A government run by bondholders could prioritize profitability over the well-being of the poorest individuals, leading to negative consequences like slavery and restriction of personal freedoms.
Implementing new supermajority rules, such as a two-thirds vote in the Senate or House, can be beneficial in certain policy areas, such as a balanced budget amendment.
Political polarization in America is amplified by social media and ethnic diversity, creating divisions among different ideological groups.
Deep dives
Effects of Government Run by Bondholders
If a government were strictly run by bondholders, the main concern would be that they would prioritize profitability over the productivity of the economy. This could lead to negative consequences such as slavery, restrictions on personal freedoms, and disregard for the well-being of the poorest and least productive individuals. On the upside, the government would be focused on financial stability and ensuring reliable revenue streams. However, this scenario would lack competition and market dynamics.
Benefits and Drawbacks of IMF Programs
IMF programs, on average, are seen to be beneficial. They can act as a check on government abuses. While bondholders can serve as a check on government power, they should not replace the role of voters entirely. Giving one group 100% voice and power is not a desirable path as it can result in the exclusion and oppression of weaker individuals. A stakeholder theory of the state, where multiple groups have a voice, yields better results. Examples of well-run cities like Singapore, San Francisco, and London demonstrate the benefits of global competition and freedom of movement.
Enhancing Supermajority Rules for Policy Choices
Implementing new supermajority rules, such as a two-thirds vote in the Senate or the House, can be beneficial in certain policy areas. For instance, a balanced budget amendment that requires a supermajority to run a deficit could be a wise choice. However, it is worth mentioning that current constraints, such as Finland's two-thirds rule for tax increases, don't always have a significant impact. Ultimately, public opinion and the will of the voters play a crucial role in shaping policies within a democracy.
Political Polarization in America and the Role of Social Media and Ethnic Diversity
Political polarization in America has increased, and there are several factors contributing to this trend. Social media has played a significant role in amplifying divisions among different ideological groups. The rise of social media has created a sort of federalism of the internet, where like-minded individuals can connect and reinforce their beliefs. Additionally, the increasing ethnic diversity in the United States has also contributed to political polarization. Historical examples highlight that ethnic conflicts often arise when people from different cultural backgrounds disagree with each other. While disagreements may sometimes appear to be primarily among rich, white elites, it is important to recognize that they often position themselves as representatives of different social groups, even if they do not accurately reflect the diversity within those groups.
The Influence of Firm Culture and Equilibrium on Decision-Making
Garry Miller's book 'Managerial Dilemmas: The Political Economy of Hierarchy' applies classic public choice theory to the organization of firms. Miller highlights that within a firm, decision-making can be influenced by disagreements among top managers. These disagreements can lead to preference cycling and pose challenges for rational decision-making. Miller argues that firm culture, which is an equilibrium to a repeated prisoner's dilemma, is crucial for firm success. Coordinating on a good equilibrium that fosters cooperation is essential, and firms that fail to achieve this are more likely to struggle. Miller's insights from studying firm culture can also be applied to understanding how societies function as a whole.
Why is Garett Jones willing to write books about risky topics like the case for reducing democratic accountability? Is it the iconoclastic Mason econ culture? Supportive colleagues like Tyler? Those help, but what ultimately gives Garett peace of mind is that he’ll never have to go hungry because he has a broad and deep knowledge of econometric tools. It’s a skillset he recommends to all research economists precisely so they can take bigger risks in their careers—or at least be well-prepared to shape policy in an unelected position at a central bank.
Garett joined Tyler to discuss his book 10% Less Democracy, including why America shouldn’t be run by bondholders, what single reform would most effectively achieve more limited democracy, how markets shape cognitive skills, the three important P’s of the repeated prisoner’s dilemma, why French cuisine is still underrated, Buchanan vs. Tullock, Larry David vs. Seinfeld, the biggest mistake in Twitter macroeconomics, the biggest challenges facing the Mormon church, what studying to be a sommelier taught him about economics, the Garett Jones vision of America, and more.
