Of Public Interest

Volume 4, Number 12
June, 2002

As children, most of us experienced the need to cram before exams. Had we paced ourselves better during the term, it would not have been necessary to cram at the end of the term. For many of us, though, cramming proved to be necessary. As we mature, most of us learn to pace ourselves reasonably well. We learn that our objectives take time to accomplish, and we spread our work over an interval of time that avoids a frantic effort at hyper-accomplishment when our work is due.

While most of us learn to apply these lessons in our personal lives, they do not seem to be applied too easily in our political lives. The budgetary work of democracies does not seem to proceed in a regular and smooth fashion. It proceeds in jerky, spasmodic fashion, lurching from crisis to crisis, and with one reform following another.

Indeed, the federal government rarely enacts its own budget in accordance with its own announced schedule. It is often necessary for Congress to enact continuing resolutions to keep the government’s finances moving because the new fiscal year has begun without the budget yet being enacted. To be sure, this method of doing things does work. The government does not really shut down, even if some of us might think it a good thing if at least some of the government did shut down.

What is puzzling about all this is the repeated pattern of delay followed by hyper-activity that resolves a crisis at the last moment, with calls for reform then being sounded with increasing volume. It reminds one of one’s school days. Cramming for the geometry exam in the fall was awful, and a vow of reform was taken to avoid doing the same thing in the spring. Only with the coming of spring, the vow is forgotten, and the cramming begins again.

What is there about the practice of politics among adults that repeats, again and again, the behavior of adolescents? One possible explanation traces this pattern of conduct to the perverse incentives that politicians confront because they do not operate with secure, well-defined property rights.

A right of property means that you are responsible for the consequences of your actions. If you try to cram most of your work into the last week of the semester, it is you who bear the consequences of your actions, whether this is in lower grades, rejections from colleges, or lost sleep. If, as an adult, you do the same thing with your business, and so fail to make a timely delivery to a customer, it is you who suffer the loss of business and reputation.

In democratic politics, however, there are no property rights. Economists have a name for this kind of setting. They refer to it as common property. The consequences of your actions are spread over everyone.

It is easy to illustrate the difference between private and common property. Suppose five people are responsible for plowing a five acre field. One way they could work would be for each of them to be responsible for one acre. Each person’s work would be finished when he had finished plowing his assigned acre. The other way would be for the five to work as a unit. No one would be finished until the entire five acres were plowed. Under normal circumstances, we would expect this arrangement to take more time to complete the job. If one person reduces his exertion, he shifts more of the work onto others. As a result, we would expect the plowing to proceed more slowly under the common property arrangement.

This is how it is with democratic budgeting. Social Security and Medicare are in deep trouble. This is widely known and has been known for at least 40 years. Commission after commission has offered various approaches to reform. Each so-called reform offers a fix that lasts for a few years, at which time the process starts over again.

The difficulty is that the real crisis in politics occurs at two, four, or six year intervals, depending on the office that is up for election. What matters most to nearly any political figure is how he will stand with the voters at the next election. Privatizing social security in one fashion or another might well prove to be electorally rewarding twenty years from now, but if it doesn’t prove rewarding at the next election, it won’t stand a chance.

There is really nothing that can be done to change the significance of periodic elections in democracies. It is simply a feature of democracy with which we must live. It is the necessary price we must pay for being able periodically to register our assessment of political candidates. It is, however, also testimony to the wisdom of limited government. Democracies will necessarily generate adolescent conduct in budgetary matters among their participants, and this conduct will redound to our general detriment. It is impossible to eliminate this and maintain democracy, but it is possible to limit the reach of democratic government.

A Publication of:
Public Interest Institute at Iowa Wesleyan College
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Mt. Pleasant, Iowa 52641-1328
Phone: 319-385-3462 Fax: 319-385-3799
E-Mail: public.interest.institute@limitedgovernment.org Web Site: www.limitedgovernment.org