Against Laissez-Faire Democracy

In a new paper, Brennan and Freiman argue persuasively that:

the arguments against laissez-faire capitalism apply in a rather straight way against laissez-faire democracy. This should be a rather startling result, considering that laissez-faire capitalism is widely rejected, yet laissez-faire democracy is widely accepted.

All the typical market failure arguments–externalities, asymmetric information, principal-agent problems, behavioral issues–apply to democracy. For example:

democracies also suffer from obvious externality problems. Indeed, this is the key difference between markets and politics. Market decisions are usually and mostly internalized; negative externalities are seen as an anomaly to be corrected. Political decisions are by nature public. For instance, about 37% of the eligible
voting public, and 26% of the entire population of the UK voted in favour of Brexit, but the effects of Brexit are borne by everyone else, including losing voters, eligible voters who abstained, children and other citizens ineligible to vote, future generations, and foreigners. …The problem is similar to the pollution of individual automobile drivers or airline passengers. We drive too much and pollute too much because we bear the benefits of these actions but pass the costs onto others. Individually we matter little but collectively we matter a great deal. If externality regulation is prima facie justified in the case of pollution, it is prima facie justified in the case of voting.

They go on to suggest regulations that might apply to democracy. Noting first that:

…pretty much everyone already accepts some government actions which are plausibly seen as vote or democratic regulation. For instance, some issues are put directly to voters, while others are left to elected leaders, while others are left to judges and bureaucracies, and still others are removed from political consideration entirely. The timing and place of elections, who is permitted to vote (at what age), who is permitted to run for office, and so on are kinds of regulation. Government funding of public education is in part meant to be a non-laissez-faire subsidy meant to increase voter competence. Many readers are likely comfortable with government regulation of campaign donations, campaign expenditures and even which kinds of speech are permitted. Probably almost all readers reject straight up markets in votes (Freiman 2014). Each of these things is a kind of government regulation of democracy which inhibits laissez-faire democracy.

The authors sketch possible regulations while stipulating, for the sake of argument, universal, equal suffrage—no weighted votes or knowledge tests for voting eligibility. Possibilities include paying citizens to pass a voluntary civics exam; tracking campaign promises and fining deceptive claims; regulating political advertisements more like drug advertisements; and requiring supermajorities for certain decisions. See the paper for more.

You may object that these regulations would be captured by special interests, be administered by biased officials, or have unintended consequences. Indeed, welcome to the argument for laissez-faire.

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