Pressures to be Selfish

The last column described the philosophy of economist James Buchanan as it applied to the United States. What is its relevance to New Zealand?

When I looked at James Buchanan’s theory of public choice, I was struck by how it reflected an American institutional setting; Our political system is different. Even so, our colonial mentality meant his economics and social philosophy was influential on ‘Rogernomics/Ruthanasia’ in the 1980s and 1990s generating patterns of thinking which persist to this day.

A critical assumption of the theory is that individuals use the political system to pursue their self-interests and do not have altruistic goals such as the public good. When the assumption is used to evaluate market behaviour, it suggests self-interest can produce reasonable social outcomes in certain circumstances. Buchanan showed that when self-interest is applied in the more-monopolistic political system it leads to poor quality outcomes. The theory has very little empirical evidence to support it. Believers just know it to be true.

In fact the evidence shows that we are a mix of self-interest and altruism and that the latter is involved in many human interactions including commercial ones. You trust your doctor to act in your best interest even though you pay her. The vast majority of doctors do not exploit you (sadly a few do). Some time in your life you probably met teachers for whom you had the greatest respect. Yet the theory says that when a doctor claims that the health system needs fixing or a teacher says the education system is failing, their lobbying is entirely in their self-interest and should be disregarded. Better to have the system run by generic managers, who are not beholden to professional interests disguised as ethics while their ignorance is transparent.

The theory has one exception. The Rogernomes regarded themselves as philosopher kings who acted in the interests of society. They assumed they were not beneficiaries of their policies or were so only by accident, so they were not driven by self-interest. Yeah, right.

Besotted by public choice theory and certain of their wisdom, the Rogernomes restructured many of our public institutions, assuming that those who operated them acted only in their self-interest, thereby shifting the way we regulated society from less professional responsibility to more accountability.

The consequence has been to increase the degree of selfishness in society. Self-interest drives out altruism. Institutions based on self-interest encourage that sort of behaviour. And they reward with promotion those who exhibit the greatest selfishness.

Friends constantly draw my attention to managers who behave badly towards those they manage (and obsequiously towards those who manage them). Unfortunately we have no systematic evidence, but there is a belief that such thuggery was much rarer forty years ago. There is also a view that the fraud and misbehaviour we see is more frequent today because of the change of the public ethos towards selfishness, although perhaps it existed then but was not so obvious. We certainly are a more litiginous.

The oddity of the Rogernome’s approach is that while they said they were diminishing the power of the state – and their privatisations did to some extent – the core state has become more powerful and repressive. The philosophical underpinnings of Buchanan explain why.

The last column described the importance the theory gave to (US) state rights, which turned out to be concerned with protecting property with the expectation that this gave greater freedom to those with capital. However, such freedom has to be enforced by state power; in America they use state troopers to break up a strike or a human rights demonstration. To protect property-power, it is necessary to weaken people-power.

The new institutional arrangements make it harder to change the pro-property course of the government, while at the same time undermining popular confidence in government. As the state withdraws its support and protection roles, people see it increasingly imposing on them without any offsetting gains. An easy resolution is the social conservative one of repressing behaviour that is not widely approved, ranging from punitive (if ineffective) measures against criminal behaviour to punitive (and effective) measures against beneficiaries (and certainly avoiding addressing inequality).

In the 1990s, the ACT party chose to extend its mandate by promoting social conservatism. It was an admission that there were not a lot of people who truly support their core values and they have to look for allies. Even so, many thought this was odd because market liberalism is usually associated with social liberalism. However, right-libertarianism makes no such connection. Its purpose is to defend property by any means available.

Did the Rogernomes understand the course they were embarking us on? I can identify a handful who were right-libertarians and I suspect another handful were too. But the vast majority of Rogernomes were probably not. They just did not understand what they were doing, captured by the latest fashion just as they adopted economic policies which failed. Some Rogernomes were, of course, pursuing their self-interest by joining with the powerful.

Are we irredeemably committed to the path that the right-libertarians have set us upon; one which could take us to the Hobbesian ultimate of a society in which life is solitary, poor, nasty, brutish, and short? As long as we retain some altruism and associated decencies perhaps not, although it may be that selfishness will eventually overwhelm such virtues.

On the other hand, it is proving very difficult to reverse the trend, notably in the public services. (That talk about ‘state services’ says that the role is serving the state rather than the public.) When the public demands some action to address a social failure or need or to make a better society it is invariably told that the additional taxation needed to fund it is not available.

I am struck how so much of the election campaign is about offerings to encourage targeted groups to vote for the parties in their self-interest. This is exactly what the Buchanan school feared, although it is their policies which have driven us towards such behaviour.

Oh, for someone with the vision expressed by John F Kennedy: ‘ask not what your country can do for you; ask what you can do for your country.’