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Democracy is Overrated…
Michael Munger
Duke University
November 7, 2005
Key Elements of Public Choice
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Methodological Individualism
Aggregation
Consequence, not Intention
Disagreement
Self-interest
Institutions and Organizations
THE Key Element
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Difference between Samuelsonian “public
goods” problem and the problem of
making choices collectively
Information, tastes, and culture
Institutional design
Collective choices
Collective v. Public
Property of Choice Individual Decision: I can
choose, alone and
Property of Good
without interference
Collective Decision:
Choices are made by a
group, and are binding
on all
Private Decision: My
choice has no
consequence for your
welfare
Liberty of the individual:
 What socks should I
wear?
 Whom should I marry?
Tyranny of the majority:
 Invasion of privacy
 Theft of property
rights
Public Decision: My
choices affect your
welfare
Underinvestment, or else
theft by the minority:
 Air or water pollution
 Education
Liberty of the group
 How much to spend on
defense?
 How to take care of
the poor?
I. Information, Tastes, and Culture
“The peculiar character of the problem of a rational economic
order is determined precisely by the fact that the
knowledge of the circumstances of which we must make
use never exists in concentrated or integrated form but
solely as the dispersed bits of incomplete and frequently
contradictory knowledge which all the separate individuals
possess. The economic problem of society is thus not
merely a problem of how to allocate "given" resources—if
"given" is taken to mean given to a single mind which
deliberately solves the problem set by these "data." It is
rather a problem of how to secure the best use of
resources known to any of the members of society, for
ends whose relative importance only these individuals
know. Or, to put it briefly, it is a problem of the utilization
of knowledge which is not given to anyone in its totality.”
(F.A. Hayek, 1945, AER).
“The” Right Thing
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There may not be any one right thing to do. It
depends.
It is the nature of collective choices that they are
unitary: One defense budget, one standard for
pollution, and so on.
Asking “What Will We Do?” begs the question.
The real question is…
Why Do You Think There is a ‘We’?
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Buchanan and Tullock’s “Two Levels”: Can’t let
the majority decide what the majority gets to
decide
My Plan + Your Plan  Our Plan
Socialist Calculation Debate
“This is not a dispute about whether planning is to be
done or not. It is a dispute as to whether planning is
to be done centrally, by one authority for the whole
economic system, or is to be divided among many
individuals. Planning in the specific sense in which the
term is used in contemporary controversy necessarily
means central planning—direction of the whole
economic system according to one unified plan.
Competition, on the other hand, means decentralized
planning by many separate persons. The halfway
house between the two, about which many people talk
but which few like when they see it, is the delegation
of planning to organized industries, or, in other words,
monopoly.” (Hayek, 1945).
Coherence and Legitimacy
Can a group of people who disagree come to a
consensus? How would this work? Why would
we believe that the “consensus” is any more
than an imperfect choice?
Do the choices of majorities tell us anything
about “the right thing to do” in the face of
disagreement?
Is there such a thing as “the majority,” which we
just have to discover through voting or some
political process?
I want…you want…what do we want?
Institutional Design
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Institutions are the humanly devised rules of the
game that shape and direct human interactions.
Institutions reduce uncertainty by shrinking the
choice set of all of the “players.” If the rules are not
formalized, the players spend too much time arguing
over the rules, and less time in productive activities.
The actual choice of institutions, however, is hard,
since there are countless ways of choosing. What
makes some institutions better than others?
In particular, is democracy a “good” institution?
How would we know? What are the alternatives?
Step back for a moment….
The Fundamental Human Problem
(according to Munger)
How can we construct or preserve
institutions that make individual
self-interest not inconsistent with
the common good?
Two Approaches
Madisonian
“Ambition must be made to counteract
ambition…”
 Rousseauvian
Transform the self, solve the problem of
amour propre. Inscribe the law on the
hearts of men. Some preferences are
better than others.
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Origins of Markets
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Differences in endowments
Differences in preferences
Technical cost conditions (div of labor,
economies of scale, increased dexterity,
innovations in tool design)
Origins of Government Institutions
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Disagreement/exchange (B&T)
Capture gains from trade by reducing
transactions costs
Make public goods possible
Origins of Government Institutions
What if we all wanted the same thing?
Would government even be necessary?
It would. Because we do all want the same
thing: more….
On disagreement, Charles IV:
“My cousin Francis and I are in perfect
accord—he wants Milan and so do I.”
Madisonian Institutions
Markets—Smith’s baker
 Politics—Federalist #51:
Men are not angels
Men are not ruled by angels
“Ambition must be made to counteract
ambition…”
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Democracy Unbound….Rousseau
But it is asked how a man can be both free and
forced to conform to wills that are not his
own. How are the opponents at once free and
subject to laws they have not agreed to?
I retort that the question is wrongly put. The
citizen gives his consent to all the laws,
including those which are passed in spite of
his opposition, and even those which punish
him when he dares to break any of them….
(From The Social Contract)
Democracy Unbound….
When in the popular assembly a law is proposed,
what the people is asked is not exactly whether it
approves or rejects the proposal, but whether it
is in conformity with the general will, which is
their will….
When therefore the opinion that is contrary to my
own prevails, this proves neither more nor less
than that I was mistaken, and that what I
thought to be the general will was not so.
If my particular opinion had carried the day I
should have achieved the opposite of what was
my will; and it is in that case that I should not
have been free.
Loyal Opposition?
This conception of democracy is logical. The actions of
government are driven by the people; the general will
is sovereign. Opposition to the general will is treason,
and must be punished. No need for two parties: only
one general will.
All those countries with “Peoples’ Democratic Republic of
___” were not perversions of democracy, but
examplars. That is what pure democracy, with no
limits on scope, looks like. Cannot be otherwise.
Democracy, in and of itself, is an attractive concept that
must constitute a recipe for tyranny, unless the scope
of collective sovereignty is strictly limited.
Che Guevara’s “Man and Socialism
in Cuba” (1965).
Society as a whole must become a huge school....We can
see the new man who begins to emerge in this period of
the building of socialism. His image is as yet unfinished;
in fact it will never be finished, since the process
advances parallel the development of new economic
forms. Discounting those whose lack of education makes
them tend toward the solitary road, towards the
satisfaction of their ambitions, there are others who,
even within this new picture of over-all advances, tend to
march in isolation from the accompanying mass. What is
more important is that people become more aware every
day of the need to incorporate themselves into society
and of their own importance as motors of that society
Collective Choices
‘What is truth?’ said jesting Pilate, and
would not stay for an answer.
True Statements?
Democracy means: “rule by the people”
Democracy is the best form of government
The many are wiser than any one person
Morality is defined by majority—Democracy
is a means of discovering truth
A movie: Pure Democracy in Action
Central Questions:
Can reasonable people differ? Can a reasonable
person oppose gay marriage? Can a reasonable
person be pro-life? Is it possible to support the
war in Iraq?
What is the basis of disagreement—
1.
Chocolate vs. Vanilla? In politics, values. Are
they primitives? Deliberation won’t help.
2.
Different information sets? Evidence about
causes, different understandings of means-ends
relations. Deliberation might help.
Is there a “fact of the matter”?
Central Questions:
Is it true that the many are wiser than any one?
Many people have argued this claim….
“For it is possible that the many, no one of
whom taken singly is a sound man, may
yet, taken all together, be better than
the few, not individually, but
collectively.” (Aristotle, Politics, Book I,
Chapter 11)
Some important analytical support, under some
circumstances. Condorcet’s “Jury Theorem,”
for example.
Central Questions:
The real problems of democratic choice:
1. Scope of government/collective power: the
Buchanan problem
2. Information of time and place: the Hayek
problem
3. Coherence and legitimacy: The Condorcet /
Arrow problem
Scope
What can government decide? How would
we decide what government can decide?
What do I get to decide, by myself? What
things does my family get to decide?
Suppose a group of people want to decide
something for me, for my own good? Can
they do that? How could I stop them?
P.J. O’Rourke—Information and
Scope Problems of MR
Now, majority rule is a precious, sacred thing worth
dying for. But—like other precious, sacred things,
such as the home and the family—it's not only worth
dying for; it can make you wish you were dead.
Imagine if all of life were determined by majority
rule. Every meal would be a pizza. Every pair of
pants, even those in a Brooks Brothers suit, would
be stone-washed denim. Celebrity diets and exercise
books would be the only thing on the shelves at the
library. And—since women are a majority of the
population, we'd all be married to Mel Gibson.
(Parliament of Whores, 1991, p. 5).
James Buchanan:
Like Hobbes, too much liberty?
“What should government be allowed to do?
What is the appropriate sphere of political
action? How large a share national product
should be available for political disposition?
What sort of political decision-structures should
be adopted at the constitutional stage? Under
what conditions and to what extent should
individuals be franchised?” (“Politics Without
Romance.”)
Coherence and Legitimacy
Can a group of people who disagree come to a
consensus? How would this work? Why would
we believe that the “consensus” is any more
than an imperfect choice?
Do the choices of majorities tell us anything
about “the right thing to do”?
Is there such a thing as “the majority,” which we
just have to discover through voting or some
political process?
I want…you want…what do we want?
Problem of the U.S. in Iraq
Democratic Choices: War in Iraq
You’ve got to help me out here…play along!
Preferences and beliefs, on the little card. REALLY!
Accept the premise, and act like those are your
preferences. Three choices:
No war: N
Aggressive war: W
Police/political means: P
Choices: War in Iraq
One possibility: isolationist variant of Powell
doctrine
N>W>P
We should not get involved.
But, if we do, we should go in with overwhelming
force.
Worst thing is to expose our troops/workers in a
limited police action, depend on the U.N.
Choices: War in Iraq
Another possibility: Rummy World
W>P>N
Iraq/Saddam is an imminent threat, will
develop WMD.
If not war, then must vigorously pursue
sanctions
Worst thing is to do nothing, relax sanctions
and let Iraq become nuclear power
Choices: War in Iraq
Final possibility: Prudent Dove
P>N>W
Let sanctions and inspections do their work,
because Iraq is a potential danger to its
neighbors and the world
We have no good claim to just war, so next best
is to do nothing
Worst thing is to use war against a nation that
has made no overt attack on the U.S.
Choices: War in Iraq
So…we have disagreement
1.
Prudent dove wants to use P, police action
2.
Rummy wants war
3.
Isolationists would prefer to stay far away
from foreign entanglements, so do nothing.
Choices: War in Iraq
Let’s use “democracy,” the pure kind
where the people make the choice
directly.
First, let’s decide whether to use force, or
do nothing….
Vote P vs. W to decide which activity is
better, and then vote that against N.
That way, we are comparing the best
“do something” against “do nothing.”
Choices: War in Iraq
Consider what just happened. Simply
by changing the order in which we
consider the alternatives, I could
generate as the “winner” any one of
the three alternatives.
Choosing the agenda, then, is
tantamount to choosing the outcome.
Is this just a conjurer’s trick, or does it
tell us something about democracy?
Choices: War in Iraq
If there are three (or more)
alternatives, and there is
disagreement, then democracy may
be radically indeterminate.
More simply, there is no correct answer
to the question, “What do the people
want?”
In fact, some majority opposes every
alternative.
Choices: War in Iraq
Here is the problem:
I/P
Rummy
N
W
W
P
P
N
Prud Dove
P
Best
N
Middle
W
Worst
Majority preferences:
W>P>N>W
Endless, infinite cycling over alternatives. Not a
tie, but a literal perpetual motion machine
But this is nonsense: meetings end
That is what should terrify you: meetings end, and
things get decided. The point is that we are rarely
presented with three or more alternatives. We usually
are presented with two. How are those two chosen?
The “Lawson Revolution”: coalitions form, charismatic
people take power. Not the will of the people, but the
force of will of some demogogue or tyrant
If the rules matter to this extent, that means that
procedures, not preferences, determine outcomes.
And elites control procedures….
Democracy works fine….
So long as everyone agrees
But if there is disagreement, and at least three
alternatives, then a majority opposes every available
choice. So, democracy fails us when we need it most!
Since some choice has to be made, we are left with an
outcome that is either
 Imposed (tyranny)
 Arbitrary (random or procedure-driven)
In either case, “democratic choice” is chimerical
Dictatorship with the trappings of democracy
The worst of all worlds
Democracy without constitutional liberalism…
1. Rule of law, protections of property and
liberty
2. Limits on scope of issues within the
jurisdiction of collective choice…
Democracy without these is the most terrifying
kind of tyranny you can imagine. Americans,
and the West, are confused about “good
government.” The key is constitutional
liberalism, not democracy.
“Stability” is a variable
Politics in nations are not always stable
 Different nations have different
institutions
 Those institutions are more or less
effective at different times
 How do U.S. institutions serve to make
our political system more, or less, stable?
How do the institutions of other nations
solve this problem, differently?
Utility
In our example, Iso-Powell was
the culprit…
N
P
W
Intensity of War Effort
Cannot Rely on the Conditions of
the MVT to Turn Up by Chance
Institutions shape the choices nations make.
But:
 Preferences aren’t single-peaked
 Issues are not always one-dimensional
 Democratic institutions are likely to fail
when we need them most…
Three “Histories”
 Plato
 Shakespeare
 Plutarch
Plato: Democracy
Means Tyranny
“Democracy is precisely the constitution out of which
tyranny comes; from extreme liberty, it seems, comes
a slavery most complete and most cruel….When a
democratic city gets worthless butlers presiding over
its wine, and has drunk too deep of liberty’s heady
draught, then, I think, if the rulers are not very
obliging and provide plenty of liberty, it calls them
blackguards and oligarchs and chastises them…and
any who obey the rulers they trample in the dust as
willing slaves and not worth a jot.” (Republic, Book
VI, 560a-564b)
Shakespeare’s Tragedy of Coriolanus: Act II, Sc 3
BOTH CITIZENS. The gods give you joy, sir, heartily! (Exeunt citizens)
CORIOLANUS. Most sweet voices!
Better it is to die, better to starve,
Than crave the hire which first we do deserve.
Why in this wolvish toge should I stand here
To beg of Hob and Dick that do appear
Their needless vouches? Custom calls me to't.
What custom wills, in all things should we do't,
The dust on antique time would lie unswept,
And mountainous error be too highly heap'd
For truth to o'erpeer. Rather than fool it so,
Let the high office and the honour go
To one that would do thus. I am half through:
The one part suffered, the other will I do.
ARISTIDES: FROM PLUTARCH’S LIVES
[Aristides] being surprised and asking if
Aristides had ever done him any injury, "None
at all," said he, "neither know I the man; but
I am tired of hearing him everywhere called
the just." Aristides, hearing this, is said to
have made no reply, but returned the sherd
with his own name inscribed. At his departure
from the city, lifting up his hands to heaven,
he made a prayer (the reverse, it would seem,
of that of Achilles), that the Athenians might
never have any occasion which should
constrain them to remember Aristides.