Democracy, Idiocracy, Kludgeocracy

Q: When public choice economics meets the rationally irrational voter, what is the result?

A: “If anything, we have arrived at a form of government with no ideological justification whatsoever.”

That’s Steven Teles writing in National Affairs, describing what he terms the “kludgeocracy.” The whole article is worth a read, but the TL;DR version is this: America’s entire policy-making apparatus has evolved into a complex Rube Goldberg machine, wherein policy is crafted by a multitude of government players and special interests, and any new proposed rule faces an indomitable number of “choke-points” – multiple committees, filibuster threats, Ted Cruz’s presidential aspirations  – that function more like toll booths, requiring concessions or further tinkering before a bill can win approval. Simple, broad reforms are nearly impossible to push through.

As a result of this piecemeal, cobbled-together, “There, I Fixed It” approach to policy-making, the government’s tentacles are injected deeper into the economy in ways that are not obvious to the average American voter. Teles points to the federal and state rules governing health care, finance, the tax code, K-12 education, environmental regulation, and welfare programs as examples of the kind of bafflingly complex rule systems that are all but unnavigable by even the most savvy members of the public, let alone the average voter.

Worse yet, as Americans are left unaware of their increasing dependence on government, we are also oblivious to the fact that more wealth is being redistributed towards wealthy individuals than the poor. Example 1: Obamacare transfers wealth from the young, healthy, and poor to the old, less-healthy-but-wealthier/Aetna. Example 2: Social Security and Medicare do the same. Example 3: The mortgage interest deduction, and other tax expenditures. Example 4: Tax-advantaged goodies like employer-sponsored health plans, retirement accounts and savings plans. Whatever your opinion on current levels of taxation, tax-advantaged savings benefit people who have enough money to save, and undermine the progressiveness of the income tax. Consider this: The American polity went absolutely apeshit last year over the marginal income tax rate for 2% of households, and ignored all the lesser-trumpeted tax policies that allow Warren Buffett to famously pay less taxes than his secretary.

Here’s a related question: how many jobs are left in America that aren’t in some way at the mercy of the government policy (other than employment and income taxes)? If you work in any of the big, institutional industries – medicine, energy, communications, transportation, education, finance, food and beverage, real estate/construction, agriculture, any company with a “compliance officer” or a government affairs division – then like it or not, the government is all up in your business, literally. Koch Industries, Exxon Mobil, et. al. may whine about the $1.8 trillion cost of regulation, but it’s the guys working on the floor who are going to pay that bill. The government may not seem intrusive when anyone can go to school, own a home, or choose among a couple hundred beverages at the liquor store, but sometimes even respectable folks want to get torn up on a Four Loko. Bryan Caplan put it thusly: indirect coercion is the homage the state pays to liberty.

Cato’s Left-Libertarian-in-Residence Brink Lindsay provides the lesson for libertarians dealing with the kludgeocracy, and it goes beyond the standard Government-Is-Inefficient argument. The reason a sane person can carry this protest sign in a logical universe is because the process of policy-making hides the outcomes of our preferences from us. “The public feeds its ravenous appetite for government,” Lindsay says, “while the true extent of its gluttony is conveniently hidden from view.” The government is simultaneously getting bigger and less visible to John and Joanna Q. Public, and they’ve been paying attention to a farcical budget showdown for the last three weeks. If only there were a sexy partisan angle on indirect taxation and regulation – cable news pounce on it.

This is another one of the big questions young libertarians need to be thinking about: How do we have a real effect on the overall size of a practically invisible government? As Mr. Lindsay points out, “starve the beast”-style fiscal conservatism has become another form of spend-now-tax-later. Ideally, we could push for a law forcing all new programs to be paid-in-full every year, but who would vote for it? To Teles’s and Lindsay’s point, who would want it?  Let she who has not benefited from low-interest student loans cast the first stone.

Unfortunately, the current order will only get worse until some catastrophic event — financial panic, hyperinflation, aliens, zombie apocalypse — forces a reboot. What we have now is a tangled mess of fishing line. I’m pessimistic, but I also hold out hope that some enterprising young libertarian mind will find an answer/reach the technological singularity, rendering this whole discussion moot. And if there’s a silver lining to the government’s steady march toward entropy, it may be that the increasingly byzantine policy-making apparatus may be able to suck up the glut of law school graduates. The US Government: Totally A Jobs Program!