Top
Photograph by Boyrd

You know you are over the target if you’re catching flack.  That old adage should give comfort to the proponents of public choice theory, who have been the subject of a flurry of take-downs and “exposés” in the left-wing press.

This past month the socialist magazine Jacobin published a piece denouncing any joining of forces of leftists and public choice-espousing libertarians as an “unholy alliance” that would sabotage, rather than spur, the fight against inequality.  The Baffler goes even further, excoriating public choice theory as not just wrong, but fundamentally racist.  And most interestingly, Zelda Bronstein attacks public choice’s insights into zoning laws in Dissent, positing that planning commissions, land use regulations, and zoning laws have nothing to do with the cost and availability of housing.  It’s all the market’s fault, says the owner of some $32 million in rental properties.

Common to all three pieces is a reliance on Marxist ideology to serve as a substitute for any practical theory of why individuals, interest groups, and governments behave as they do in the real world.  Public choice theory is flawed in their eyes, not so much for its lack of empirical insight, but because it fails to conform to ideological conclusions that were arrived at before the evidence. In attempting to expose the evil of governance-optimizing thought, leftists reveal how incapable their own ideas are at describing a world where incentives are real.

Public choice theory deals in the world in pre-ideological terms. It asks how, given the tendency for human beings to use others for their own advantage, actors will re-strategize harmful self-interested behavior into socially useful self-interested behavior. It answers with the idea that states should be limited in their powers, that those powers be explicitly spelled out in a constitution, and that that constitution aligns interests with outcomes with respect to the power dynamic of the society it seeks to govern. One can disagree with the answer that public choice theory purports to have. But it cannot be denied that it is an answer, one that attempts to describe mechanisms that result in effective governments.

The left, as represented by the three pieces discussed, fails in even attempting to answer these questions, instead relying on abstract ideology to liberate it from the need to think about practical governance. The result is a stunted critique that demonstrates the limits not of public choice, but of the quasi-Marxism that is so fashionable today. It’s not even that contemporary left-wing thought has a bad theory of rational governance—it’s that leftists have no interest in exploring the topic at all.

To understand the limitations of these critiques fully, we must begin with some definitions. For the uninitiated, public choice theory is the rather uncontroversial idea that public officials and advocacy groups are just as motivated by self-interest as private citizens and businessmen.  Society, the theory’s proponents further suggest, is not divided into rigid classes of workers and capitalists, rulers and ruled, but instead into a patchwork of individuals and smaller interest groups, from urban renters and suburban homeowners, to restaurateurs and health inspectors.  In the social democracies of the 20th and 21st centuries, politics becomes a competition between these interests to extract the maximum amount of privilege and protection from the state, while dispersing those costs onto competitors and society writ large.

This view has much to offer those on the left; it explains how powerful interests acquire and sustain their privileges.  It also presents a threat to left-wing ideology by seeing society as more than a simplistic class struggle, and by having the temerity to assume that self-interest precedes political institutions.

Take the November 30 Jacobin piece, itself a review of The Captured Economy by Brink Lindsay and Steve Teles.  In The Captured Economy, Lindsay and Teles detail how established interest groups use state power to benefit themselves—in a practice known as rent-seeking—to the detriment of poorer and less influential groups.  The result, they claim, is increased inequality and poverty.

To illustrate their point, the two focus on four examples of rent-seeking, financial regulation, intellectual property, occupational licensing, and land-use regulations.  Eliminate grants of state privilege in these areas, and you eliminate the economic inequality that comes with them.

The response in Jacobin, penned by Max B. Sawicky, concedes some of the basics of this argument, saying that it’s “hard to imagine the super-profits received by holders of patents and copyrights, or the benefits to banks from lax financial regulation, going to any but the wealthiest in society.”

Of course, the point Lindsey and Teles are making is not that financial regulations are lax—they aren’t—but that they are slanted to larger wealthier financial firms.

This is a minor point, however, for Sawicky saves his real fire for the Lindsey/Teles take on occupational licensing.  It is here that public choice theory is on its firmest ground, as it describes how the transformation of the right to work in a profession into a state licensed privilege awards incumbent market actors at the expense of potential market entrants and consumers.

Occupational licensing as Sawicky admits creates real inequalities of wealth and privilege.  But because they occur within, not across, class lines, their identification and study is at best irrelevant, and at worst a distraction from the fight against wider inequalities.

Sawicky gives the example of licensed beauticians in Washington D.C., who are able—through occupational licensing—to restrict the entry of hair braiders into the market.  The beauticians are given a grant of state privilege in the form of a license, creating one inequality, leading to higher incomes for the them at the expense of the hair braiders.

Eliminating licensing requirements would eliminate this inequality, but asks Sawicky, “is that an improvement in the distribution of income to celebrate?”  Both sides, he tells us, are “predominantly African-American women, earning low- and middle-class incomes.”  Any distribution thus is just shuffling of income among workers, without doing anything to address the overall structure of inequality perpetuated by capitalism. Left unaddressed is the question of how workers—currently willing and able to use democratic means to extract rents from their peers—will be prevented from doing so under a socialist ideal of more democracy, and greater worker dictation of government policy.

Public choice theory answers this, of course.  Its proponents would suggest that the best way to limit workers extracting rents from other workers is strict limitations on the very means of extraction.  Occupational licensing, whatever its merits, is subject to capture by interest groups—like the beauticians—who would corrupt its public purpose for their own advantage.  Do away with the licensing says public choice theory, and replace it with strict protections of all workers to engage in whatever labor they find most advantageous.

Sawicky sidesteps these questions, instead suggesting that worker empowerment and more democracy will eliminate the exploitation we see today.  In doing so he leaves the important questions unanswered. Would occupational licensing exist in this workers utopia? If it does, how would be constrained so as to avoid it future capture and rent-seeking?  We don’t know because Sawicky doesn’t tell us.  Instead he leaves it to theories of class struggle to wash away these petty bourgeois questions.

Whatever its flaws, Sawicky’s article has the decency to treat proponents of public choice as honest brokers of their ideas.  That is more than be said for the vicious screed published by The Baffler’s Andrew Hartman, who see’s public choice theory as nothing more than a cloak for reactionary white supremacists to perpetuate their domination of the working class.

The article is long, riddled with evidence-free assertions, and reliant on already discredited versions of history, including the myth that John C. Calhoun was a substantial influence on public-choice economics.  I will not relitigate this ridiculous claim, but would encourage readers to check out its many debunkings here, here, and here.

Hartman’s point is that public choice theory has unfairly claimed for itself a reputation for anti-statism, when in reality, it’s true intention is to restructure the state to serve the needs of the master class.   This is in contrast to Marxism, which Hartman contends has always been the real force of anti-statism, advocating an ideology of “liberty for all.”

Writes Hartman, “during the Cold War, Marxism was caricatured as a theory of collectivism—a caricature lent considerable credence by the Soviet Union, the first nation to proclaim itself Marxist, while vesting all power in an authoritarian state. In contrast, public choice was a theory of freedom that portrayed the state as the embodiment of repression. What gets lost in this formulation is Marxism’s actual role as a theory of freedom that actually saw the state as an engine of repression.”

Marx’s utopia was indeed one where, in the absence of class divisions, the state would “would wither away and die.”  What Hartman treats almost as incidental is that this never happened in any Marxist state.  He spends one sentence on the fact that the Soviet Union quickly became a totalitarian nightmare, as did every other state to be seized by Marxist ideologues.

The actual results of Marxism are irrelevant.  As are the results of public choice theory for that matter.  Instead, Marxist theory is what establishes its anti-statist bona fides.  Hartman’s thesis is thus an explicit rejection of reality in favor of ideology.

Nothing illustrates this better than Hartman’s closing call for Marxists to reclaim the mantle of the true anti-statists.

After offering a muted defense of some state action, Hartman writes, “in addition to civil rights protections the state is also Vietnam. It is drones, bank bailouts, tax cuts for the wealthy, prisons. The state is Trump. If we want to reclaim the mantle of liberty from the master class and their court intellectuals, we must also reclaim a theory of the state for the masses.”

In a sentence intended to be the anti-state climax of his piece, Hartman identifies a reduction in revenue for the state as somehow an action of unmitigated statism.  Because, for Hartman, it’s not what the state is doing, but how one thinks about the state that matters.  This is essential for his worldview.  To think otherwise would be to acknowledge how Marxism has always led to statism, whatever the intention of it’s chief intellectual proponents.

And as with Sawicky, Hartman leaves the crucial questions raised by his views unanswered.  If Marxism has led to statism in the past, how will it be prevented from doing so in the future?  If the working class can be bought off—as he suggests in the article—by a state under the thumb of the rich and powerful, how will a Marxist utopia avoid such a fate?  Hartman’s rather unsatisfying answer is we just have to think about Marxism differently, then it will magically function as an anti-statist doctrine.

Public choice theory does not require such ideological purity.  Instead suggest real mechanisms for limiting state power, through a mix of explicit constitutional limitations and a requirement that a large majority (some would advocate unanimity) of society approving of state action.  Though public choice scholars will quibble over what specific constitutional structures are most desirable, they all offer solutions on how to prevent state exploitation in a world where most people do not share their anti-statist views and who would, if given the opportunity, be happy to engage in a little exploitation.

But if theory can blind Sawicky to public choices insights and Hartman to Marxism’s flaws on an intellectual level, it can also do so on a personal level, as evidenced by Zelda Bronstein’s anti-market piece in Dissent.

Of the three, Bronstein is by far the best advocate for her position.  Her conclusions are no sounder. In her article, “When Affordable Housing Meets Free-Market Fantasy,” Bronstein takes on the growing consensus that restrictive zoning laws, local land use regulations, and obstinate local planners have contributed to the dramatically escalating housing costs in California and beyond.

Writes Bronstein, “Developers build housing, and what they decide to build—and when and whether they decide to build it at all—depend on factors that over which local governments have no control: the availability of credit, the cost of labor and materials, the cost of land, the current stage of the building cycle, perceived demand, and above all, the anticipated return on investment.”

Of course, all the things that Bronstein mentions are essential to developers’ decisions on where and what to build.  Many of the things she lists however, are indeed within a local government’s control.  The ones that are not are still heavily influenced by them. Labor costs, of course, are governed in no small part by minimum wage laws, something local governments in California—the primary subject of Bronstein’s essay—have say over.  On top of that, local governments also have a litany of prevailing wage and local hiring requirements for construction projects that drive up the costs of labor and therefore development.

Indeed, California’s SB 35—which Bronstein spends a good portion of her essay deriding as a regulation-slashing, capitalist-beloved bill—contains within it both prevailing wage and local hiring provisions.

While return on investment will of course be the defining factor in whether a developer invests or not, the return of any given investment is heavily influenced by local policy decisions. Whether you rent out an apartment or keep it empty as a speculative bet—in San Francisco, for instance—is going to be determined on the city’s local tenant protections that prevent you from raising rents concurrently with the value of the land.

Whether you have to pay per-square foot development fees—as developers in Los Angeles now have to do—is going to determine whether an investor will choose to operate a currently existing apartment complex, or tear it down and build more units.

Market incentives interact with local government policy, and local government policy is most often going to be set by entrenched interests at the expense of new entrants. Bronstein herself should know this.  She does after all serve on Berkeley, California’s planning commission.  She reportedly lives in a $1 million home she purchased for $300,000 and owns another 9 rental properties valued at $32 million.  That she spends a great deal of her Dissent piece scolding anti-zoning folks as cloaking their own self-interest in publicly minded rhetoric is thus a tad ironic.

It is also something predicted by public choice theory, which would hold that people act out of their own material self-interest while maintaining a façade of public-spiritedness.  Just as Hartman uses pedantic theorizing to obscure the disastrous results of his own ideology’s implementation, Bronstein hides in left-wing rhetoric to obscure her own complicity in the phenomenon she seeks to explain away.

The details of Bronstein’s biography are not meant as an ad hominem attack.  They are included to illustrate a common thread between all three pieces discussed in this essay.  All three writers critique public-choice economics not by attacking the substance of its methodology, but by complaining that it steps outside the boundaries of their ideology. Just by addressing the issues raised by public choice—even while rejecting every conclusion—they could ask practical questions that lead to answers instrumental to achieving goals like reducing poverty. But they didn’t.

Sawicky brushes off the idea of workers exploiting workers in a democratic system of government, while at the same time assuming that a democratic system of government controlled by workers will free them from exploitation.

Hartman engages in word games and pedantic theorizing to assert that Marxism is the true anti-state ideology, liberating him from grappling with why Marxists, once in power, always and everywhere implemented the worst kind of statism seen in human history.  So long as one thinks about Marxism the right way, actual questions of governance become secondary, or even irrelevant.

Bronstein’s own diatribe against market-based approaches to housing—with precious little acknowledgment of her own role in the problem—raise tough questions for her ideological fellow travelers.  If such a committed socialist can be so self-interested now, what mechanism will stop others like her from acting in such a self-interested fashion should they are ever be at the levers of power?

Public choice theory, in contrast, takes the realities of incentives and practical governance head on.  Unlike solutions of the left that are fenced in by how well their conclusions fit with ideology, public choice theory is value-neutral. It doesn’t lean on the crutch of rhetorical conformity. Public choice scholars accept the fact that most human beings will never be saints.  They instead task themselves with formulating structures and mechanism of government that work in a world where not everyone is as opposed on principle to state action as they.  Doing so exposes the essential weakness of the prescriptions of left-wing ideology, and for this reason it has drawn so much fire.

Christian Britschgi is an assistant editor at Reason