IN PRAISE OF THE STUDY OF FOLLY
It is hard … to claim that the same individuals act in
a rational and forward-looking way as economic agents
but become fools when casting their vote.
—Torsten Persson and Guido Tabellini,
DEMOCRACIES have a lot of apparently counterproductive policies. Economists emphasize the folly of protection and price controls. Experts in other fields have their own bones to pick. How are these policies possible? There are three basic responses.
Response 1: Defend the accused policies on their merits.
Response 2: Argue that politicians and special interests have sub-
Response 3: Explain how policies can be both popular and counter-
Response 1 is rarely convincing. We would laugh if a professor spent hours poring over a failing exam scrawled in crayon, searching for its elusive wisdom. Why should we take the effort to rationalize misguided policies any more seriously? Their typical proponent has no subtle counterarguments. Most cannot state the experts' main objections, much less answer them.
Response 2 is more intellectually satisfying.2 A policy with negative overall effects can still have big benefits for a small minority. But in spite of the academic attention this explanation has accumulated in recent decades, it suffers from two great flaws. First: Theoretically, there are many ways for the majority to cheaply reassert its dominance.3 Second: Empirical public opinion research shows that the status quo—including and perhaps especially its counterproductive policies—enjoys broad popular support, and that politicians respond to changes in public opinion.4
These facts have led me to response 3. Yes, it seems paradoxical for policies to be popular yet counterproductive. Common sense tells us that people like the policies that work the best.5 Economic training reinforces this presumption by analogizing democratic participation