THE LIMITS OF DEMOCRACY.

• Author: Schansberg, D. Eric

There's an old saying that democracy is the worst form of government, except for all of the others. Or putting it another way: the best form of government is a benevolent and knowledgeable dictator, except for the problem of finding a good and wise leader. Whatever democracy's strengths, they are relative not absolute, and they are contingent on context--namely, the people being governed, the people governing, and the underlying institutions.

Regardless of political bent, most people have high hopes for democracy, at least if they can manipulate the levers of governance. Even if they can gain control, is the hope warranted? Rational ignorance and irrational ignorance undermine the likelihood of effective policy. Media segregation along ideological lines--following the confirmation biases of consumers--leads to more dogmatism and tribalism than political knowledge and wisdom. From there, a reflexive defense of democracy and popular support for more democracy may lead the majority to defend suboptimal institutions that produce less economic and individual freedom. As such, proposals for less democracy--and more limited government--may reduce the politicization of life and improve policy outcomes.

Rational Ignorance

Public Choice economists point to the foibles of political markets in general and democracy in particular--for example, the disproportionate power of interest groups in some contexts ("tyranny of the minority"); the unjust exercise of power by the general public ("tyranny of the majority"); the problems caused by any system of government where people are fond of using power to hike others' resources; arid so on. In a word, it turns out to be difficult to have an optimistic view of the general public, the elites in political markets, and those who work diligently to influence the process.

One of the most powerful observations from Public Choice is that political activity often features concentrated benefits and diffuse costs. Even when the costs are much larger than the benefits in aggregate, the costs are smaller per person. This subtlety makes their occurrence quite likely. Voters have little to offer in political markets: a modest voice, perhaps a bit of money, and a single vote (Gelman, Silver, and Edlin 2012). So they are "rationally ignorant and apathetic," and will tolerate diffuse costs if they even notice them. Interest groups will passionately pursue such laws and engage in mutually beneficial trade with politicians and bureaucrats. Those engaging in political activity are further motivated to come up with "good stories" for government intervention: rationales for why benefiting themselves at the expense of others is (supposedly) good for the country and the economy. It's easy to imagine and document the misuse of government power to enrich some at the expense of others.

Kolko (1963) provides a useful example of this flaw in democracy, arguing that business leaders, rather than "reformers," were the chief catalysts behind the Progressive Era's regulation of business. He observes that

important business interests could always be found in the forefront of agitation for such regulation, and the fact that well-intentioned reformers often worked with them-indeed, were often indispensable to them-does not change the reality that federal economic regulation was generally designed by the regulated interest to meet its own end, and not those of the public [Kolko 1963: 59].

Some people are paid to be knowledgeable about polities and others treat understanding policy as a serious hobby. But, otherwise, the implications of this model are largely independent of education, income, or other factors. For example, the more educated are in a better position to learn about politics and public policy (or anything else), given their advantage in overall knowledge, greater capacity to process information, and stronger ability to think critically (an income effect of sorts). But learning about any given thing has higher opportunity costs for them (a substitution effect of sorts). In any case, the underlying incentives are similar: because most voters have little to offer in terms of influencing political outcomes (their vote is not decisive in a majority voting system), the costs of becoming knowledgeable about politics and public policy are usually far too high to indulge seriously.

Brennan (2016: 30) reports the stability of political ignorance despite more education and lower-cost information over time. But some groups are relatively impressive in terms of political knowledge: educated, wealthy, those living in the West (the South fares poorly), GOP voters, middle-aged (ages 35-54), male, nonblack, and those who generally favor less government (pp. 33-34). Citizens are more likely to know more about civics and politics when they don't get most of their information from social media (Mitchell et al. 2020).

As knowledge increases, citizens who are male, have more education, have job security, and live in regions with greater income growth are more likely to be pro-free market (Caplan 2007: 28, 154-56). Fortunately, citizens are more likely to vote with higher income, education, and age (p. 157). But relatively impressive knowledge (compared to others) does not imply objectively impressive. And none of this lends itself toward much optimism about governance, even in a democracy.

Public Choice Economics and the Media

Even though most people are "rationally ignorant" about politics and public policy, they still have some incentive to acquire low-cost information that is perceived to be relatively accurate. Consumers will tend to acquire more information when the costs of information are reduced (e.g., lower price or greater access) and the benefits of information are greater (e.g., if life becomes more politicized or one has a greater financial stake in learning about a topic).

The benefits of information include perceived accuracy. But, with limited information in hand, consumers' sense of accuracy may not be objective or accurate. Another complication is that consumers want other benefits from the media--for example, entertainment and affirmation. They find greater enjoyment when information is more consistent with beliefs they already hold. They value news and opinions that affirm confirmation biases or media delivery that lampoons an opposing view (Mullainathan and Schleifer 2005; Gentzkow and Shapiro 2006).

The demand for media inputs is derived from the preferences of consumers. The media are certainly interested in providing what consumers want-namely, some combination of accuracy, affirmation, and entertainment, or what Munger (2008) calls "truthiness." In this sense, the media are responding to consumers and trying to maximize profit, and shouldn't be "blamed" for what they produce, any more than WalMart should be criticized for satisfying customers so well.

As with other businesses, members of the media are pursuing profit and compensation, along with other utility-maximizing goals. On the former, media owners are also interested in other streams of revenue (e.g., advertising) where there may be tradeoffs with what consumers want. Given the nature, influence, and stature of "news," the potential role for self-actualization is greater than with many jobs. Within the media, there are owners, news-producing employees (journalists, editors, radio show producers, TV show hosts), and other staff. As one is closer to "producing news," the nonmonetary benefits are higher. As a counterexample, those selling ads or subscriptions would not receive as much satisfaction as those writing stories or editing content.

The media may be driven by a desire for influence and status, discovering and presenting truth, undermining corruption and working for justice, and so on-even if it militates against profit. So, depending on their audience, employees and owners may find it beneficial or painful (personally or professionally) to provide slanted information to consumers (Baron 2006; Besley and Prat 2006).

The media are concerned with revenues and costs. They want more viewers and face tradeoffs between costs and quality--and price and quantity demanded. They desire to draw consumers away from alternatives, such as watching Netflix or playing board games. Whatever consumers want, there can be tradeoffs for media providers between those wants (e.g., accuracy, entertainment, affirmation) and advocacy. Aside from an inability of consumers to assess accuracy, it is difficult to imagine the media deviating much from consumer preferences.

In recent decades, media have proliferated-from cable TV and satellite radio to "social media" and blogs. But the slow historical evolution of media is a fascinating topic. Stromberg (2004) describes the role of radio from 1920 to 1940 as a relatively efficient mechanism to "educate" voters and promote voter turnout, especially in radio-heavy markets. Gentzkow (2006) describes the impact of TV on voting up to 1970, as consumers substituted from radio and newspapers. Coverage of issues shifted from local toward national, and media focused on information were "crowded out" by entertainment. As a result, voter turnout decreased, especially in local races and off-year elections. Gentzkow attributes 38 percent of the drop to TV. All of this was despite the availability of lower-cost information and hopes of "greater democracy" as a result, especially with advances in civil rights, income, and education.

With better information, more competition and technological advance will result in lower prices and higher quality, including greater accuracy. Gentzkow and Shapiro (2006) find far greater accuracy when the information conveyed is relatively objective-for example, on stock prices, sports results, and weather reports. In contrast, news coverage varies significantly on more complicated topics such as taxes, war, and "climate change." When topics are debatable and complex, consumers are more...