Sunday, October 13, 2013

Stochastic Saliency as the Torque on the Ratchet Effect

The moral principles described by euvoluntary exchange analysis are a useful adjunct to a complete story of what drives popular but economically inefficient marketplace interventions. But as enamored as I am of the project (obviously), I wouldn't go so far as to say that they compromise the whole of the tale, not by a long shot.

Economist Robert Higgs described in Crisis and Leviathan what's now one of the key tenets of public finance analysis: the ratchet effect. The nickelodeon version is that the political process tends to select for folks who want to encrease their dominions and they're faced with a public that is recalcitrant when it comes to ponying up that sweet moolah to pay for the various enterprises of the sovereign. To overcome this, political elites vault proposals until a crisis comes along, at which time they break the seal and let slip the pens of war [on drugs, poverty, et al.]. Then, when the crisis has passed, the higher spending and taxation scheme is the new norm and has an uncanny tendency to stick around.

The intersection of this effect with EE lies in what James Buchanan described as "parentalism" in "Afraid to Be Free," a condition where constituents seek state management of their affairs. It occurs to me that these two ideas integrate very well with the EE conditions with just a touch of attention scarcity and randomness. 

Here's sort of what I have in mind. The median voter may be weakly predisposed to object to exchanges that are not strictly euvoluntary. She may also be weakly predisposed to petition the government for redress from time to time. Since her time and attention are scarce, she is only able to devote notice to one issue at a time, the determination of which arises naturally from the events of the day to include inter alia, the vociferous clamoring of well-organized groups of fellow constituents, the bleating chorus of political kayfabe as it roils from assembly halls, and the sundry acts of God as they are manifest on this fallen earth. When a particular issue breaks the threshold that keeps the noise of the world at bay, these small propensities resolve into political action. Then, when the call for attention has passed and the next new non-euvoluntary slight has poked its blossom above the short poppies, the first is just now part of the new background noise, invisible to any but those few who specifically devote their attention to the study of counterfactual states of the world.

If this argument is plausible, then it follows that Higgs's ratchet has two hands on it: political elites, in it for Humean reasons, and ordinary constituents, in it for Buchanean reasons. For those of us who have the end of increasing the scope of euvoluntary exchange in mind, this suggests that broad omnibus repeal of destructive policy is what ought pierce the median voter's armor of indifference. 

And so I write in one hand, hope in the other.

Note: I wrote this post with a toddler sitting on my lap, so please forgive any particularly egregious errors of grammar.

1 comment:

  1. hey nice post meh, I love your style of blogging here. this post reminds me of an equally interesting post that I read some time ago on Daniel Uyi's blog: .
    keep up the good work friend. I will be back to read more of your posts.



Do you have suggestions on where we could find more examples of this phenomenon?