Institutions

The conventional wisdom is that the nation faces difficult economic choices, and that we cannot make progress on our collective challenges without imposing losses on someone. But in a provocative New York Times column, Cornell University economist Robert H. Frank argues that many important problems can be solved “without requiring painful sacrifices from anyone.”

Frank gives the example of highway congestion. Roads are crowded because they are generally free. Yet many Americans would gladly pay to avoid horrendous traffic delays. As Frank points out “A modest congestion fee, administered with E-ZPass-style technology, would raise needed revenue and provide an incentive to use crowded roads only when the benefits outweigh the social costs.” The congestion fee would be a burden for low-income households. But, Frank suggests, “because the gains far exceed their price, we can redistribute them so that everyone comes out ahead.” The more general point is that there are many potential reforms where the winners could compensate the losers and still be better off. Yet such “painless” solutions often fail to generate political support. Why not? Frank observes that the reforms may upset some ideologues and lobbyists, but that is at best a partial explanation.

Several years ago, Yale political scientist Alan Gerber and I invited leading scholars to contribute to an edited volume (Promoting the General Welfare: New Perspectives on Government Performance) on the failure of government as an institution to solve collective problems. Factors that our colleagues nominated for consideration included: the tendency of political competition by cohesive, differentiated parties to raise the political stakes in policy debates and inhibit the search for pragmatic solutions (Morris Fiorina); the failure of the federal system to function as a true “laboratory of democracy” that develops and spreads effective policy innovations across jurisdictions (Mark Rom); the failure to devise congressional rules and procedures that encourage the adoption of socially efficient laws (Sarah Binder); the elimination of analytic research bureaus like the Office of Technology Assessment (Eugene Bardach); and the tendency for electoral incentives to detour lawmakers “into small-bore distributive politics and feckless position taking” (David Mayhew).

To this list of factors, Gerber and I added another: developing novel solutions to promote the public good can be politically risky, because it requires a policy innovator to shift public opinion. This effort at persuasion is akin to making a risky investment, which can generate rewards for the investor or go sour. In a commercial setting, such an investment often enjoys legal protections such as patents and trademarks. But in politics, there is nothing to stop an opportunistic opponent who observes the changes in public opinion produced by his political rival’s effort to build support for a new policy from developing a similar proposal of his own. If this copy-cat behavior is successful, the policy innovator will, at best, capture a small share of the credit for the result of his efforts, reducing the incentive to develop the policy innovation in the first place.

Gerber and I coined the phrase “Zero Credit Policymaking” to capture this political failure. As we wrote, “If problem solving is an unintended by-product of political competition rather than something pursued for its own sake, and if politicians are motivated to do what wins elections, a tension exists in our system of collective choice. From the standpoint of social welfare, a policy should be adopted if the benefits are greater than the costs, whereas from the standpoint of a politician, a policy should be adopted if the political benefits to the politician are greater than the political costs. Good policies that have large social but small political benefits may not find a political sponsor.”

Can anything be done? Focusing on Congress’s role, Yale University political scientist David Mayhew came up with a thoughtful list of reforms: streamline legislation (no more 1,000 page omnibus bills!) to help citizens better understand what their government is doing; open up congressional primaries to all voters regardless of party; encourage members to raise at least half their campaign contributions in their states or districts; package C-SPAN coverage in small segments that voters and the media can digest; and cripple partisan gerrymandering. All good ideas to promote the general welfare, but unfortunately they have not gained much traction.