In the spirit of Clemenceau, Huntington (1981) claims that in a democracy, the ultimate responsibility for a country’s military strategy belongs to the civilian political leadership. If, instead, the military controls the political decisions, it is a military dictatorship. In the same way, the ultimate responsibility for a country’s economic policy should belong to the political leadership. If economists control it, it is a technocratic dictatorship.
This is the opening paragraph of a short article by Luigi Zingales, “The Political Limits of Economics,” American Economic Review, May 2020.
The whole piece is worth reading, not because I agree with it but because he makes some points that are worth thinking about.
What seems to be at the heart of his objection to the power, such as it is, that economists have in economic policy is that we don’t respect the wishes of the majority. He writes that we are substituting “our preferences in place of those of the majority.”
Is that true? I think it often is. Is it bad? I think it depends on the preference. Let’s say that the majority want President Franklin D. Roosevelt to imprison largely innocent Japanese residents on the West Coast in 1942. I think there’s some evidence that that was true, especially if we focus just on residents of California. Imagine that you’re an economic adviser to FDR and your preference is that they not be imprisoned. Should you ignore your preference and help FDR achieve his goal in the least-cost way. Or should you argue against imprisoning them? I’m in the latter camp. (Pun not intended.)
I wonder what Zingales would say an economist with my views should do? It’s not clear from his article.
Zingales does point to the famous case of Jonathan Gruber. He writes:
The crudest form of political failure is that assumed by Jonathan Gruber, President Obama’s advisor on the health-care reform. In a panel discussion at the University of Pennsylvania, he frankly said what many economic advisors are too afraid to express: the Affordable Care Act was deliberately written “in a tortured way” to disguise the fact that it creates a system by which “healthy people pay in and sick people get money.” The obfuscation was necessary due to “the stupidity of the American voter.” The presumption, therefore, is that a majority of American voters do not want a health-caresystem that pools risk because they are ignorantor stupid, and thus the role of the advisor is to implement this system anyway—if necessary obfuscating the effects from voters, so they cannot possibly undo it.
On that issue, I wrote:
Tyler Cowen, co-bloggers Scott Sumner and Bryan Caplan, and David Friedman have all weighed in on Jonathan Gruber’s morality or lack of same. I have little to add to that discussion beyond the fact that I agree with Bryan and David.
Zingales points out, I think correctly given my reading of the history, that the Robinson-Patman Act was passed to protect small business competitors rather than to promote competition. He writes:
The most explicit form of substitution is when we economists de facto abrogate an existing law because we deem it inconsistent with economic thinking. This is the case with the Robinson–Patman Act. Approved in 1936, the act aimed at “protecting small business firms from competitive displacement by mass distributors at a time of general economic distress” (Rowe 1980, p. 508). In spite of several attempts to repeal it, the Robinson–Patman Act is still on the books. Yet it is not enforced, because we economists found it “inconsistent with the antitrust goal of promoting competition” and have de facto abrogated it: in the past two decades, the Federal Trade Commission filed only one case (Blair and DePasquale 2014, p. S214).
I think of this as a victory for good economic thinking. Zingales doesn’t address whether it is: what upsets him is that economists substituted their judgment for that of Robinson and Patman. But notice the rhetorical power that comes from his misstating the issue. He writes that economists, in pushing not to enforce the Act, have “abrogated” it. Have they? Normally you abrogate a law by breaking the law. But pushing not to enforce the act is not breaking the law.
Consider a non-economic issue. Many states have laws on the books against adultery. I happen to oppose adultery. I don’t think, though, that people who commit it should be charged with a crime. Imagine I’m advising a prosecutor in a state with such laws. Zingales would presumably say that because those laws were passed by politicians and because, he assumes, the majority favor those laws, I should advise the prosecutor to enforce them. Should I? And If Zingales would say that such laws shouldn’t be enforced, what would his argument be? And in arguing that the laws against adultery shouldn’t be enforced, am I de facto abrogating that law?
In making his case that economists should avoid substituting their judgments for those of the majority, Zingales doesn’t grapple with co-blogger Bryan Caplan’s argument in The Myth of the Rational Voter. I wish he had. Zingales does, though, refer to some work by Gilens and Page. He writes:
For example, Gilens and Page (2014) shows that US government policy seems to respond more to the interests of economic elites than to the preferences of the majority.
It’s possible that Gilens and Page found this. I doubt it though. From what I’ve read, Gilens’ data are thorough and impeccable. But what they found is the following, as noted by my co-blogger Bryan. He writes:
Gilens compiles a massive data set of public opinion surveys and subsequent policy outcomes, and reaches a shocking conclusion: Democracy has a strong tendency to simply supply the policies favored by the rich. When the poor, the middle class, and the rich disagree, American democracy largely ignores the poor and the middle class.
Notice what Bryan says. The tendency is to supply policies favored by the rich. That’s different from saying policies that are in the economic interests of the rich. Bryan explains:
To avoid misinterpretation, this does not mean that American democracy has a strong tendency to supply the policies that most materially benefit the rich. It doesn’t. Gilens, like all well-informed political scientists, knows that self-interest has little effect on public opinion. Neither does this mean that Americans strongly object to the policy status quo. They don’t, because poor, middle class, and rich tend to agree. Gilens’ key conclusion is simply that when rich and poor happen to disagree, the rich generally get their way.
One final point. Zingales writes:
Last but not least, neoclassical economics separates efficiency and distribution, focusing only on the former. Thus, the (implicit) preferences embedded in our approach are not politically neutral, but they clearly favor the strongest players, who—in the absence of any distributional concern—will capture the larger share of the benefits.
I have two problems with this two-sentence paragraph: the first sentence and the second sentence.
I think you would have to read the history of economic thought very selectively to agree completely with his first sentence. It’s true that neoclassical economics separates efficiency and distribution and one can argue that it focuses on efficiency. But “only” on efficiency? No way.
An even bigger problem is his second sentence. Not caring about distribution does not mean that you clearly favor the strongest players. At any given time, some of the strongest players will be firms with monopoly power. Economists concerned about efficiency are among the strongest critics of long-term monopoly power, especially the kind that is brought about by restrictions on competition. Economists were in the forefront of pushing for deregulation of airlines and trucking, for example, which made the airline and surface transportation industries more competitive and brought down prices paid by passengers and shippers. Economists concerned about efficiency have been among the harshest critics of subsidies to rich owners of sports teams. I could go on and on.
READER COMMENTS
Jon Murphy
May 17 2020 at 7:51pm
I had initially read Luigi’s post a little differently, but reading your commentary has made me adjust my interpretation.
I do think Luigi is starting something important. There is a habit among economists, especially of the Samuelsonian/Pigouvian bent, to be philosopher-kings. Often, their preferences are substituted in for the public or the people involved in the transaction either implicitly (as in the case of Posnerian/Pigouvian law & econ analysis ) or explicitly (as in the case of standard Samuelsonian welfare economics or certain kinds of behavioral econ).
But, as you rightfully point out, there may be times when the majority should be constrained. Indeed, such a restraint could be in the form of a constitutional rule (a la Buchanan or Madison) or via an expert overruling some desired action (see, for example, Franklin Pierce’s veto of an act in 1854 to grant land for a state-run mental hospital on the grounds he felt such an action was unconstitutional).
It seems to me this is the tension of liberalism. Where is that line drawn between (to use the terms of Adam Smith) the “science of the legislator” and “that insidious and crafty animal called…politician”? The key, I think, is in justice and liberty (which are two sides of the same coin), but that is a comment for another time.
SaveyourSelf
May 18 2020 at 2:53pm
“The key, I think, is in justice and liberty…”
I think you are close. Both justice and liberty are defined in relation to an individual, and that is where the key is found. Zingales is making a straw man argument posing individual rationing against voter rationing and presuming the latter is the stronger and more moral position. Voter rationing is, by and large, an illusion—a straw man. Even Democratic rationing is individual rationing. That’s why it leads to totalitarianism.
Zingales wrote, “The most explicit form of substitution is when we economists de facto abrogate an existing law because we deem it inconsistent with economic thinking.”
Zingales is assuming that a given group of people have a majority position on some specific question, that everyone affected by that decision considered the alternatives, and that some individual or minority group was able to overrule the group’s expressed consensus. Typically in Democratic politics none of those things are true. What happens is a majority elects an individual who then makes rationing decisions for everyone. If an economist is able to convince said elected individual to decide in a particular way, say on the grounds of justice or liberty, does that persuasion qualify as ignoring the will of the majority? In his argument it does. But his argument assumes Democracy is something other than what it really is–substituting individuals rationing for themselves with other individuals rationing for them.
Vivian Darkbloom
May 18 2020 at 7:28am
“He writes that economists, in pushing not to enforce the Act, have “abrogated” it. Have they? Normally you abrogate a law by breaking the law. But pushing not to enforce the act is not breaking the law.”
I could make a non-blushable argument that this is obstrucing justice.
Nevertheless, I’m very wary of the argument that an executive has discretion not to enforce laws passed by Congress (and signed by, presumably, a different President). The oath of office of the President is to “faithfully execute the office”, to which I understand it to include enforcing or “executing” the laws on the books. To say that the President has discretion not to enforce laws makes a mockery of the bedrock Constitutional principle of the separation of powers. If you go down the road that the President will of course limit his refusal to enforce laws that don’t deserve being enforced, this is a slippery slope indeed.
The better (and, I’d argue) more legal course is to enforce all the laws on the books, even those you don’t like. At the same time, go about trying to use your authority and influence to change them. If those laws are bad and contrary to the majority opinion, enforcing them only encourages Congress to do the job given it—to change that law by the established democratic process. If the law is so abhorent you cannot in good conscience enforce it, then the honorable thing to do is to resign. Why should Presidents be an exception to this time-honored tradition?
Please also note in respect to the above-referenced quote that Zingales did not simply write that the law was “abrogated”. The words “de facto” preceding abrogated assign his phrase a much different meaning.
David Henderson
May 18 2020 at 9:14am
You write:
So then, Vivian, you would advocate enforcing laws against adultery even if it meant sending adulterers to prison?
Jon Murphy
May 18 2020 at 9:24am
In Massachusetts, it is still illegal to dance on Sundays.
David Henderson
May 18 2020 at 9:42am
Jon,
That’s an even better example than mine because at least we can be sympathetic to the goal of reducing adultery, whereas it’s much harder to be sympathetic to the goal of reducing dancing on Sunday.
Two questions:
For you. Do you know the penalties?
For Vivian: Would you advocate imposing the harshest of those penalties on people in Massachusetts who dance on Sundays?
Jon Murphy
May 18 2020 at 10:04am
I slightly misremembered the legislation. You cannot dance or have any kind of entertainment on a Sunday without a proper license.
The General Law does not proscribe punishment but leaves it up to the towns.
By the way, in Massachusetts, it is also illegal to:
-Sing only part of the national anthem or set it to a dance beat (subject to a $100 fine and jail time)
– Scare pigeons (30 days in jail)
– Blaspheme (1 year in jail and a $300 fine)
Thomas Hutcheson
May 18 2020 at 10:47am
But how many resources should go into enforcing a law? The cost of ensuring that no traffic law were never broken without punishment could be many times a state budget. Just as legislators and regulators should take account of both efficiency and distribution so should police and prosecutors. Ultimately all are responsible to the citizens for their trade-offs.
robc
May 18 2020 at 12:39pm
But the President (and governors?) also have pardon power. Isn’t not enforcing a law exactly the same result as blanket pardoning those that break that law? Maybe the Prez should do it more explicitly, as a form of getting the law changed and to avoid targeted prosecution. But it is still within the executives power.
SaveyourSelf
May 18 2020 at 3:00pm
” I’m very wary of the argument that an executive has discretion not to enforce laws passed by Congress.”
So, I take it, you do not subscribe to the “checks and balances” aspect of separation of powers and would prefer the president act like a member of congress and lobby for and against legislation?
Vivian Darkbloom
May 18 2020 at 9:57am
To both Jon and David,
I don’t think Zingales was referring to red letter laws so perhaps we should concentrate on something more realistic, such as the example he actually gave?
Nevertheless, to your point, if I had the responsibility of an executive (president, governor, etc) I would take my responsibility to faithfully execute the laws seriously as well as the Constitutional separation of powers. Thus, one priority would be to identify those ridiculous antiquated laws and put everyone on notice that if Congress doesn’t fulfill *its responsibility” to eliminate those law within a reasonable period I would fufill *my* responsiblity to enforce them, even though I don’t personally agree with them. I think you would find this approach much more effective in getting the type of law you refer to off the books and rather quickly at that. And, no, I would not advocate “the harshest penalties” or any penalty at all for those things because that part is discretionary. Again, this would be a great incentive for Congress to act and to act quickly.
I trust that it is clear that I would not refuse to enforce the type of law Zingales referred to and which was the subject of this post. Would you? Would you refuse to enforce the immigration laws currently on the books as passed by a democratically elected Congress and signed by a democratically elected President?
Jon Murphy
May 18 2020 at 10:06am
We’re objecting to your comment “The better (and, I’d argue) more legal course is to enforce all the laws on the books, even those you don’t like.”
Vivian Darkbloom
May 18 2020 at 10:30am
And, oh, by the way. Consistent with the powers vested in me, the President or Governor, I would immediately pardon those convicted of these heinous crimes. It is possible to get a lot of very useful things done by taking seriously the responsibilties one is given while at the same time respecting the limits of power. I am much more concerned about the larger structural issues than the two of you seem to be.
Jon Murphy
May 18 2020 at 10:48am
So, are you enforcing the legislation or not?
Here’s the problem with that. At least here in Massachusetts, many of the aforementioned legislative acts are not enforced simply because the cops don’t enforce them. Resources are scarce and their time is not well-spent arresting people for blasphemy. Would you, then, require cops to enforce the legislation if the state legislature does not act?
Vivian Darkbloom
May 18 2020 at 10:04am
Since both of you seem to be fond of the argumentum ad absurdum may I also ask if you would refuse to enforce the laws against murder and child molestation? Or, are we simply to trust that David and Jon, having superior ethics, morals and intellects, should be left to decide which laws are just and effective and that therefore should enforced and which not, perhaps after consulting some other economists?
Jon Murphy
May 18 2020 at 10:07am
It’s not obvious to me why you think this question is relevant here. It’s not a reductio of our point at all.
David Henderson
May 18 2020 at 10:37am
You ask:
No. I would enforce them.
I do think that my morals and intellect are superior to those of the vast majority of politicians. I’m pretty sure that’s true of Jon also. Fortunately, though, my view about enforcement doesn’t depend on that. The vast majority of people and probably a majority of politicians believe that we should enforce laws against murder and child molestation. And the reason that’s true, which is more important than the polling data, is that it’s obvious why such laws should be enforced. Indeed, I suspect, Vivian, that the fact that it’s obvious is why you came up with these examples.
Vivian Darkbloom
May 18 2020 at 10:48am
” Indeed, I suspect, Vivian, that the fact that it’s obvious is why you came up with these examples.”
You are very correct David, and for similar reasons you and Jon came up with yours. The problem is almost always at the margin. Zingales’ example was at the margin, I think.
I’m serious about my proposal with regard to silly laws. It’s a useful way to test outdated laws against current mores. Giving an executive power to decide which laws to enforce and which not to is a recipe for dictatorial disaster.
Finally, David, and this is not a minor thing. You’ve been pretty hard on others here recently about the accurate use of language and yet I was dismayed that when responding to Zingales you changed de facto abrogation to simply abrogation and your counter-argument is consistent with the latter. As Jon is fond of saying, “words have meanings”!
Jon Murphy
May 18 2020 at 10:54am
Why not just see which ones are de facto enforced and which are not?
David Henderson
May 18 2020 at 11:09am
Re “de facto,” touche. I should have quoted that.
So let’s look at the Zingales quote with “de facto abrogate.” Refusing to enforce a law is NOT to “de facto abrogate” it.
Vivian Darkbloom
May 18 2020 at 11:23am
Well, I suspect that Zingales chose those words carefully. There is a big difference in meaning, I think, between a de facto abrogation and a de jure abrogation. The latter sense is usually understood, I think, when abrogation stands alone. I’m pretty sure that Zingales understood that. Your counter was that he implied that to abrogate a law is illegal. You wrote:
Normally you abrogate a law by breaking the law. But pushing not to enforce the act is not breaking the law.
My understanding is simply that he meant it would have the same practical effect as if the law were annulled unilaterally by the executive. Apparently, your view is that refusing to enforce a law is not essentially the same as writing it off the books?
As I wrote above, I think “pushing not to enforce a law” gets us in murky legal territory. I think it would depend on the type of law, the persons it affected, the type of “pushing” involved and the relationship, if any, of all the above.
Mark Z
May 18 2020 at 4:11pm
“Giving an executive power to decide which laws to enforce and which not to is a recipe for dictatorial disaster.”
Is it really? Obviously, taken to the extreme it may be, though I think it’s arguable that selective enforcement of laws is more a product than a cause of dictatorial governance. In most societies though, we effectively already have a system where many laws are enforced or not enforced at the discretion of executives. Have we, and all the countries where jaywalking laws or adultery laws have simply been left by the wayside by the authorities without being overturned been living in a dictatorial disaster all this time?
I would say we have an implicit common law system where, when a broad societal consensus develops that a law is a bad law, it stops being enforced. Politicians don’t seem to perceive this as license to stop enforcing laws that are not widely regarded as unnecessary. This practice doesn’t seem to lead to disastrous consequences. I don’t deny that there’s a philosophical issue here, but I don’t see the practical consequences of not enforcing unpopular laws being so severe.
I’d also add that if you found yourself at the helm of a state of federal government, you’d likely find that it is effectively impossible to faithfully enforce all the laws on the books given how many of them there are and the limited enforcement resources available. You would still have to use your own judgment to triage laws for allocation of enforcement resources, and it may be inevitable that some laws end up going effectively unenforced.
Finally, it’s easy enough to come with hypothetical examples of laws that I expect no conscientious person would enforce. Someone who shares your position on enforcing laws that are on the books could resign or refuse to hold office as long as such laws are on the books. But if everyone who opposed atrocious laws took this position, only people who support or tolerate them would end up in executive positions. The laws can be changed via the political process of course, but even for widely unpopular laws that can take much time and effort or the public may be close enough to indifferent that the political will is hard to muster against legislative inertia. I’m not sure the political process is always more trustworthy than the judgment of officials tasked with enforcement.
Thomas Hutcheson
May 18 2020 at 10:35am
I think that and economist could and should have helped FDR achieve his objective of ensuring that Japanese Americans were not a greater security risk than other Americans in the least cost way. This might have been to do nothing or it might have required efforts to counteract anti-Japanese prejudice.
Thomas Hutcheson
May 18 2020 at 10:49am
“an” economist.
Mark Z
May 18 2020 at 4:17pm
Another thought on the discretionary non-enforcement of laws that generally seen as unnecessary: this dilemma may be a good argument for sunset provisions being the norm. I think an issue with that, though, is that, given the sheer complexity of modern law codes, such provisions would force legislatures to spend a lot more time wrapped up in keeping laws up to date, leaving much less time for what the public might call “getting stuff done.” This may not be a bad thing, depending on how one feels about the kinds of things politicians want to ‘get done,’ but I think it would definitely slow the pace of political change, whatever direction it happens to be going in.
David Seltzer
May 18 2020 at 6:09pm
As to adultery. Biblical consequences were codified into law. While the arguments posted are fair and thought provoking on both sides, the libertarian in me sees this as a private matter between and among the parties involved and where the matter should be resolved. With NO place for punitive intervention by states or other jurisdictions. The laws against adultery are no laws at all as they are, in my view, morally presumptuous.
John Alcorn
May 19 2020 at 7:11pm
A few scattered comments:
It’s good that economists distinguish efficiency and fairness (“distribution”). Economists also distinguish several kinds of efficiency; and several kinds of fairness. Conceptual distinctions clarify. To quote William Blake: “Art and science cannot exist but in minutely organized particulars.”
When economists provide political advice—when they speak as economists in the forum or in council—they should stick to economics. For example, perhaps internment of Japanese Americans (120,000 persons, mainly on the west coast) had also economic implications. It would have been appropriate to consult economists about the economic implications, if any. But economists per se don’t have special insights about ethical, constitutional, or other considerations, which surely were much more important.
Now, some economists become public intellectuals who are respected also for their political judgment. I’m not an economist, but I don’t hesitate to defer to John Cochrane or Arnold Kling about macroeconomic policy. (Perhaps I should defer more to Scott Sumner?) My point is that some economists have not only expertise, but broad knowledge of history, a wide conception of the social sciences, congenial values, and the elusive quality, good judgment.
As David Henderson noted, the challenging little essay by Luigi Zingales provides food for thought. I hope that EconLog will continue to grapple with these challenges.
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