Why is it that Congressman and Senators will vote for a bill,
such as the so-called stimulus package, when they are not sure it
will accomplish the intended goal? One might go even further and
ask why will they vote for a bill that they know will not
accomplish the intended goal? The answer to both questions lies
in what economists call the rational ignorance of the voters,
what Gordon Tullock labeled rent seeking by special interest
groups, and the incentives of the political structure.
People that economists consider rational will undertake an
activity if the added benefit to them of the activity is greater
than the added cost. For example, you decide to watch
American Idol if the pleasure that you get from watching
it is greater than your opportunity cost — the value of the next
best thing you could be doing with your time. The so-called
stimulus package was in excess of 720 pages at its introduction
and ended up over 1,000 pages. The introduced bill was eventually
posted on the Internet, and a large number of Americans with a
high-speed connection could have sat down and made their way
through it. Would it have been rational for them to do so?
It is obvious that there was a significant cost to just read
through the bill. To gain even a cursory understanding of what
was in it would take several hours. Given that the vote on the
Senate substitute occurred within 72 hours of its drafting, you
would have had to spend much of your spare time to read the bill
in time for the vote. The cost to you was obvious, but the
benefit from doing less so. Suppose after reading the bill you
found that out of the $800 billion in spending there was $275
billion that you find inappropriate. Did you have any chance of
altering the bill? Of course not. Even if you were a Republican
Senator it would have been difficult to affect the legislation.
Four out of every five amendments offered on the bill by Senators
were not even considered for a vote. The chance that you would be
able to call your Senator and he or she would take your call,
listen to you, be convinced that your ideas are correct, draft up
an amendment, get it considered for a vote, and pass the Senate
is near zero. Thus, it was not likely that the benefit to you
from knowing what is in the “stimulus package” was greater than
zero and the costs of learning about it were significant. Thus,
Congress could pretty well rely on constituents not knowing what
is in the stimulus package. That is why naming the bill was
vitally important. If it is referred to as “the stimulus
package,” then most people will assume it will stimulate the
economy.
The mainstream media does little to provide voters with any
relevant information about legislation. During the President’s
press conference, wherein he suggested that most economists agree
with the Keynesian argument that government spending stimulates
the economy, no reporter asked him about how this position can be
reconciled with the letter signed by more than 300 economists,
including three Nobel prize winners, that disagreed with the
President’s statement. There was, however, a question about the
President’s thoughts on steroid use by Alex Rodriguez of the New
York Yankees.
Now suppose that you are the lobbyist for a special interest
group, such as ACORN. It is in your interest to know whether an
appropriation for ACORN is in the bill. Since you have some
ability to affect the outcome you will spend a significant amount
of resources attempting to get an appropriation for ACORN in the
stimulus package. This is what Professor Tullock called rent
seeking — investing resources to use the political process to
get benefits for you. Special interests will thus dominate the
political process and the stimulus package is one prime example
of this.
A Congressman may personally benefit from placing provisions in
legislation for special interest groups that will in turn provide
him help in his next campaign, or who might hire him once he
leaves office. If so, we might expect a Congressman to vote for
an amendment or for a piece of legislation that will not
accomplish the goal assigned to the legislation, but will benefit
a particular constituent or interest group. The vast majority of
his constituents will either not even know the provision is in
the bill, or will not have the time or ability to analyze whether
the provisions he has added will accomplish the bill’s purpose.
Of course, we could rely upon our legislators to go against their
own self-interest and only vote for bills that will advance the
good of the general public. But as Nobel Laureate James Buchanan,
the founder of Public Choice Theory, pointed out, we expect
legislators to act in their own self-interest when they go to the
grocery store so why would we expect them to act against their
self-interest once they enter the legislative chamber. While some
may do so, we can assume that the majority will act in what is
their own self-interest.
The stimulus bill became a massive case of the process just
described and what Frederic Bastiat called legalized plunder in
his 1850 book, The Law. It is highly unlikely that the
prodigious amount of spending in the bill will do much to improve
the economic climate of the majority of Americans. It is more
likely that the inflationary risks and the increase in debt will
cause long-term harm to the economy, and it is likely that many
of the legislators who voted for the bill know this. But until
those who understand, as Ludwig von Mises pointed out 90 years
ago, that only market capitalism and limited government can
provide wealth for the masses gain the ability to inform the
rationally ignorant voter we will repeat what transpired with the
stimulus package — continued use of government-created crisis to
expand government and serve the interests of those who are in
control of the political process.
