Bryan Caplan argues, in The Myth of the Rational Voter (Princeton University Press, 2008), that the main reason for bad economic policy is excessive influence by the economically illiterate general public.
The very fact that Caplan takes democracy seriously raises serious alarms. Come on: NAFTA enjoyed overwhelming bipartisan support, despite strong public opposition. It’s a safe bet ADM and Cargill had more to do with the food stamp program than the powerful welfare mom voting bloc. The content of policy is far better explained by Millsian elite theory than by a bunch of civics book nonsense about democracy.
Sometimes the state intervenes in the market on behalf of big business and passes it off to the public as a “progressive” exercise of “countervailing power.” Other times, the state intervenes on behalf of big business and calls it “free trade.” But what the voters think about it simply reflects the rhetoric used to sell it to them after the fact. The actual policies are made by the corporate hogs at the trough.
In any case, if public economic illiteracy is really a problem, it’s because economic illiteracy is encouraged by neoliberal economists.
So the public believes the evidence of its own lying eyes that the world is under transnational corporate lockdown, and that big business extracts profits from the worker and consumer in a zero-sum manner. And because the public equates that state of affairs to a free market, it expresses some skepticism about the virtues of free markets. Whose fault is that? Perhaps the fault of neoliberal economists, talking heads and politicians who equate that state of affairs to a free market.
Perhaps the real problem is that the public rightly hates the corporate economy they observe, but wrongly identify it as a free market — but that’s exactly what they’re told by Caplan’s “expert economists!”
The public actually shares many of the opinions of establishment economists. For example, they share Caplan’s opinion that “free trade agreements” like NAFTA actually have something to do with free trade (when in fact the “intellectual property” provisions of NAFTA and the Uruguay Round are the biggest upward spike in protectionism since Smoot Hawley).
See, it’s not just the public that has an irrational bias. The technical expertise of the professional economists is filtered through the prism of their unquestioned ideological assumptions. Mainstream economists — including Caplan himself — share an unexamined bias: The implicit assumption that the existing corporate economy and its characteristics are largely results of the “free market.”
Caplan’s economic experts are not just disinterested appliers of economic principles, or advocates of free market principles as such. They’re apologists for a particular system of power.
That’s another problem with Caplan: His belief that giving more policy-making autonomy to economic experts, and insulating them from interference by the economically irrational public, will result in better policy. Caplan seems to assume some sort of generic or immaculate expertise, and to neglect the possibility that expertise might be colored by institutional culture or the needs of a particular system of power. In practice, his economist philosopher-kings’ idea of “free market” economics largely mirrors the corporate neoliberal conventional wisdom.
I doubt Caplan’s “free market” economists will include many radical Rothbardians agitating to nullify the “intellectual property” of the RIAA and MPAA, or open up the latifundia of Third World landed oligarchs for proper Lockean homesteading by the peasantry. No, what we’ll get is the neoliberal conventional wisdom, “free market” principles warped beyond recognition in the interests of the corporate mercantilists who own the world. And they’ll pass it off as disinterested expertise, even as they serve the material interests of their corporate masters.
Caplan tips his hat to the possibility that mainstream economists aren’t really neutral experts, but apologists for a set of vested interests. The problem is his idea of the proper way to test it: Controlling for the income of economists, to see if rich economists share the views of the rest of the rich. Instead of considering the possibility that the conventional wisdom of economists reflects the ideological hegemony of dominant institutions in our society, Caplan looks for crude self-promotion on the order of Ken Lay and Bernie Madoff.
What matters is not how pure the consciences of establishment economists are, but how their views of economics — sincere or not — are shaped by the system of power they serve. The economic policies supported by “four out of five economists” are, overwhelmingly, the policies desired by state-connected corporate interests. And they have little or nothing to do with genuine free markets.
The problems with economic policy have more to do with the biases of the “experts” than the biases of the Great Unwashed.