Monday, May 04, 2015

To the hustings!

Back from St. Cuthbert's Church where the candidates for the Wells constituency were on display. The audience was old, gray and somewhat Christian - those folk who peregrinate between the Cathedral, Classical Music Concerts and the Wells Literary Festival.

I learned little from the candidates' answers but found the atmosphere fascinating. People talk about the corrosive and stupefying quality of Political Correctness, but in lower case that is the natural mode of the comfortable middle-class. The shared sensibility is patrician: this translates as well-mannered leftism - pro-immigration and anti-technology; pro-state intervention and anti-market; pleasant and not nasty.

This natural state of liberal public opinion should not come as a surprise, it was all documented ages ago in Bryan Caplan's 2008 book, "The Myth of the Rational Voter: Why Democracies Choose Bad Policies". I summarised his main points in a post here and reproduce the main points below.

Bryan Caplan flagged three areas where voters passionately rally to counterproductive policies which actively harm their own self-interests.

1. Anti-Market Bias

Despite the fact that capitalism is the most successful form of economic organization ever seen on the planet, most people are profoundly suspicious of it. Adam Smith’s famous observation about the trade of the businessman:
By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good,
has never been believed by the general public.

The public’s instincts are to go with regulation, price subsidies and Government provision of essential goods and services, believing that market mechanisms are driven by private greed, keep prices sky-high, lead to shoddy output and don’t give a damn about customers (i.e. themselves).

Given a competitive market, the truth of the matter is almost completely the reverse, as people would realize if they compared their grocery stores to almost any Government department they deal with. (But then, people don’t trust markets.)

2. Anti-Foreign Bias

Left to themselves, many people would choose to erect impenetrable tariff walls at our borders and keep all foreign imports out, stopping those perfidious foreigners stealing our jobs.

Protectionism misses a revelation about the gains from trade which has been known for 250 years. The Law of Comparative Advantage encourages countries to specialize in what they’re good at and trade with others doing the same. The result is prosperity, even if your trade partners damage their own economies through protectionism. Alternatively, you could be North Korea.

Does the general public buy this argument? Not at all. They listen to steel workers, about to lose their jobs because steel-making in America is uncompetitive, and they rally to their defense. Keep cheap steel imports out! In doing so, they make all other American goods which incorporate steel more expensive for themselves and less competitive on the world market. But, hey, we saved the steel workers! (Or did we?)

3. Make-Work Bias

The third area where public opinion gets it wrong is layoffs. Capitalism works, and we all get richer, by continually churning obsolete technologies in favor of newer, more productive ones. In the short-term workers in these declining industries lose their jobs; in the longer term they tend to get new and higher-paid jobs. Still, we hear more about those unfortunates who don’t.

In 1800 it took 95 out of every 100 Americans to work the land to feed the country. In 1900 it took 40, while today it takes just 3 in a 100. That was a lot of farmers let go. Do you see them hanging around the poor parts of town begging for handouts? Do you?

There was a lot of pain in the wrenching transitions which saw an agricultural economy transition to a modern technological one. At every step of the way, compassionate people cried ‘stop!’ – fighting to freeze the status quo and avoid redundancies. (Yet who today would want to go back?)

The result is political correctness

There is a common factor to these three biases. Humans are social creatures: we have empathy with others in our social group. Our emotions reward efforts for the common good and prompt us to help those suffering misfortune and not stand idly by: that’s how we evolved.

Capitalism in its most effective and competitive mode deliberately pits people against people and disrupts bedded-down patterns of life in favor of disruptive change. Locally it can damage lives even as it globally increases prosperity and opportunity. Our emotions don’t ‘get’ the way complex, holistic capitalism works and in our guts we don’t really approve. And when it comes to elections (where the act of voting is very distant from any personal economic consequences) we vote our feelings.

Economist Bryan Caplan calls this ‘Rational Irrationality’ and it explains a lot about modern politics, even the forced-hypocrisy of otherwise honest politicians who are forced to advance correct policies by stealth in the face of heated populist opposition.

In the Wells hustings there was a joke candidate (the 'Birthday' Party - great work, Dave Dobbs!) and three parties, the Liberal Democrats, Labour and the Green Party, pitching nice-but-dim sentimentality (in ascending order of dimness) with the audience nodding its approval. The UKIP candidate was way out of her depth while the Tory, James Heappey, managed that difficult trick of saying some of the things which needed to be said without offending the easily-bruised proprieties of his audience. The guy is a bit of a star and is likely to win on Thursday.

I left with new sympathies for our more honest politicians. And wondering why anyone would want to become a politician in the first place.


My favourite Tessa Munt (Lib-Dem incumbent) lines at the hustings. Firstly in the context of how it's morally correct to contribute (for the benefit of those worse off than yourself) through the tax system:
"It's a privilege to pay tax."
Then a little later:
"We were the ones who forced through raising the Personal Allowance threshold that took millions out of paying tax."
Intellectual consistency in a politician is so over-valued, don't you think?

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