September 28, 2011 1:31PM

Orszag and the People

Former OMB Director Peter Orszag has written a provocative New Republic essay calling for less democracy. Most people, myself included, would be inclined to dismiss his effort as an obviously self‐​serving call for rule by progressive experts. I believe that temptation should be put aside. After all, in 1789 and afterwards, the American people have not created a democracy but rather a republic. So we should address Orszag’s arguments on their merits while asking whether he is proposing a “Republican remedy for the diseases most incident to Republican Government.”

A bit of historical context offers a way into Orszag’s argument. Progressives did favor expert influence over government, but they also plumped for direct democracy; the referendum and the initiative were progressive reforms. They believed direct rule of the people would bypass corrupt and “reactionary” state legislatures who refused to enact progressive legislation. Orszag does not propose reforms introducing direct rule; he is thus left with the expert aspect of the progressive legacy. Why not more democracy?

The people are dysfunctional. Orszag reasons that legislative gridlock does harm to the nation and will do more in the future, that gridlock is rooted in polarization of the masses and not just of elites, and that polarization arises from people living and interacting only with people who share their views. Representatives in DC reflect these divisions. The problem, according to Orszag, is not in our agents but in ourselves. In response, we should sever the link between policymaking and the problematic people.

You need not equate the voice of the people with the voice of God to find Orszag’s analysis unconvincing. Is it really so surprising that the people are so polarized? For decades, we have lived under a redistributive government. Your gain is my loss and vice‐​versa. The politics of redistribution also foster a rhetoric of blame and contempt. You are the cause of my problems and vice‐​versa. In the zero sum struggles around the redistributive state, people begin to see each other as friend and enemy. Big Government leads to Big Polarization.

Orszag offers three general ways around the people and their representatives: automatic policies, backstop rules (like the sequester governing the supercommittee), and institutions more independent of the dysfunctional people. I focus on the last of these.

Is the independent judgment of experts what we need? Policies are means to ends, and the latter are tied to values. For example, Cato experts often argue for a policy of deregulation to limit government and thereby increase individual liberty. Experts have special knowledge about means not ends, about the effects of policies and not about the worth of values.

However, Orszag might say, Americans agree about ends/​values. Everyone wants more, not less, economic growth. Politicians (and their constituents) bicker over the policies needed to bring growth; in contrast, experts agree about the effects of policies. If we turn over policy to experts, we will get policies that achieve the ends everyone wants. Is this true? Consider for a moment the expert debates about the stimulus, the most recent policy designed to renew growth. Would you say those debates reflect expert agreement or a polarization not unlike what Orszag ascribes to the public?

Orszag’s case for more independent institutions cites policies that involve ends as much as means, values as much as facts. Tax policy might be given to a board of independent experts similar to the Federal Reserve. But making tax policy requires making tradeoffs between liberty and equality (among other values). Why would a board of experts have special knowledge about the proper tradeoff between those two cardinal values? In fact, mainstream economics assumes such values and their proper relationship cannot be known. Hence, economists begin with exogenous preferences which are not a matter of knowledge but rather, of will. The most important decisions about tax policy are simply not within the competence of experts.

You might think that Orszag takes as his slogan “taxation without representation” but that would be unfair. He does allow that the legislature could overrule his various independent institutions and their judgments about ends and means. But the experts would set the agenda, and political scientists have found that those who set the agenda usually win the policy battle. So actually Orszag is proposing “taxation (usually) without representation.” The original Tea Party Patriots of 1773 might wonder: has it really come to this?

Orszag does have a point. Americans do deeply disagree about public ends and means and thus about the size and scope of government. Why must all those disagreements be resolved in Washington? Must we always be at one another’s throats? Actually, no. The same political tradition that promised “no taxation without representation” also endorsed a division of power between national and subnational governments. Federalism offers an chance for people who deeply disagree about values to live at some distance politically from one another. We are too centralized and too much a nation for the people that we have become.

But we can and should deal with this challenge by drawing on, not repudiating, American political culture.

Update: I did a podcast on this topic with Cato’s Caleb Brown.