Caplan on Economic Ignorance and Public Choice

by Don Boudreaux on May 12, 2007

in Politics

My colleague Bryan Caplan has a very nice op-ed in today’s Wall Street Journal.  In it, Bryan brings more richness and rigor to the familiar story of special-interest-group politics.  In short, Bryan argues that widespread ignorance — especially ignorance of economics — provides necessary fertilization for the growth and spread of harmful interest-group policies.

Here’s the gist:

Unfortunately, most people resist even the most basic
lessons of economics. As every introductory teacher of the subject
knows, students are not blank slates. On the first day of class, they
arrive with strong — and usually misguided — beliefs about economics.
Convincing students to rethink their anti-market views is no easy task.

The principles of economics are intellectually
compelling; but emotionally, they fall flat. It feels better to believe
that greedy intentions imply bad consequences, that foreigners destroy
our prosperity and that price controls are a harmless way to transfer
income. Given these economic prejudices, we should expect policies like
steel tariffs, farm subsidies and the minimum wage to be popular.

None of this means that special interests don’t
matter, but it does put their activities in a new light. Special
interests do not have to sneak behind the majority’s back; they just
need to ask for the right favor in the right way. The steel lobby could
have demanded a big handout from the federal government. But that would
have struck many voters as welfare for the rich; steel-makers can’t
expect the same treatment as farmers, can they? Instead, the steel
lobby took the crowd-pleasing route of blaming foreigners and asking
for tariffs. Tariffs were less direct than a naked subsidy from
Washington, but they enriched the steel industry without alienating the

If special-interest legislation were fundamentally
unpopular, public relations campaigns would be futile. They would serve
only to warn taxpayers about plans to pick their pockets. Since the
public shares interest groups’ critique of the free market, however,
there is room for persuasion. Left to its own devices, the public is
unlikely to spontaneously fret about the plight of the steel industry.
But a good public relations campaign can — and often does — change
the public’s mind. Once the public actively supports an interest group,
even politicians who would prefer to leave the market alone find it
awkward to block government intervention.


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