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Machiavelli and U.S. Politics Part 6: Public Choice and Spending


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Public choice theory

Machiavelli would take great comfort in the public choice theory as outlined by economists James Buchanan and Gordon Tullock. Public-choice theory tells us that politicians cannot legislate or spend taxpayer dollars wisely. Why? Because there simply is no incentive to fight powerful interests on behalf of the majority of taxpayers.

This is how it works. On the one hand, the general public remains intentionally unaware of most legislation because keeping informed requires too great an investment of time in proportion to the benefit gained from the information. Even if individuals become aware of harmful legislation, they are unwilling to do anything about it. Why? Because the negative financial impact of the legislation on each person is small (but it adds up), and the cost is divided among all taxpayers.

While the effort required to successfully block one bit of legislation is huge for a single taxpayer to assume, special-interest groups receive rich rewards from legislation designed expressly for their benefit. The benefit, which is taken in very small amounts from millions of taxpayers, is highly concentrated in a much smaller group whether it is a business group, a labor union, the local PTA, or government employees. Consequently, the recipients are willing to invest the resources needed to influence the legislators. Like crime, living off the public dole can pay off handsomely. Public-choice theory goes a long way toward explaining the redistributionist flavor of the legislation that dominates U.S. politics: the victims are many, dispersed, and silent, and the beneficiaries are few, organized, and vocal.

In much the same spirit, Machiavelli delivers the following insight in chapter 3, where he describes how a new ruler can seize the belongings of newly conquered enemies and divide them among his supporters:

One offends only those from whom one takes fields and houses in order to give them to new inhabitants who are a very small part of that state. And those whom he offends, since they remain dispersed and poor, can never harm him, while all the others remain on the one hand unhurt, and for this they should be quiet; on the other, they are afraid to err from fear that what happened to the despoiled might happen to them.

Divide and conquer. Thats the message. Otherwise, politicians would have to face up to Frdric Bastiats succinct and frightfully accurate definition of the state: the great fictitious entity by which everyone seeks to live at the expense of everyone else.

Once again, we can perceive the workings of lie, hypocrisy, and half-truth. The lie is that, when someone seizes the belongings of another, the slate somehow is wiped clean and the new property holder will be secure in the newfound wealth. The truth is that seized property is stolen property. In general, people tend to retaliate against thieves whether they are freelance street thieves or well-armed, uniformed soldiers acting on behalf of politicians. The hypocrisy is that the new owners believe they have a bona fide claim to the stolen property. Is it likely, however, that a ruler who does not respect property rights will respect their bogus claim? The recipients of the stolen booty are likely to be victimized, in turn, the moment it becomes convenient whether their booty is awarded to someone else or confiscated more slowly by taxation. This hypocrisy is covered up, in turn, by whatever slogan or excuse can be manufactured to galvanize the new recipients of the booty into assisting their leader. In foreign policy (Iraq, anyone?), the excuse can be far-fetched: an enemy is about to attack, so wed better attack first (and use their oil money to pay for our attack). In domestic politics, it can be a claim of unfair advantage, unequal distribution of wealth, monopoly control, or greed a malady that never seems to infect those who wield the accusation. No matter how tenuous this half-truth, people accept it if it is convenient.

Government spending: parsimony or liberality?

Machiavelli devotes an entire chapter to the question of liberality versus parsimony in spending. His advice, however, has been disregarded by contemporary politicians. They understand in their bones that Machiavelli was advising rulers who had long-term plans plans defined by decades and dynasties, not by this weeks polls. He did not anticipate the short-term thinking that has been engendered by two-, four-, and six-year election cycles. Consequently, his instructions about fiscal responsibility (chapter 15) sound quaint and out of date:

If one wants to maintain a name for liberality among men, it is necessary not to leave out any kind of lavish display, so that a prince who has done this will always consume all his resources in such deeds. In the end it will be necessary, if he wants to maintain a name for liberality, to burden the people extraordinarily, to be rigorous with taxes, and do all those things that can be done to get money. This will begin to make him hated by his subjects, and little esteemed by anyone as he becomes poor…. When he recognizes this, and wants to draw back from it, he immediately incurs the infamy of meanness. Thus, since a prince cannot, without damage to himself, use the virtue of liberality so that it is recognized, he should not, if he is prudent, care about a name for meanness. For with time he will always be held more and more liberal when it is seen that with his parsimony his income is enough for him….

In response to Machiavellis concern that in the end it will be necessary … to burden the people extraordinarily, todays politicians are guided by a quip of economist John Maynard Keynes in his Tract on Monetary Reform: Long run is a misleading guide to current affairs. In the long run we are all dead. Keynes demonstrated the short-term bias that underlies democracy as a political system. In contrast to todays politicians, who constantly praise democracy instead of individual rights and constitutional limits on government power, one of the nations founders, John Adams, condemned democracy in his writings. In one instance, he pointed out that democracy would ultimately evolve into despotism. In a letter to Jefferson, he added that democracy will envy all, contend with all, endeavor to pull down all, and when by chance it happens to get the upper hand for a short time, it will be revengeful, bloody, and cruel.

Using John Adams as a springboard, we can appreciate the observations of Austrian-school economist Hans-Hermann Hoppe. In his book Democracy: The God That Failed, Hoppe observed that even monarchy is preferable as an alternative to democracy:

It is worth remembering that any prince who failed in his primary duty of preserving the dynasty who wrecked or ruined the country, caused civil unrest, turmoil and strife, or otherwise endangered the position of the dynasty faced the immediate risk of either being [sic] neutralized or assassinated by another member of his own family. In any case, however, even if the accident of birth and his upbringing could not preclude that a prince might be bad and dangerous, at the same time the accident of a noble birth and a princely education also did not preclude that he might be a harmless dilettante or even a good and moral person. In contrast, the selection of government rulers by means of popular elections makes it practically impossible that any good or harmless person could ever rise to the top. Prime ministers and presidents are selected for their proven efficiency as morally uninhibited demagogues. Thus, democracy virtually assures that only bad and dangerous men will ever rise to the top of government; indeed as the result of free political competition and selection, those who rise will become increasingly bad and dangerous individuals, yet as temporary and interchangeable caretakers they will only rarely be assassinated.

It appears that only gridlock in Washington will prevent each successive president from outdoing his predecessors in the arena of profligate spending. In John Densons book Reassessing the Presidency, economists Richard Vedder and Lowell Gallaway offered tacit proof of Hoppes theory in an essay entitled Rating Presidential Performance. In the essay, Vedder and Gallaway used various criteria to rank U.S. presidents in terms of the economic damage they unleashed while in office. They presented their rankings in a series of five charts taking into account the following criteria for each presidents term in office: the governments share of the nations total output, change in the size of government, the inherited size of government, and the presence of inflation.

Viewing the data in the charts, one cannot help but notice that there has been an increasingly depressing trend toward fiscal irresponsibility since the founding of the republic. As a remarkably ironic surprise, however, President Clinton was ranked as fiscally more responsible than all of the following presidents: Richard Nixon, Ronald, Reagan, George H.W. Bush, Lyndon Johnson, Herbert Hoover, Woodrow Wilson, Abraham Lincoln, and Franklin Roosevelt.

Consequently, we should sing the praises of gridlock. While their reputed enemy President Clinton held office in the 1990s, it seems that Republican congressmen were able to achieve the slight victory of curbing government spending by a minuscule amount. Once they possessed control of the White House and Congress, however, Republicans opened wide the sluice gates of government spending. By every measure of spending, domestic or military, Republican-controlled government has become so saturated by pork that pigs are squealing everywhere. This ensures that the current president, George W. Bush, will have the honor of bumping along on the murky bottom of the fiscal cesspool. He will be in the company of the most fiscally irresponsible presidents in U.S. history; Presidents Hoover, Wilson, Lincoln, and Franklin Roosevelt all managed to appear in the bottom six slots in every one of the Vedder-Gallaway charts, with only one small exception in the case of Herbert Hoover.

Here as elsewhere, we can see the pattern of lie, hypocrisy, and half-truth. All of these presidents have claimed to hold the financial interests of Americans close to their hearts. Each of them, however, has used taxpayer dollars to subsidize some special interests over others never cutting spending across the board in any significant amount. When their opponents in another political party point this out, they deliver a series of half-truths to rationalize their willingness to spend other peoples money each one, in turn, rhapsodizing about the merits of the special interests they serve. These interests include poorly run businesses in need of tax-fed subsidies; spoiled union members who refuse to compete honorably by offering products of value to consumers; middle-class families seeking subsidies for college tuition or secondary schools; government employees who oppose cuts in spending programs they administer; law-enforcement agencies whose members gain job security by persecuting persons who commit crimes that have no victims; and members of the military-industrial complex who lick their chops at every multi-billion defense system and refuse to pull back from the overextended network of ineffective, war-provoking bases spread like a gill-net around the world.

Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6

Harvey C. Mansfields translation of The Prince is the source for quotations unless otherwise noted.

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    Lawrence M. Ludlow provides international location analyses and marketing services to corporate clients. He holds an M.A. in medieval studies from the University of Toronto’s Centre for Medieval Studies and has lectured on manuscripts, early printing, and art history at the Newberry Library in Chicago and at the San Diego Public Library.