Mises Daily: Wednesday, February 16, 2011 by Mark Brandly
[An MP3 audio file of this article, read by Steven Ng, is available for download.]
In his superb analysis of democracy, Hans-Hermann Hoppe observes that “prime ministers and presidents are selected for their proven efficiency as morally uninhibited demagogues. Thus, democracy virtually assures that only bad and dangerous men will ever rise to the top of government.” Those who seek political office appear to be eager to break the moral code that most of us are willing to follow. The greater the power of the political office that a candidate is seeking, the more likely it is that that individual has no sense of right and wrong.
At the local level, we sometimes find elected officials that we respect, but at the federal level, such candidates are few and far between. With few exceptions, Congressman Ron Paul comes to mind, it seems that the minimum requirement to be a viable congressional or presidential candidate is the ability to exploit others.
George W. Bush is a prime example of candidates’ apparent willingness to be unscrupulous in order to acquire and wield political power. The deceit of his administration during his eight years of reign was readily apparent to unbiased observers, and we see the same characteristics in the Barack Obama administration.
Questions arise from the preceding observation: Why are scoundrels successful in the political arena? Even if we recognize that morally corrupt individuals will seek to rule over others, why do voters support such candidates? Would we not expect people to vote for morally upright candidates? Do corrupt candidates have an advantage over candidates with integrity?
This essay attempts to answer these questions and explain why moral corruption tends to be a characteristic of successful political candidates. Applying economic analysis to political decision making provides us with conclusions regarding the necessary attributes of winning political candidates.
The Nature of an Election
Understanding the nature of an election is the first step in winning an election. Let’s begin by comparing an election to private-sector decisions. Think about how consumers make their daily purchases. A consumer will go to Walmart, grab a shopping cart, and fill the cart with items that he wants and is willing to pay for. There’s nothing in the cart that the consumer does not want and every item is worth more to the buyer than its price.
the lord of production is the consumer. From this point of view the capitalist society is a democracy in which every penny represents a ballot paper. It is a democracy with an imperative and immediately revocable mandate to its deputies.
In a market, each consumer decides exactly what he wants to buy; he votes every time he purchases goods and services.
In a market democracy, voting is registered by spending money. You can have a blue shirt by voting for the blue shirt with your money. In other words, your vote matters. Each consumer chooses the goods that he wants and he ends up with nothing that he would rather not have.
Also, everybody gets to have a different cart. Some buyers leave with carts full of costly goods, while others walk out with only a few items. You buy the blue shirt, another buyer purchases a red shirt, and I decide to not buy a shirt. The fact that you want a blue shirt does no harm to me. This is an important point. In market democracy, there is no reason for consumers’ disagreements to lead to conflict. Each consumer may vote differently, but one consumer’s purchase of a shopping cart of goods does not compel other consumers to take home the same set of goods.
Finally, each consumer has an incentive to be informed to some degree about his purchases. Because acquiring information about products allows one to make better decisions, buyers take time to know something about these products. This is especially true for expensive items. For items that are a large part of a consumer’s budget, it’s worth the effort to research the available options. One is rewarded for finding high quality items at relatively low prices.
Things are quite different in a political democracy. Choosing between two candidates is analogous going to Walmart and being presented with two shopping carts already filled with items. Everyone will leave the store with the same cart of goods. Each cart contains products that a person may want and products that one wouldn’t choose to have, but the voter is not able to take anything out of either cart.
This demonstrates the concept of bundled choices in political decision making. The carts represent candidates and the products are the political positions of those candidates. The candidates might support policies that a particular citizen favors, but that individual won’t agree with everything a candidate stands for. In private decisions, one chooses only the items he wants, since the choices are not bundled, but in political decisions, you don’t have this option. If you support a candidate, you realize that you are accepting a bundled choice that includes some policies that you do not favor.
Also, for reasons that will be explained later, the two carts are very similar. They contain many of the same items, the items that are different are still similar (e.g., both carts contain a shirt — one red and one blue), and the two carts cost about the same amount. In addition, each taxpayer will end up paying for one of the carts even though he wouldn’t voluntarily purchase this basket of items.
We see here the conflict present in political decisions. You want a blue shirt, someone else wants a red shirt, and I don’t want a shirt. Your wishes conflict with mine. In order for you to be satisfied, you support policies that are harmful to me. We don’t see this type of conflict in market democracy.
Returning to the Walmart shopping cart analogy, when you are presented with the two carts, you are allowed to vote on which cart you want. However, you vote infrequently, say, once every four years, and your vote doesn’t matter. You will end up with the same cart regardless of your vote. In fact, even if you don’t vote, this will not affect the bundle that you receive in your cart.
It’s the same way in any major election. The chance of any single vote changing the outcome of an election is remote. Therefore, voters have little incentive to be informed about the items in the two carts. Going to the effort of learning about the two carts generates few rewards. Even being fully informed about the items in the carts will not change anything, since any individual vote will not change the outcome of the election.
Finally, even though the voters are promised a particular set of goods in the shopping cart that won the election, that doesn’t mean that the voters will receive that set of goods. The candidate could promise to deliver a specific set of policies, but after the election, the office holder is free to deliver a different set of policies to the voters, either because the candidate changed his position on some issues or because he was being deceitful during the campaign in order to gain political support.
The point, so far, is that in an election voters are faced with bundled choices, they vote infrequently, no individual’s vote will affect the election, voters have little incentive to be highly informed about the candidates’ policy positions, and the winning candidate is not obliged to deliver on his promises. Candidates who understand these simple facts about an election will have an advantage over political opponents who do not understand the nature of elections.
Realizing this, candidates need to make two important decisions. First, a candidate must consider which bundle of policies will give him the best chance of winning the election, and second, a candidate must devise a strategy that will give his supporters an incentive to vote in spite of the fact that no individual vote matters. I will consider these two issues in order.
Which Political Bundle Will Win the Election?
Consider a spectrum of possible political positions. There are extremists, such as libertarians and Marxists, at the edges of the spectrum. Most voters are not at these extremes of the spectrum. Many voters tend to have somewhat similar views and they are in what we might call the center of the spectrum. I realize that one might argue that the bulk of voters are nearer to one edge of the spectrum than other edges, but my point is that there is a centrist position in this spectrum and voters tend to be clustered in this region of the spectrum.
In order to win the election, a candidate needs to appeal to this center position. If candidate D takes a position much to the left of center and candidate R takes a position just slightly to the right of candidate D, then R will probably win the election. Similarly, if candidate R takes a right-of-center position, candidate D can win the election by taking a position slightly to the left of R. Therefore, in order to win the election, each candidate wants to appeal to the center of the political spectrum.
The analysis above is a watered down version of the median-voter theorem. Candidates of both parties need to get the support of the middle-of-the-road voter, the “median” voter. This conclusion has some important implications.
First of all, since both candidates are trying to appeal to the median voter, we should expect the candidates to hold similar positions. The last two presidential administrations demonstrate this point. Even though they represent different political parties, many of the foreign-policy and financial advisors of the Bush administration would be comfortable in the Obama administration and in some cases the same individuals are in both administrations. Bush and Obama both support the welfare state and the military empire. They both have proposed budgets greatly expanding the budgetary size and legal reach of our federal government.
Federal debt nearly doubled during Bush’s reign and it appears that it may double again under Obama. Both presidents supported massive healthcare bills that increased federal spending and federal control over the healthcare industry. And, importantly, both presidents support loose monetary policies and the Federal Reserve system, the primary cause of the current economic crisis.
Second, we should expect many voters to be unhappy with the outcome of the election. Those who agree with the political preferences of the median voter may be satisfied with the winning candidate’s positions, but many voters hold positions that are considerably different than the centrist position and will find little comfort in the political positions of the winning candidate.
Third, the need to appeal to the center of the political spectrum creates a dilemma for the candidates. In order to gain political power in our system, a candidate must win two elections, the primary election and the general election. The difficulty for a candidate is that he needs to appeal to a different set of voters in each election. In order to win the primary election, a candidate must attract the median voter of his party’s primary voters. Then the candidate must change his position to gain the support of the median voter in the general election.
In our common political language, the Republican needs to take a right-wing position in the primary and then move to the center for the general election. The Democrat makes a similar change from a left-wing position to a centrist position.
There are at least two keys for a candidate to change his position and still hold his political support. First, a candidate needs to appeal to his base during the primary election, without taking firm positions. At this point, he needs to avoid being too specific. He wants to be able to change his position while at the same time denying that any such change occurred. After the primary, he can swing to the middle of the road.
Each candidate knows that he is changing his positions, but he also knows that the other candidate is acting in a similar manner. The winning strategy here is to be the first to accuse your opponent of flip-flopping, and point to his obvious change of heart, while all the time maintaining that you haven’t changed your position at all. The goal is to shine the spotlight on your opponent’s deceptiveness and assert that you are a straight talker who never waivers in his convictions, all the while ignoring the fact that the only convictions most candidates have is the willingness to do anything to acquire political power. Such deceptiveness pays off for reasons that will be explained later.
Next, we must consider which bundle of political positions will appeal to the center of the political spectrum. The obvious conclusion is that a candidate needs to pick a bundle that contains positions that reward his followers for their support.
Voters will support a candidate who will give them political favors. Various groups are willing to lobby government officials — economists call this lobbying rent seeking — to gain these benefits. Think of it as an exchange. Groups are willing to provide money and political support to candidates and in return candidates transfer wealth to these groups.
A candidate can buy votes by providing concentrated benefits to special-interest groups. These favors can take the form of transfer payments, where the state simply takes money from some people and gives it to others, or some market intervention such as price supports for agricultural products or various protectionist policies. The main budgetary task of the federal government is to hand out these political favors, as the bulk of federal spending is made up of transfer payments. On top of this spending, laws and regulations tend to be aimed at benefitting the politically favored classes.
The downside of handing out favors in exchange for political support is that someone has to pay for these policies. The trick, politically, is to gain support by providing concentrated benefits to various groups while losing a minimal amount of support from those who are harmed by the policies.
Therefore, it’s important to disperse the costs of government largesse. If you take $10 apiece from 10 million people, these victims will have little incentive to oppose this policy. Few would find it worth their time to lobby against a policy that only costs a person $10. However, if you take this $100 million and offer $100,000 to each of 1,000 people, then this group will find it profitable to organize a political action committee and give you votes and cash. In order to get other people’s money, the favored group will be willing to organize, hire lobbyists, send campaign contributions to the appropriate officials, and campaign for the candidate that has organized this wealth transfer.
In addition to dispersing the costs of government programs, it’s also sometimes possible to hide the costs from the taxpayers. For example, few workers understand the tax burden of the Social Security system. On their paychecks, workers see that 6.2 percent of their gross pay is taken from them to pay for Social Security. What they don’t see is that employers match this tax payment with an equal additional payment. It seems that employers are paying half of the Social Security taxes. That’s not the case. Even though the employers are legally liable for the tax, they shift the tax on to workers in the form of lower wages. The Social Security tax burden, 12.4 percent of each worker’s gross pay, falls on workers. This is just one of the many ways that politicos hide the costs of government policies.
When running for office, it’s important to emphasize the benefits of the wealth transfers to the recipients of the transfers and ignore the costs to the victims of the policies. Henry Hazlitt explained that the “art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.” Hazlitt illustrated this idea by considering a broken window. Breaking the window creates a job for the glazier, an immediate effect, but repairing the window reduces spending in other sectors of the economy. The long-run effects include the negative effects on the workers in these sectors.
A key to winning an election is to reverse Hazlitt’s wisdom. The art of political campaigning is to look only at the immediate effects for one group, the group that benefits from the policy in question, and ignore the negative effects on other groups. By ignoring the overall effects of a policy, candidates can support destructive policies that harm social welfare. We saw an obvious example of this broken-window fallacy in the 2009 “cash for clunkers” program, when the Obama administration made the ridiculous claim that destroying 700,000 cars in the United States would help our economy. Elected officials have turned the famous broken-window fallacy into the broken-window excuse for handing out political favors.
Candidates know how to play this game. Therefore, they all tend to favor increased government spending, more burdensome regulations, and additional central planning. The country is headed down the road towards totalitarian socialism and the Democratic and Republican candidates are arguing about how fast we should drive the car.
So, in order to gain political support, a candidate needs to cater to special interests by supporting policies with concentrated benefits and dispersed costs, and, to the degree possible, he must hide the costs of the policies. The lesson here is that a candidate that respects private property is at a disadvantage and is likely to lose the election. A willingness to take others’ property — in everyday life we would call this thievery — is critical to gaining political power.
Your Vote Doesn’t Matter
Once a candidate has bribed voters for their support, he next needs to find a way to get his supporters to vote, all the while recognizing that individual votes will have no effect on the election. The odds of a single vote changing the outcome of an election are about 1/N, where N is the number of voters in the election. Roughly 130 million people voted in the 2008 presidential election, so the chance of a single vote making a difference was, roughly speaking, less than one millionth of one percent.
A lot of potential voters, however, can be convinced that their vote will make a difference. In order to win support, candidates stress that each vote does matter. They claim that the election hinges on every single vote and that the upcoming election is always the most important election in a lifetime. Since voting is infrequent, voters will have forgotten that the last election was also the most important election ever.
Linking voting to patriotism or claiming that practicing democracy is equivalent to living in a free country are also successful tactics. Of course, such statements are false, but many people still fall for these claims. It helps that the government schools reinforce these ideas and teach students that it’s their civic duty to vote. After 12 years of hearing this propaganda, many people will accept this position. History shows that this works.
What Role Does Deceptiveness Play in an Election?
The analysis above leads us to the conclusion that candidates will engage in deception. A major problem with supporting policies that have concentrated benefits and dispersed costs is that such policies are not in the public’s interest. Militarism, price controls, protectionist policies, transfer payments, and socializing various industries impoverish the country. When candidates use these schemes to get elected, they generally hide the fact that their proposals harm the country. Instead of being truthful, candidates claim that the destructive policies are good for society. Of course, these policies centralize political power and are therefore good for those closely associated with the state, but the candidates are lying when they claim that the programs generate net benefits to the overall country. Consider a few of the fallacious claims that we should expect to hear from those running for political office:
For instance, a candidate will never claim that his main goal is to acquire political power so that he can enrich himself. He will use pet phrases that hide the true nature of his policies. No matter what policy he is defending, he may claim that the program is “for the children,” or that it will “strengthen the family.” Other possibilities include asserting that the policies will “grow the economy” or “help the environment.” In the current political atmosphere, saying that you are “fighting terrorism” will blind many people to your actual intent. The point is that simple platitudes will fool many people.
Asserting that your positions will help the country works particularly well if you are an incumbent. During time in office, whenever there is good news, an incumbent will claim that his policies created the good news. If the unemployment rate drops, we will hear him claim that this is his doing. The claim that event A (some government policy) preceded event B (some positive outcome) and therefore event A must have caused event B is the post hoc fallacy. Most people will not recognize this as a fallacy, however, so office holders can get away with this sleight of hand.
For those that are skeptical of your claims, it may be necessary to have some “experts,” bought and paid for by the government, back up your claims. Many economists and other academics seek to work for the government and they see that it’s in their interest to draw conclusions that fit the positions of elected officials in order to be rewarded with money and power. Such experts gain fame and riches and elected officials gain by being able to assert that authorities support their policies. Only the public loses out in this game.
As mentioned before, another complication of gaining political office is that you often need to win two elections, a primary election and then a general election. The problem here is the need to appeal to the voters in a particular political party for the primary election and to the general population for the general election. This may require the candidate to switch positions. The set of bundled choices that will win the primary election may be different than the political positions that will win the general election. Candidates will therefore be vague and try to avoid specifics in the primary election.
Another lie we hear is candidates’ assertion that (even though they would take similar positions when in office) there are major differences between them. Each will claim that their policies will lead to prosperity and security, and that their opponent’s positions will result in impoverishment and ruin. Convincing supporters that there is a major difference between the candidates will make it more likely that they will vote. A candidate needs to continually push his supporters to go to the polls.
A common tactic for gaining support is fear mongering. Fear often trumps logic. Voters can be scared into believing that there will be dire consequences if their candidate loses the election. A candidate can appeal to his followers by claiming that if the other candidate wins the election we will be attacked by terrorists, or our taxes will be raised, or we may lose our jobs, or our children will not get a good education, or we will run out of oil, or we may not get adequate health care, or the environment will be destroyed. While some of these claims may be correct, they are true regardless of which candidate wins the election, because either winning candidate will implement policies that will do us much harm. In making to make such claims, candidates rely on the fact that voters will not recognize that the candidates largely agree on the major issues regarding government policy.
Voting is another area where candidates lie. Candidates, or their handlers, know that individual votes do not matter. Yet these same candidates continually encourage their supporters to vote by alleging that each vote could make a difference.
This long list of deceptions leads us to another important lesson. A candidate that is averse to being deceitful is at a disadvantage and is likely to lose the election. Successful candidates tend to be liars.
Won’t people generally discover that elected officials and candidates for elected office lie? Probably not, since most people are rationally ignorant. In other words, it’s not worth it to most people to be well-informed about political issues.
Consider again the shopping-cart analogy. For most people, the cost of understanding the political bundle in the cart is higher than the benefits of gaining this knowledge. Even if a voter has perfect knowledge about the candidates, his individual vote will not have any bearing on the election. Therefore, most voters have little incentive to be informed. It’s rational to be ignorant about the details of candidates’ positions and government policies, and ignorant voters may fail to recognize the candidates’ lies.
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 Hans-Hermann Hoppe. 2001. Democracy: The God That Failed. New Brunswick: Transaction Publishers, p. 88. If the reader is interested in a comprehensive analysis of democratic institutions, this is the book to read.
 For an Austrian view of class analysis and exploitation theory, see Hans-Hermann Hoppe’s “Marxist and Austrian Class Analysis.”
 Agents of the state have monopolistic advantages that allow them to support policies at the expense of voters in general, and some may argue that elected officials can ignore voters’ preferences, even the preferences of the median voter. This argument has merit. For this reason, strictly speaking, the median-voter theorem is flawed. However, I am arguing that candidates, during an election, must appear to cater to voters’ wants in general, and specifically to the voters that are clustered in the political center. Once in office, political officials may ignore voters’ preferences. The system protects the officeholders from political repercussions when the officeholders support policies opposed by the majority of voters.
 For an explanation of the Federal Reserve’s role in causing the ongoing economic crisis, see Tom Woods’Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse.
 For more analysis of our move to a socialized economy, see Tom Woods’ Back on the Road to Serfdom: The Resurgence of Statism.
 See Cecil E. Bohannon and T. Normal Van Cott’s “Now More Than Ever, Your Vote Doesn’t Matter” for an explanation of the point that a single vote is unlikely to affect the outcome of an election with many voters.