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Quotation of the Day…

… is from page 197 of my former teacher Randy Holcombe’s 2018 book, Political Capitalism: How Economic and Political Power is Made and Maintained:

The democratic ideal suggests that in a democracy, government is controlled by the people – by the masses. But government is never controlled by the masses; it is always controlled by the elite. Millions of people can never work together to create public policy. Even if they had an interest in doing so, negotiations would be too cumbersome to get anything done. The transaction costs are too high. That is why democratic government is representative government, and representative government is always controlled by an elite. A small subset of the population is designated as having the right to use the force of government to impose their policies over the masses.

DBx: Some people might reject Randy’s argument by insisting that the democratically elected representatives of the people need not come from ‘the elite.’ But this assertion misses the point. The elite in any society are the ones who are disproportionately able to influence the actions of others. In free-market societies, the elite – the rich – influence the actions of others only by improving the welfare of others (as these others see it). But insofar as society is ruled by the state, the elite – those with state power – influence the actions of others simply by threatening to cage or to shoot them.

Despite his billions of dollars, Jeff Bezos as a private citizen cannot force you to do anything. If he wants you to act in a way that furthers his interest he must offer to you a deal that you will voluntarily accept only if you judge that this deal will also further your interest. In contrast, even the financially poorest member of Congress, by successfully organizing a majority coalition with other members of Congress to support a piece of legislation, can force you to do pretty much anything that coalition demands. That coalition does not have to offer to you a deal that you find acceptable beyond your agreeing to follow their orders as the price you pay to persuade them not to lock you up in a cage.

Those holding government power, especially in a nation with few substantive constitutional or cultural restrictions on the exercise of that power, are made elite by the very fact that they possess a unique and highly scarce ‘resource’ – namely, the ability to use force to impose their will on large numbers of people.

In reality, no one has anything to fear from market elites who act in markets. But every one of us should fear political elites, even when these political elites are elected by the populist masses.
By the way, Randy gave a very nice presentation on his book yesterday at GMU, followed by superb comments by Josh Hall and my colleague Chris Coyne (and, in absentia, Matt Mitchell).