Liberals campaign for open government data because they believe that increased transparency will lead to a restored trust in government. There are liberal critiques of this liberal theory, including one notably by Aaron Swartz.
On the other hand, those of us who seek limited government tend to believe just the opposite. Transparency, we believe, will lead to limited government because the more people see the reality of their government, the more they will conclude that it’s too expensive and it does not work. There is also a libertarian critique of this libertarian theory.
The theory that government transparency, and in particular better access to government spending data, will lead to limited government is premised on the idea that the reason the public doesn’t press for an end to out-of-control government spending—whether on defense or entitlements or anything else—is that they are rationally ignorant.
If the cost to citizens of informing themselves about public policy is higher than the potential benefits of such knowledge, the theory goes, then the rational course of action for a citizen is to not invest in acquiring such information and thus to remain ignorant. Sadly, it’s a fact that there is a near-zero probability that any action an individual takes will have a decisive effect on any given policy outcome—whether it’s voting or calling congress or tweeting. Citizens, therefore, rationally choose to be ignorant. The result is an information asymmetry, and special interests take advantage of the situation to press politicians to grow government in their favor and at the expense of the general public.
Greater access to government data, the theory posits, can help undo the information asymmetry and weaken the dynamic of concentrated benefits and diffuse costs. The availability of such data—and its dissemination by savvy activists through popular information channels including Wikipedia, blogs, and the media—would lower the cost that citizens face to inform themselves about public policy. As a result, more citizens would rationally choose to inform themselves, and more informed citizens, being rational, would demand less government (at least less government spending that does not benefit them directly).
The idea is not that once informed above a certain threshold, citizens automatically become libertarians. It’s simply that knowing that a particular bill or regulation will cost their family, say, $500, citizens will, on the margin, be less likely to favor it. And citizens will, also on the margin, be more inclined to express such views–whether by voting, or calling congress, or tweeting. The cumulative effect of these small actions will press politicians to change course toward smaller government.
This is the theory, and it’s a theory that I not only subscribed to, but that for a long time I evangelized. I spent a considerable portion of my career working to liberate government data in order to achieve more limited government. So it gives me no pleasure to come to the conclusion that it’s probably wrong.
The lynchpin of the theory is that citizens will act rationally. It assumes that if citizens are shown evidence that a particular bill or regulation is very costly, or that a government program does not perform well, they will, at least on the margin, take some action to oppose it.
But here’s the rub. How is it that rational citizens faced with an information asymmetry allow big government to take root in the first place? It’s only later, when they are exposed to the folly of their ways, that citizens demand limited government. This doesn’t make sense. If anything the opposite should be the case.
A rational person that is ignorant about a matter will nevertheless know that he is ignorant, and he will also know that insiders will have more information than him. His rational course of action, therefore, will be to remain skeptical of insider proposals that bind him and withhold consent until he is convinced that a particular course of action will not harm him.
Take the paradigmatic case of an information asymmetry: a used car dealership where the salesman knows more about the cars than the customer. How does a rational person behave in such a situation? The answer is skeptically. A salesman will have to convincingly demonstrate a car’s quality, or otherwise warranty it, before the customer will buy. The bigger an information asymmetry between buyer and seller, therefore, the less demand we should see for a product.
Why should we expect anything different from citizens faced with proposed bills and regulations and programs of which they are rationally ignorant? Not knowing which are the lemons that will cost them dearly, and which are the good ones, we should expect citizens to be consistently skeptical and resistant to government spending from the start—not acquiescent or enthusiastic.
More to the point, being aware that there is an information asymmetry that puts them at a disadvantage, we should expect rational citizens to give fewer powers to politicians they do not trust. The result of asymmetric information, given ignorant but rational citizens, should be not only less government, but a constitutionally constrained state.
But this is not what we see. Indeed we see the reverse. That doesn’t bode well for a theory that depends on citizens acting rationally.
Believing things that are not true can feel good for ideological or emotional reasons. So as long as the cost does not outweigh the benefit of the fine feeling, it is rational to indulge in irrational beliefs. This is what Bryan Caplan calls rational irrationality.
For example, believing in ghosts is virtually costless, so if it makes one feel good, it is rational to hold that belief. Indulging in a belief that evolution is a myth is also virtually costless, unless you intend to make your living in the life sciences. As a result, many hold this belief without a problem. On the other hand, a belief that gravity is a myth would be costly for anyone, therefore few hold this belief.
As Caplan has shown, politics presents people with an opportunity to consume irrational beliefs very cheaply. This is because they do not have to completely internalize the cost of errors the way they would if they stopped believing in gravity.
For example, what is the material cost to a citizen of supporting a bad policy that will cost him $5,000? The answer is not $5,000, but $5,000 multiplied by the probability that his support—whether a vote, a call to congress, or a tweet—will have a decisive effect on the policy outcome. Because the probability that his action will be decisive is nearly zero, the material cost to him of holding an irrational belief is essentially zero. As a result, people will believe whatever makes them feel best about politics and act accordingly, and the aggregate costs of the political outcomes are borne by everyone.
Take the irrational belief that vaccination is the cause of autism. People with this belief may face some private cost for refusing to vaccinate their children, but they don’t internalize the much larger social cost of a weakened herd immunity. So, they consume more of that irrational belief than is socially optimal.
As far as politics are concerned, people are rationally irrational, perhaps in addition to rationally ignorant. While more open government data might address rational ignorance, it does nothing about rational irrationality. For example, a supporter of Elizabeth Warren and her “pay-it-forward” rationale for taxation who is shown uncontroversial data about the proportion of federal spending on war-making relative to police and fire will be as likely to change his beliefs as a “truther” who is shown a copy of the 9/11 report or a “birther” who is shown a copy of President Obama’s birth certificate—even on the margin.
This is not to say that people with such irrational beliefs lack a capacity for critical thinking. Indeed they are perfectly rational when they face the full cost of error. Someone who supports protectionist and anti-immigrant policies will in his own business buy foreign inputs and use migrant labor. In that case, though, they face the full private cost of their errors, so they can’t afford to turn off their rational faculties.
Unfortunately, as Caplan has also shown, the irrational beliefs citizens adopt are not random, but biased in particular ways unfavorable to a limited government perspective. Markets are the alternative to government, and people demonstrate a consistent tendency to underestimate the benefits of market mechanisms to allocate resources. They hold such views in the face of evidence to the contrary in their daily lives.
Ignorance, therefore, is not the problem; the problem is rooted in irrational biases. More information alone is not going to change beliefs or political behavior. Indeed, it could make things worse. Imagine a politician who knows full well that the minimum wage is inefficient, but dutifully votes to increase it every time he has the chance because that’s what his irrational constituents demand. In a world of perfect transparency, where his real views are exposed, such a politician would be tossed out and replaced with a true believer.
One possible antidote to irrationality is education, which should not be confused with increased information. People grasp subtle concepts like comparative advantage and opportunity cost only after careful study (even if they also lose that grasp to their biases fairly quickly). A central feature of the libertarian movement has been educating the public about economics. Though it often seems like an uphill battle, at least it might not be a completely ineffective way to affect political beliefs. Another way the libertarian movement has sought to effect change is by attempting to influence elite opinion shapers and decision makers. This is also a difficult path to travel, but at least elites are more educated—and more libertarian—than the general public.
It would be a wonderful thing if government transparency presented a new path to limited government, but it doesn’t. It can help achieve less corrupt government, which is great, but it won’t change people’s suspicions about markets.