Tullock—The Incentives Economist

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 Do not think about, write about or deal with  human behavior without determining the effects of incentives.

    Speaking of incentives, today we see an economist who believed everything revolved around incentives.

In memory of Gordon Tullock   
By: Lawson Bader   

As I watched last week’s election returns, my mind numbed to the TV pundits droning on in the background. At the time it looked like the Republicans would win control of the Senate, although it wasn’t certain. Virginia and North Carolina were “too close to call.” The Florida governor’s race was still up in the air. Louisiana was headed for a runoff.  Then that droning shifted from eager anticipation to more esoteric questions about, “What have we learned?” or “How do voters feel?”

Who cares?

I say this not to suggest this recent election didn’t matter, or that new leadership in Congress can’t bring about positive change. I say it because there are bigger things than politics.

I say it to honor a former colleague who died last week—ironically, on the eve of a midterm election that, as it turned out, altered the political landscape and will influence the 2016 race for the White House.

Ironic because that man was Gordon Tullock, co-founder of the public choice school of economics. And if you knew him and his gruff personality, “who cares” is exactly what he’d say.

Lots can be said about Gordon—that “shoulda been” a co-Nobel prize winner in economics, along with his co-author and George Mason University colleague James Buchanan. Yet, Gordon’s tendency to speak his mind—combined with the fact that the academic purists on the 1985 selection committee found his lack of a PhD unforgiveable—probably cost him joining that hallowed club. If you want a list of his bona fides, see: https://cei.org/blog/gordon-tullock-rip. No reason for me to rehash what should already be known about him.

Gordon’s office—we called it “Gordon’s Grotto”—was a spacious thing. The “I Voted” sticker on his office door never failed to bring a chuckle to anybody walking by who knew something of public choice. Gordon once said, “Anthony Downs convinced me long ago that I stand a greater chance of being killed in a car accident on the way to the polls than I do of making a difference with my vote.”

Even after Florida’s hanging chads and eventual Supreme Court decision put George W. Bush in the White House, when it most seemed an individual’s vote could sway a major election, Gordon stuck to his guns. He always believed he’d make more of a difference with his pen than with pushing a lever. That multiple generations of economists have preached his message to hundreds of thousands students are testament to the strength of his insights.

Gordon fully understood the most important lesson of economics: Incentives matter. He refused to accept that “public servants” can behave differently because of their supposed detachment from the hustle and bustle and profit motives of private industry. He was fiercely critical of government attempts to solve problems compared with the actions of private actors and institutions. He thought it wishful thinking that government bureaucrats could implement policies that benefit the common good, as if they could always remain aloof from trivial parochial concerns.

He’d agree with that Depeche Mode lyric—people are people. Public choice rests on a simple truth: People are guided chiefly by their own self-interests. Government workers are therefore motivated no differently than people in private markets. As such, they seek greater power and bigger budgets, leading to dysfunctional government. Private markets, on the other hand, use competition, transparency, and price mechanisms to channel and use that self-interest in a way that benefits a majority of people. If you’ve worked long enough in this town it’s one of those “well, duh” moments—but remember it takes academia decades to prove through complicated reasoning and peer-reviewed publications what we may already know intuitively.

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    Public servants use their office to promote their own self-interest. I’ll be.

A criticism of Gordon’s philosophy I often hear is that it’s simply too pessimistic. “Public choice is a theory of sin … but what about virtue?” That may well be true, but you have to start somewhere to address how we can create public policies that promotes limited public institutions, free enterprise, and individual economic liberty.

Incentives matter. Want to improve Americans’ driving habits? Well then, forget seat belts and air bags. Just mandate that car manufacturers install a metal spike in the middle of every steering wheel. As Gordon would say, “They’ll pay more attention.” Extreme? Perhaps, but true, and likely conducive to more realistic solutions. Want to reduce concussions among NFL players? Bar them from wearing helmets. See how hard they hit each other then.

In the field of regulation, there’s a (limited) role for government. In Gordon’s world, it was simply to incentivize people to own their own lives. Gordon’s scholarship forced regulators to recognize their motivations were paternalistic rather than preventive. It reflected a “you figure it out, just don’t kill anybody” approach to legislation. It’s not popular with the elites and scaremongers that pervade progressive political interests these days. But it’s correct.

In the last few years we’ve lost some intellectual giants—Elinor Ostrom, James Buchanan, Ronald Coase, Leonard Liggio, Gary Becker, and now Gordon. Their absence will be felt, long after we’ve forgotten who beat whom and when on election night.

But we’ll all remember that spike in the steering wheel.

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Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “
Days of Songs and Mirrors: A Jacobite in the ‘45.”
Cui Bono–Cherchez les Contingencies

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