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Why Libertarians Don't Win: the Pareto Optimality of a Majority Loss

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Why Libertarians Don't Win: the Pareto Optimality of a Majority Loss Why Libertarians Don’t Win: The Pareto Optimality of a Majority Loss Robert Gmeiner Florida State University Abstract Contemporary American politics is a case of a two-party system with substantial dissatisfac- tion on both the left and the right. There has long been an unsuccessful libertarian minority, despite occasional claims of widespread support. Treating these claims as valid I develop a model of political competition relying on asymmetric preferences to show why libertarian candidates and positions still tend to fail. This occurs even in the presence of majority support for the libertarian position on any given issue. A key result is that Pareto efficiency of the outcome may not be what is best for society. 1 Introduction Political parties generally have comprehensive platforms and their successful candidates for office tend to be very similar to one another in their positions. In the United States, individual candidates choose their respective party and obtain its nomination through a primary election, but the winners within each party tend to hold very similar positions to one other. A common talking point of the Libertarian Party is that many people have libertarian positions. Gary Johnson, the 2016 presidential nominee for the Libertarian Party made a statement to this effect near the beginning of his campaign.1 In this paper, I treat this claim as valid and show why libertarian policies are still unlikely to be adopted and their candidates unlikely to be elected. Whether or not Johnson’s claim is true is irrelevant because the outcome likely would not be very different. Not only does the Libertarian Party seldom win elected offices, but also libertarian-leaning politicians in other parties do not enjoy much legislative or policymaking success, even when elected. In the United States, where 1Chandra, Sho “Gary Johnson Says Most Americans Are Libertarian But Don’t Know It” Bloomberg, 4 June 2016, Bloomberg “Gary Johnson Says Most Americans Are Libertarian But Don’t Know It” http://www.bloomberg.com/politics/articles/2016-06-04/gary-johnson-says-most-americans-libertarian-but-don- t-know-it, accessed 6 March 2018 1 candidates choose the party (as opposed to parliamentary systems in which party leaders select candidates for the party), some libertarians may win office, but do not exert considerable influence. Listening to contemporary American political discourse, one could easily be led to believe that the Democratic Party supports big government and the Republican Party supports small government. However, comparing the overall positions of each party on different issues reveals that each supports big government in its own way. For example, Democrats tend to support more government involvement in health care, welfare programs, and tobacco regulation. Republicans tend to support more government involvement national defense, and recreational drugs (to restrict and interdict them). Many libertarians support less military spending, less health care and welfare spending, and less regulation of both tobacco and other recreational drugs. The question of why each party adheres to a given position on specific issues is not relevant to this paper. What is relevant is that each major party supports some intervention and liberty , but in different issues. My goal is to explain why more libertarian policies are not adopted and why intervention is so prevalent across the board when each individual intervention is benefits only minority of voters. For the purposes of this paper, Democrat and Republican each refer to the established base of the respective party, while libertarian refers to persons of any affiliation, but hold libertarian views. I do not use the term libertarian to refer exclusively to the Libertarian Party. In this paper, I develop a model of political competition that explains both elections for legislators and the outcomes of the legislative process. My model is one of political interaction that explains the stability observed by Tullock (1981), nonconvergence of positions which numerous authors have noted, and it relies on ideology and preferences more than on specific policies. I explain why some ideologies succeed and why some fail, particularly libertarian ideologies. The framework I adopt is one of consumer choice with assumptions consistent with collective decision making as opposed to individual. The main point of this model is that there are multiple political factions, each of which desires intervention in a few areas and nonintervention in others. As long as the groups numerically capable of forming a majority coalition desire their favored interventions more than other desired noninterventions, the result will be more intervention in all areas. Very importantly, this holds even if a majority favor nonintervention in all areas when including those not in the majority coalition. The model I develop shows to some degree why libertarian candidates do not win, it also shows why interventionist policies across the board are successful even if any single intervention is favored only by a minority. Asymmetric preferences for government involvement are central to the ideas I develop in this paper. I contend that the two major political parties will support more government involvement in different things, but will both favor a fairly large, heavy handed government. This can be seen in the administrations of Republican Presidents Ronald Reagan and George W. Bush, both of whom were considered to be conservatives, but who presided over very large administrations with large budget deficits and significant government involvement in many spheres of life. While there was less government involvement in the some things, there was still a considerable 2 amount in many others. In contrast, the administration of Democratic President Bill Clinton was smaller in terms of personnel and spending, but still showed higher tax rates and considerable government involvement in different areas. I first provide an overview of the assumptions underlying utility functions and cost functions, which necessarily have characteristics that differ from individual market exchange. I then provide a mathematical proof of the aforementioned main point. Following the proof, I outline a static model and caveats that could present problems. I conclude with examples from recent American political history and implications of the model for societal welfare. 2 Relevant Literature There is much literature on spatial models of voting. Downs (1957) presented a two-party system model in which the median voter’s preferred outcome will be chosen as candidates move closer to the median voter’s position in order to attract more votes. There have been arguments for and against the validity of this median voter model, but considerable evidence indicates that it is valid in many circumstances (Holcombe, 1989). Stokes (1963) offers criticism of the Hotelling-Downs model and does not reject it outright, but believes that there are missing elements that must be treated as explicit variables. Political conflict may be focused on one single issue, but often it is not. The model I formulate in this paper accounts for issues of varying importance as well as multidimensionality. Tullock (1981) raises the issue that models of multidimensional competition predict instability in government, but much stability is observed in practice. This has been modeled in the marketplace by Hotelling (1929). Taking this reality of stability to political interactions, Tullock discusses coalition building and logrolling. Tullock correctly states that much logrolling occurs, but notes that formal logrolling coalitions are rare. Tullock also cites examples from European legislatures, specifically the English legislature since 1900. Government favors do not exclusively go to constitutencies represented by members of the winning, or government, coalition. Marginal constituencies do particularly well, with fiercely loyal constituencies faring worse. He mentions R.H. Crossman’s memoir which states that safe Labour districts receive housing funds consistently, but then says that there is no noticeable geographic shift in spending when Labour is replaced by the Conservatives, but leaves open the question of why this is so. The model I develop addresses this question. In Tullock’s view, observed equilibria are inefficient because conditions needed to change the equilibria are too strong. The conclusion I reach in this paper is that equilibria are not good for society regardless of any efficiency criterion, but that this is not because of excessively strong conditions on changing the outcome. Rather, it is a natural outgrowth of the preference structure. Enelow and Hinich (1989) present a model in which uncertainty about candidate positions prevents the convergence predicted by Downs’s model. Others, such as Berger, Munger, and Potthoff (2000) explain why Downs’s median voter model’s prediction of convergence does not 3 hold and actually predicts divergence. This explains why candidate positions and ideologies do not converge, but it leaves open the question of how decisions are actually made and policies chosen. This is a relevant question because political decision making is a repeated game and, regardless of candidate divergence, one position must be chosen. Relying on this conclusion that candidate positions intuitively should diverge, even in a unidimensional setting, I explain electoral and legislative outcomes. Hinich and Munger (1992) presented a spatial theory of ideology as opposed to a spatial model
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