Bryan Caplan’s New Book

13 August 2007 at 1:56 pm Leave a comment

| Nicolai Foss |

During my libertarian awakening in the mid-1980s, I remember being particularly impressed by public choice theory. While I read the works of the major Austrians and felt strongly inspired by their vision, PC theory seemed richer in predictive implications and concrete policy proposals. It was also much closer to the mainstream economics I was being taught at the University of Copenhagen.

However, I increasingly grew uncomfortable with established PC theory, mainly because it didn’t really seem to me to allow for politicians and proponents of “special interests” that were entirely honest, possessed of good intentions, but misguided, even silly. Actually, the Austrians, perhaps particularly Mises, were closer to allowing for this, Mises heaping scorn on his intellectual opponents and “exploding their fallacious doctrines,” but clearly preferring to explaing their positions in terms of ideology rather than material interests. (Also see this nice paper by Dan Klein).

I have just finished reading Bryan Caplan’s  new book, The Myth of the Rational Voter: Why Democracies Choose Bad Policies. This is easily the most exciting book I have read this year, and is the book I would have badly wanted to read almost 20 years ago. It explicitly breaks with what Caplan calls “the miracle of aggregation” (i.e., the idea that voter ignorance may not be a serious problem because in the aggregate measurement errors will cancel each other out), it argues in favor of the presence of systematic voter error induced by crazy beliefs (notably about economics), and it does so brilliantly. Here is some serious earlier commentary on Caplan’s book, and here is the lefty take. Here is the blurb:  

The greatest obstacle to sound economic policy is not entrenched special interests or rampant lobbying, but the popular misconceptions, irrational beliefs, and personal biases held by ordinary voters. This is economist Bryan Caplan’s sobering assessment in this provocative and eye-opening book. Caplan argues that voters continually elect politicians who either share their biases or else pretend to, resulting in bad policies winning again and again by popular demand.

Boldly calling into question our most basic assumptions about American politics, Caplan contends that democracy fails precisely because it does what voters want. Through an analysis of Americans’ voting behavior and opinions on a range of economic issues, he makes the convincing case that noneconomists suffer from four prevailing biases: they underestimate the wisdom of the market mechanism, distrust foreigners, undervalue the benefits of conserving labor, and pessimistically believe the economy is going from bad to worse. Caplan lays out several bold ways to make democratic government work better–for example, urging economic educators to focus on correcting popular misconceptions and recommending that democracies do less and let markets take up the slack.

The Myth of the Rational Voter takes an unflinching look at how people who vote under the influence of false beliefs ultimately end up with government that delivers lousy results. With the upcoming presidential election season drawing nearer, this thought-provoking book is sure to spark a long-overdue reappraisal of our elective system. 

Entry filed under: - Foss -, Recommended Reading.

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Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
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