Institutional scerlosis

The Nightmare Of Regulatory Reform:

...the SEC and the CFTC, two agencies that have fought hard to stay apart while the products they regulate grow more and more intertwined. Both Republicans and Democrats agree the two should become one, but former House Financial Services Committee chairman Mike Oxley says the chances of that happening are about as good as him beating Tiger Woods.

This is obviously public choice theory at work. But more generally an inspection of history shows that institutions tend to go through phases, as if they have a life history like organisms. The Chinese dynastic cycle is a classic one, but consider the Roman Catholic church. Large corporate or bureaucratic entities have many advantages (e.g., economies of scale), but over time it seems that they develop cancerous growths which hijack the system and suck them for all they're worth until the organism collapses, or purges itself through some sort of chemo (consider the reorganization of the Papacy in the wake of the Protestant Reformation and the Wars of Religion).* Put another way, there is a shift from non-zero sum to zero sum dynamics.

* Keepers of the Keys of Heaven: A History of the Papacy is a narrative which describes the several phases of that particular institution.

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One thing I haven't seen public choice theorists comment on, not that I've looked very hard, is the effect of the Constitution (checks and balances, separation of powers, federalism) and the House and Senate rules on governance.

Congress has veto points all over the place. The original theory was that by making legislation difficult, hasty legislation could be avoided and deliberation would be more thorough. That seems like utter fantasy. What you really get is horse-trading, with the guy controlling one veto point talking to a different guy controlling a different veto point on a different bill, so that end one guy gets his bad ag bill and the other guy gets his bad insurance bill.

The only public choice theorist I've read anything by is James Buchanan, who is a constitutionalist (he calls himself a Madisonian) and a little-government free marketer. It seems to me that those two points of view go hand in glove: constitutionalism and proceduralism make government unworkable and corrupt, and the free-marketers swoop in to claim that government can't work and should be smaller. But they're often the same people.

There's a lot to be said for a more centralized, more majoritarian government. But the US isn't going to change.

By John Emerson (not verified) on 21 Sep 2009 #permalink