ReplyDeleteWho is this "we?" We are not the 20th century Jacobins who viewed the constitution as "obsolete" (the word Wilson used). Really, for the political institutions to function that have come into being over the past one hundred some portion of men do have to be angels - more than in their moral rectitude obviously. Though they are not angels it not the least bit surprising that they think that they are.
re: " Really, for the political institutions to function that have come into being over the past one hundred some portion of men do have to be angels - more than in their moral rectitude obviously."
ReplyDeleteThey are not angels Gary. The political institutions remain relatively functional. Ergo...
Daniel,
ReplyDelete"They are not angels Gary."
From the political commercials they use they seem to think themselves God-like actually. Happily we've avoided the institution of state divinity (so far).
Well, as long as the political institutions remain "relatively functional" all is splendid.
Meanwhile we're on tap for deporting several hundred thousand people for no particularly good reason (while destroying the lives of many people and their families in the process) and apparently that policy is on auto-pilot.
They say a lot of things about themselves. Since when do we care about that around here? Come on now - I tried to get you off this point but you go right back to it. Citing politicians' delusions proves my point that they're not angels. What are you trying to say?
ReplyDeletere: "Well, as long as the political institutions remain "relatively functional" all is splendid."
I don't know about "splendid" - but certainly all is certainly relatively functional.
"Citing politicians' delusions proves my point that they're not angels."
ReplyDeleteI agree, they aren't angels, but they pretend that they are and that is my point; see above why our current institutions encourage that way of thinking (and were built around a number of flawed ideas about the abilities of the regulators of public life). Indeed, it is one where institutions increasingly desire to make windows into a person's soul.
All of this was adopted freely of course, and all I argue is that be abandoned freely. We're making some progress along those lines.
I'd call it relatively dysfunctional.
I have no idea why you even brought up that they think they're angels. I never disagreed with that, and I don't see how it's relevant.
ReplyDeleteWe were talking about institutions that are robust to imperfect human beings.
The point is lots of politicians think they're angels (lots of people in general think they themselves are angels), none of them are, but we've got a set of political institutions such that that doesn't matter. That was the intent of Madison and others.
We've had over two hundred years of people who think they're angels vying for public office and things remain relatively functional. If a two hundred year stint isn't "robust political economy", I'm not sure what is. Things will change over time. Nothing lasts eternally. But the durability of a free society on the North American continent indicates something is being done right here.
Why did I bring it up? To discuss the historical process/change that I went into a bit. We actually have plenty of institutions which do not recognize the frailties of human beings. We'd have a far more humble government if that were the case.
ReplyDelete"But the durability of a free society on the North American continent..."
This assumes that we live in a free society. There are points in favor and in opposition to such a claim. It depends in part on whether you think that the multitude of state agents who watch us (in a way never experienced by a human society before today*) are on the whole a burden on freedom.
*During the absolutist regime of Louis XIV he had roughly 40,000 police to, well, police his entire kingdom. That is roughly the number NYC employs to police its population. Consider the geographic differences between the two; and of course that doesn't even come close to describing the number of people watching New Yorkers as agents of the state, whereas the 40,000 police of the French state were the bulk of the state's manpower.
I think Callahan is wrong. Why should large businesses necessarily benefit politicians more than small businesses, I don't think they do. Tax revenues may well be larger with many small businesses because they have less resources to use to plan their way around taxes.
ReplyDeleteThat said, I think bailouts and Keynesianism both occur because of a genuine view by politicians that they are the best course, not because of bribery and corruption.
"We are a vibrant, innovative, constitutionally limited market democracy."
ReplyDeleteI'm curious...what constitutional limits on federal government size do you think are being obeyed? Do you think the Constitution allows for:
1) Social Security?
2) Medicaid?
3) The Department of Education?
4) The Department of Energy?
If so, which specific language in the Constitution do you think gives the federal government the power to fund each of those programs? (These are just four among many constitutionally questionable programs.)
"We have major problems but somehow macroeconomic stabilization policy - with all the public choice warts which I've never denied exists - still seems to be doing pretty well."
Our current debt (the phony "small" number, not the present-value-of-all-future-obligations number) stands at ~100% of GDP, with all evidence showing that it will continue up steeply. Unlike WWII, we aren't involved in a major war, so the debt isn't primarily due to war. Unemployment is the worst since WWII:
dailymail.co.uk/news/article-1336078/Post-recession-unemployment-scariest-job-chart-worst-WW2.html
If this is macroeconomic stabilization policy doing pretty well, it doesn't say much for macroeconomic stabilization policy.
Yes Mark - these things are constitutional. Article 1 Sec. 8 gives Congress the authority to appropriate money to provide for the general welfare.
ReplyDeleteI'm not sure what your argument is in the second half here. Do you think macroeconomic stabilizations policies are responsible for the problems posed by entitlement reform? Can you be a little clearer on what you're arguing here?
Hi Daniel,
ReplyDeleteYou write, "Yes Mark - these things are constitutional. Article 1 Sec. 8 gives Congress the authority to appropriate money to provide for the general welfare."
I have two responses:
1) James Madison does not appear to agree with you. With regard to the phrase "general welfare" he wrote:
"With respect to the two words 'general welfare,' I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators."
“Having not yet succeeded in hitting on an opportunity, I send you a part of it in a newspaper, which broaches a new Constitutional doctrine of vast consequence, and demanding the serious attention of the public. I consider it myself as subverting the fundamental and characteristic principle of the Government; as contrary to the true and fair, as well as the received construction, and as bidding defiance to the sense in which the Constitution is known to have been proposed, advocated, and adopted. If Congress can do whatever in their discretion can be done by money, and will promote the General Welfare, the Government is no longer a limited one, possessing enumerated powers, but an indefinite one, subject to particular exceptions. It is to be remarked that the phrase out of which this doctrine is elaborated is copied from the old Articles of Confederation, where it was always understood as nothing more than a general caption to the specified powers."
"Some, who have not denied the necessity of the power of taxation, have grounded a very fierce attack against the Constitution, on the language in which it is defined. It has been urged and echoed, that the power "to lay and collect taxes, duties, imposts, and excises, to pay the debts, and provide for the common defense and general welfare of the United States," amounts to an unlimited commission to exercise every power which may be alleged to be necessary for the common defense or general welfare. No stronger proof could be given of the distress under which these writers labor for objections, than their stooping to such a misconstruction."--Federalist No. 41
“For what purpose could the enumeration of particular powers be inserted, if these and all others were meant to be included in the preceding general power?” — James Madison, in Federalist No. 41
"For what purpose could the enumeration of particular powers be inserted, if these and all others were meant to be included in the preceding general power? Nothing is more natural nor common than first to use a general phrase, and then to explain and qualify it by a recital of particulars. But the idea of an enumeration of particulars which neither explain nor qualify the general meaning, and can have no other effect than to confound and mislead, is an absurdity,..."
Do you think James Madison was wrong, i.e., that he didn't know what the phrase "general welfare" in the Constitution authorized?
Or do you think these quotes from Madison don't conflict with your contention that the "general welfare" clause allows the federal government to spend money even on things that clearly were *not* enumerated in the Constitution? (Such as federal spending on education, or federal spending on healthcare for the poor?)
2) If you do indeed think that the federal government can spend money on whatever Congress and the President consider to be in the "general welfare" (e.g., federal spending on the Big Dig in Boston, or the "bridge to nowhere" in Alaska)...what are some items that you think the Constitution does NOT allow federal spending on?
I'll try to write more about the second part of my comments later tonight...
Best wishes,
Mark
I'm having trouble commenting. Twice I've posted comments that have replied, "Your comment has been published"...but the comment wasn't published.
ReplyDeleteWell I obviously agree with him that it does not grant an unlimited power to Congress and if such an unlimited power were granted the Constitution would be useless. Obviously the first enumerated power is conditional on other enumerated powers and restrictions.
ReplyDeletere: "
Or do you think these quotes from Madison don't conflict with your contention that the "general welfare" clause allows the federal government to spend money even on things that clearly were *not* enumerated in the Constitution? (Such as federal spending on education, or federal spending on healthcare for the poor?)"
I don't think this Mark. The federal government is restricted to the powers enumerated in the Constitution. It can't do what's not enumerated. Providing for the general welfare is enumerated. Mark you don't just get to decide which enumerated powers are really enumerated and which aren't after over two hundred years of consensus that in fact all the enumerated powers are actually enumerated powers.
Madison is a really tough guy to cite on this, and citing the Federalist Papers - which were essentially a sales pitch - is tough too. The thing is, he changed his mind a lot on the appropriateness of provisions for the general welfare. He's also just one founder - many thought it was entirely appropriate. Certainly the courts, the Congress, the president, and the American people think its appropriate. The Constitution is pretty clear, Mark.
Ask yourself this - why have most scholars who have dedicated their lives to understanding the Constitution come out disagreeing with you?
ReplyDeleteHi Daniel,
ReplyDeleteI can only comment as time allows, but my first comment deals with your statement, "Obviously the first enumerated power is conditional on other enumerated powers and restrictions."
You have an interesting definition of "enumerated".
Here's a definition from the Internet:
Verb: 1.Mention (a number of things) one by one.
2.Establish the number of.
Synonyms: count - recite - list - recount
Per that definition, I doubt most English majors, let alone Constitutional scholars...and most importantly, let alone the Founding Fathers, would consider the general welfare clause as an "enumerated power".
Here's how Article I, Section 8 reads:
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
To borrow money on the credit of the United States;
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
To establish Post Offices and Post Roads;
etc.
I think most English majors would consider the "enumerated powers" to start with "To borrow money on the Credit of the United States."
That's where the list (the "enumeration") starts.
And how do you address Madison's simple observation that, if the "general welfare" was meant to be a general power, there would be no *need* for the enumeration?
Why would they have listed:
"To borrow money..."
"To establish Post Offices and Post Roads"
and so on, if the Congress had already been empowered to do whatever it thought would promote the general welfare?
James Madison and I would like to know! ;-)
Best wishes,
Mark
Exactly why is the first "power to..." excluded but all other "to..."'s included Mark?
ReplyDeleteIf you ask "what is the first on the list of things that the Congress is given the power to do?" The answer would seem to obviously be: "lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States".
Unless you're somehow arguing that the Constitution is NOT giving Congress the power to do that... in which case I would just ask you why it says "the Congress shall have power to" do that.
It's a bizarre way to write that the Congress DOESN'T have that power, and no substantial portion of anyone in Congress, in the courts, in the law profession, or in the public seems to ever have interpreted that any other way thant that they have those powers.
Why would they list specifics when some of the specifics seem to fall under enumerated powers? For the same reason that they decided to list specific rights in the bill of rights. Emphasis and clarity. Obviously "provide for the General Welfare" is going to mean a lot of different things to a lot of different people and that is going to be negotiated in a democratic process (that was the whole point!). It's not a blank check but it is vague. They wanted to guarantee that a few specific things were definitely not ruled out: post roads, patents, etc. Congress would obviously debate a lot of other stuff - by design.
Your approach of just deciding that one of hte enumerated powers isn't actually a power granted to the representatives of the people doesn't make any sense. Yes, as Madison said, it is limited by everything else in the Constitution. That doesn't seem to me to be saying that that line doesn't exist as written.
And again I'd reiterate - Madison is great, but he's one man, he's regularly engaged in a sales pitch, he's regularly serving partisan purposes, and most importantly of all he changes his mind a lot on these points. It's much like Hayek, in fact. When you outlive everyone and get time to think about different things in different circumstances you end up giving lots of different explanations for things. That's not to say ignore Madison. As I've said above I agree with a lot of his points. It's just to say we need to look more broadly than Madison. If all you've got against over two centuries of understanding of hte very plain English of this article is one or two quotes from one man I'm afraid you're not bringing much to the table.
I feel like I answer the same question from you over and over again. If you comment again, maybe we could move this forward or in another direction?
Hi Daniel,
ReplyDeleteA couple more comments.
You also write, "Madison is a really tough guy to cite on this,..."
The "Father of the Constitution" is a "tough guy" to cite on what the Constitution means and does not mean? If Madison is a "tough guy to cite" who is NOT a "tough guy to cite"?
"...and citing the Federalist Papers - which were essentially a sales pitch - is tough too."
I'll grant that the Federalist Papers were meant to sell the Constitution after it was written, but what better citations are available? It would have been nice if the Founders had explained that the phrase "general welfare" did not mean that Congress could do anything to promote the general welfare. But I expect that the Founders thought that was pretty clear. Which of the Founders do you think agreed with your interpretation?
"The thing is, he changed his mind a lot on the appropriateness of provisions for the general welfare."
Can you give some citations for where you think he "changed is mind a lot"?
"He's also just one founder - many thought it was entirely appropriate."
Who, besides *perhaps* Alexander Hamilton, among the Founders, thought that the "general welfare" clause conferred broad power? (Note that even Alexander Hamilton wrote this: "No objection ought to arise to this construction from a supposition that it would imply a power to do whatever else should appear to Congress conducive to the General Welfare.")
"The Constitution is pretty clear, Mark."
I agree that it's pretty clear, Daniel. It's pretty clear that Madison is right, and you're wrong. I think the whole history of federal spending up to the Civil War supports that Madison was right and you are wrong. Federal government spending, as a percentage of GDP, was a tiny fraction of what it is today. And there was absolutely no indication that the federal government should be funding grade schools (there was no Department of Education), or health care for the poor (Medicaid), or retirement (Social Security)...let alone investigating new energy sources (Department of Energy).
First Mark - I think you may have missed my coment immediately above. This answers a lot of your questions and I think it was identified as spam initially as well.
ReplyDeletere: "The "Father of the Constitution" is a "tough guy" to cite on what the Constitution means and does not mean? If Madison is a "tough guy to cite" who is NOT a "tough guy to cite"?"
As I've said above - you don't cite a single person to understand the Constitution. The problem posed by Madison is that he changes his mind a lot. That doesn't mean don't cite Madison - it means be cognizant of that. Even if he were entirely consistent, though, he's not the final word. Remember the other author of the Federalist Papers for God's sake!
re: "Can you give some citations for where you think he "changed is mind a lot"?"
On internal improvements as falling under the power to provide for the general welfare. On the primacy of the national government. And again, this is just Madison. There were other founders who simply disagreed with him and clearly over two centuries of constitutional jurisprudence shares my understanding.
Hi Daniel,
ReplyDeleteYou write, "First Mark - I think you may have missed my coment immediately above. This answers a lot of your questions and I think it was identified as spam initially as well."
Yes, I don't think your comments of October 25, 1:18 PM were posted when I wrote my comments of October 25, 10:00 PM.
You write, "As I've said above - you don't cite a single person to understand the Constitution."
I have cited James Madison, widely acknowledged to be the Founder most intimately involved with the creation of the Constitution. I also cited Hamilton. (However, due to his lust for power--for the "general welfare" of course!--Hamilton tended to say whatever would get him more power.)
You haven't cited any of the Founders. So you admonish me that I can't just cite one Founder, but you apparently can cite NO Founders, and think that's an improvement! :-)
You also say that the "general welfare" clause authorizes: 1) the Department of Education, 2) Medicaid, 3) Social Security, and 4) the Department of Energy.
However, as far as I know, your assessment is completely contradicted by the history of the Constitution and the early history of the U.S. Let's take the Department of Education, for example. What historical evidence do you have that the Founders intended the federal government to spend money on elementary or high school education? What federal funds were spent on elementary or high school education by any Congresses before, say, 1840?
Hi,
ReplyDeleteA bit more on whether the Department of Education is constitutional or not. (It's not.) From "The Constitutional Convention of 1787: A Comprehensive Encyclopedia of America's Founding," page 517:
"The Constitution's failure to mention a national university is part of a larger omission, that of education in general."
"They (the Founders) likely regarded education within individual states primarily as a matter for the states themselves to take care of."
Indeed. (Obviously.)
Regarding Madison's supposedly changing views on "internal improvements."
ReplyDeleteHere is the complete text of his veto of an "internal improvements" bill in 1817, at the very end of his presidency. (Add the http, but not www.)
millercenter.org/president/speeches/detail/3630
Every word is completely faithful to the points I have been trying to make. Some individual quotes:
"To refer the power in question to the clause "to provide for the common defense and general welfare" would be contrary to the established and consistent rules of interpretation, as rendering the special and careful enumeration of powers which follow the clause nugatory and improper. Such a view of the Constitution would have the effect of giving to Congress a general power of legislation instead of the defined and limited one hitherto understood to belong to them, the terms "common defense and general welfare" embracing every object and act within the purview of a legislative trust."
Tell it like it is, bro'! There's a man who knows his Constitution! :-)
Mark
英文seo ：They say a lot of items about themselves. Since when do we treatment about that around here? Come on now - I tried to get you off this factor but you go right rear again to it. Stating politicians' delusions shows my factor that they're not angels. What are you trying to say?
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