Public choice research has revealed a variety of political dilemmas associated with governance that tend to make good governance unlikely. This paper suggests that the good governments that we observe are likely to have cultural or ethical support–support that solves or ameliorates the dilemmas uncovered by public choice research. It demonstrates that five important impediments to good governance can be ameliorated by internalized ethical dispositions. Although good government is not generated by ethical conduct per se, some forms of conduct regarded as ethical are supportive of good governance and arguably prerequisites to it.
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Here and in other papers on the role of ethics in choice, I use the term “pragmatic” in a manner that is a bit more severe than many would use the term. It is used as an antonym to behavior that is “idealistic” in the sense of being substantially determined by one’s internalized norms. This is one of its many definitions. It is not used in its philosophical sense, although this author has some sympathy for its conclusions, but as a term to characterize a person’s immediate, practical, narrow interests in such matters as their own (and perhaps their family’s) health, safety, comfort, wealth, status, and fame.
That evolutionary support for such rule internalization exists is implied by a variety of simulation studies, beginning with the simple round-robin tournaments among rules (computer programs) for participating in prisoners’ dilemmas organized by Axelrod (1980). The first application of simulations to study norms for participating in social dilemmas (with exit) were undertaken by Vanberg and Congleton (1992), who subsequently extended the approach to multiparty prisoners’ dilemmas with exit possibilities in Congleton and Vanberg (2001).
Issues of cosmology are beyond the scope of this essay, but it bears noting that a deistic theory of the divine would allow Locke’s theory of natural law to be compatible with both genetic and social transmission of rules of conduct from one generation to the next. Disagreements among deists, physicists, and biologists boil down to whether a first mover exists or not—which of course is not a testable proposition.
A variety of social dilemmas have to be solved for all of that to happen, but they are beyond the scope of this paper. They are addressed in the book manuscript mentioned in a previous footnote on ethics and prosperity.
In many respects, this approach is similar to that developed by Nozick’s classic (1974) book, who also begins with the Lockean state of nature. However, the point of the present paper is that ethical predispositions are necessary—or at least the most plausible explanations—for solutions to political dilemmas that tend to make extractive regimes more commonplace than productive ones, even in cases in which governing institutions are adopted through largely consensual means. Nozick, in contrast, simply assumes that all agents behave in accord with a specific interpretation of natural rights and explores what types of governments and governmental policies are consistent with such rights.
The equilibrium for such markets is very similar to that of Akerlof’s (1970) lemons dilemma, but without his differential equations. Note also that this and the other game matrices developed later in the paper can be used to characterize larger number games and the subgame perfect equilibria of finitely repeated versions of such games. Their one-shot versions are adopted to simplify the narrative.
Rent extraction requires the existence of economic profits, which is to say rents that can be extracted or shared without bankrupting the merchant or commercial organization of interest. Such markets would be commonplace when, for example, production processes are Ricardian rather than Marshallian, or markets diverge from perfectly competitive and monopolistically competitive equilibria. The enforcement game with bribery (not shown) tends to generate a stochastic pattern of law enforcement that is sufficient to make the threat of punishment credible but weak enough to maximize the bribe revenue collected.
In the case in which all law enforcers are volunteers, S = 0. In others, S > 0. Including the possibility of S > 0 demonstrates that the problem is not caused by the assumption that the enforcers are volunteers.
Becker and Stigler (1974) advocate paying law enforcers relatively high salaries (efficiency wages) to reduce their temptation to accept bribes. However, the the enforcement dilemma goes through in that case as well, insofar as such a salary is simply one of many values that S can take. The use of efficiency wages requires a still higher level of authority that would dutifully fire the highly paid rule enforcers that failed to perform their duties.
It bears noting that internalized norms also improve the performance of extractive organizations: as with promise keeping, deference to authority, and bravery, which likewise may be reinforced by the formal rule-enforcing aspects of such organizations. The contracts adopted by pirate ships (Lesson 2007), for example, clearly relied upon internalized norms for much of their effect on the behavior of both officers and members of the crew.
Congleton (2020) suggests that agreement-based governments are likely to rely upon consensus or supermajority rules. Majority rule is used in the examples that follow because it is so widely regarded to be the best rule for collective action—where “best” is used in its normative sense. Such majoritarian norms are likely to play a role in solving the last majoritarian dilemma examined in this paper.
To be fair to Black, he would have regarded such choices as multidimensional in which each person’s net benefit share is a separate dimension. However, as far as pragmatists are concerned, such choices are essentially single dimensional. Only effects on themselves are relevant.
Shepsle and Weingast (1981) and Weingast et al. (1981) propose a series of procedures that can stabilize majoritarian systems, which may provide an alternative to the norm-based one suggested in the text. However, such institutionally induced equilibria require that such institutions be adopted formally, which would tend to be subject to the same cycling problems. Moreover, their associated rules have to be followed faithfully. The same reasoning applies to other mechanism design solutions as well. Such solutions thus also rest ultimately on the existence of rules for solving majoritarian cycling problems and supportive “rule-following” norms after the ameliorating institutions are adopted.
Support for such demogrant programs comes and goes in the West. Such programs—sometimes termed negative income taxes—were favored by both mainstream candidates in the 1972 US presidential election and have returned to prominence as proposals for universal basic income in the past decade.
The model easily can be generalized to account for life cycles and economic growth. In a generalized model, pragmatists would maximize the present value of their lifetime incomes, and economic growth would be affected by the size of the demogrant program. The first-order conditions for ideal tax rates and demogrants conceptually would be very similar to those developed above, although the mathematical characterizations would be somewhat more complex and include new terms for time horizons, discount rates, and growth rates. The steady state model examined thus is sufficient for the purposes of this paper.
For an early analysis of the effects of norms on the politics and sustainability of a welfare state, see Lindbeck et al. (1999).
Lott and Bronars (1993), for example, find little or no evidence of significant policy or voting changes in an incumbent candidate’s last term of office.
Table 7 leaves out two even higher-income states regarded as democracies because their PPP per capita rgdps were implausibly high: Luxembourg and Norway. Including them would not have changed the basic results.
Bjørnskov and Méon (2013) provide persuasive econometric support for the generalized trustcausality explanation. Insofar as generalized trust characterizes trustworthiness and trustworthiness is generated by a community’s most commonplace ethical dispositions, the main body of the present paper can be regarded as providing one plausible theoretical explanation for their results.
As I had not read their paper before constructing Table 7, their results likewise can be regarded as a further test and affirmation of the hypotheses developed above.
Notice that “vintage” is not necessarily decisive. India’s and Germany’s democracies are of approximately equal age and in force long enough to have influenced the political culture of their politicians and parties, but they are still very different in terms of their average effects on income and perceived corruption. However, it also bears noting that India exhibits the highest generalized trust of the poor democracies and Germany is among the lowest of the rich democracies.
See Bjørnskov (2019) for an overview of public choice research on trust and Potrafke (2018) for an overview of public choice research on ideology. Evidence of the effects of internalized norms also is indicated by the various “demographic” variables commonly used in statistical studies, although they rarely are grounded in explicit behavioral models.
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A previous version of this talk was delivered at the Political Economy of Democracy and Dictatorship conference in Muenster Germany in February 2020, where several useful comments and questions helped push its development forward. The very diligent editor in chief of this journal also provided numerous helpful suggestions. Christian Bjørnskov deserves special thanks for provided the data on trust used in Table 7.
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Congleton, R.D. Ethics and good governance. Public Choice (2020). https://doi.org/10.1007/s11127-020-00824-3
- Ethical dispositions
- Good government
- Political dilemmas
- Cycling problems
- Sustaining democracy
- Mystery of democracy