A Few Assumptions About Politicians
- Politicians are like most people: They want to be liked, and they want to keep their jobs
- Politicians are self-interested: They will usually act in ways that are good for themselves
- Politicians respond to incentives: They will tend to do the things that will lead to election or re-election
- Politicians are conscious of status: They will usually seek credit where they can and avoid blame where possible
- Voters are self-interested: They will try to get the most return for their tax dollars spent
- Voters are utility maximizers: They have lots of things they'd prefer to do other than research public issues, so they tend to spend little time on that research
- Voters are aware of political power: They recognize that a limited amount of political lobbying can have large returns
- Journalists will tend to report approvingly of government behavior: When in doubt, reporters will tend to favor government sources for stories since they will appear to be "unbiased." They will tend to report favorably on subjects on which someone appears to be "taking action." They will ordinarily not be skilled in distilling cost/benefit analyses into engaging reports.
- The power of the purse will tend to resist restraint: The nature of most government spending (concentrated benefits with diffuse costs) will tend to cause an increase in government spending that is disproportionate to the growth in the rest of the economy.
- Fiscal responsibility is a virtue: The ability to judge worthy and efficient uses of resources is a laudable and necessary adult behavior.
If the above assumptions are true, then virtually any self-governing nation needs some pretty irrational politicians in order to remain solvent in the long run. The forces of political pressure and lobbying are such that the people's "wants" are virtually limitless. This is borne out in the tendency to minimize the fiscal impact of government action: Sales-tax hikes are proposed as "Just a penny" or "For the children", and tax dollars become "government revenues" (note that Massachusetts, Pennsylvania, Illinois, Missouri, and probably most of the other states call the tax office the "Department of Revenue"). While it could be argued that the "revenue" nomenclature reflects the collection of user fees and charges other tan taxes, it clearly has the effect of putting a spin on the act of tax collection itself.
As these "wants" increase, so does the personal incentive for any individual politician to advocate for those wants. This is encouraged by a two-fold feedback loop: Media coverage tends to favor government action and spending, and few people are inclined to critically analyze the effects of that action. Thus, the more government action the politician advocates and endorses, the more favorable his or her media coverage becomes.
The cumulative effects of government spending in this environment can't be overlooked: The US Federal government spends billions of dollars it doesn't have, leading to a national debt approaching $8 trillion in 2005. State governments increase their spending by an average of 6.5% a year. Despite the Pollyannas who say that budget deficits don't matter or who witlessly parrot Keynes's "In the long run, we are all dead," spending and deficits do matter, sooner or later. Just ask the Soviet Union, which collapsed under the weight of government spending and inefficiency. Bolivia shared a similar experience. In the long run, we all may be dead -- but we may have gone bankrupt before then.
The unfortunate conclusion: Politicians can only be virtuous if they are capable of controlling government spending -- but in so doing, they run counter to the built-in mechanics of the political process, which favor ever-increasing spending. So virtue (at least of the fiscal kind) can only be found among politicians who are irrational about keeping their own jobs. That we can point to a few successful budget hawks who managed to remain in office (Margaret Thatcher stands out as one) illustrates either an extraordinary level of personal charisma or a set of economic conditions so bad that the voters didn't have to invest much effort to learn how much they truly needed fiscal discipline in office.
A Corollary: The Irrationality Can Be Decreased
All is not necessarily lost: Individual non-politicians can turn their fiscal virtue into a valuable tool, given the right training. The challenge is to market fiscal discipline to the average voter in a way that makes fiscal virtue a political asset. It's not easy, but it's a matter of making economic and fiscal education palatable, even to the laziest or most disengaged voter. Medicare prescription-drug "benefits" have to become "tax-funded Viagra." Tax hikes "for the children" need to be explained as "stealing from the mouths of children." "Economic development" programs have to become "corporate welfare." "In the long run, we are all dead" has to morph into "In the long run, we still pay the red (ink)."
Is there hope? Certainly. But it requires concentrated effort by budget hawks everywhere to sharpen their messages and turn up the volume.