Mandatory Voting: One More Misguided, Coercive State Policy

Dambisa Moyo appeared on Kitco to discuss her recent book and advocate mandatory voting.  She claims that the current American system permits voters' apathetic shirking, with the result that politicians think short-term and pander to the extremes in the two parties.

The question of long-term versus short-term thinking by politicians is related to issues that Madison and Hamilton discuss in The Federalist.  They feared mass democracy because the general public tends to think short-term, so they believed that mob rule would likely result from mass democracy.

Long-term thinking favors free markets; short-term thinking favors coercion and government management. Since America was made more democratic during the Progressive era,  short-term rather than long-term thinking has tended to prevail. When the US was more in the nature of a republic than a democracy, laissez-faire policies that, in the long-term, generated 0.5% to 2.0% annual real wage increases resulted. When the country adopted Progressivism in the late 19th century and adopted the 17th Amendment in 1913, real wages were growing.  Sixty years after the passage of the 17th Amendment, which made election of Senators more democratic by ending their election by the state legislatures, real wages stopped growing.

The reason real wages stopped growing in 1973 was the passage of popular, but ham-handed, regulation in the 1960s.  President Nixon's termination of the gold standard in 1971 did not meet public disapproval, and it led to the ability of sophisticated financial elites to divert wealth to themselves. As well, government beneficiaries, defense  contractors, and other privileged interests have benefited, but the public is mostly unaware that the gains it was earning under free market capitalism ground to a halt after the Great Society regulatory expansion of the 1960s.

More democracy meant shorter-term thinking, just as Madison feared. Republics work better than democracies.

If we look at the 22  countries that have mandatory voting, they are mostly low-GDP or very small countries.  The high-GDP countries that have mandatory voting are small,so the effects of complex lobbying and media manipulation processes, as occurred during the 2008-9 bailout and routinely occur vis-a-vis monetary policy, are also small.  In a small country it is hard to favor policies that favor yourself at others' expense; the country is so small that harm will come to everyone.

As you can see in the chart below, which I copped off PBS,  there is mandatory voting in countries with insane and corrupt legal and monetary policies like Argentina, the Congo, Greece, and Mexico.  The relatively well-run countries with mandatory voting are small.  These include Singapore, Australia,and Luxembourg.

Increasing the number of voters will not change much. It may reduce the time horizon of elected officials.  The cost of voting may reduce marginal voters' time investment in learning about issues.  In small countries costs of voting for misguided policies are quickly borne by everyone, but in large countries  some groups can impose costs onto others.   Thus, voters can be convinced to vote for policies like the minimum wage that harm a small number of people but make themselves feel good. Policies that squash innovation are among these.

Even in a small country like Greece, which only has a population of 11 million, the public wasn't able to foresee that pension underfunding and excessive government wages would soon result in bankruptcy.

Most of the other countries on the list of countries with mandatory voting have not been able to develop because of the sclerotic, big-government bloat that most people believe benefits them. They believe so because they are unable to think long-term.   If anything, forcing more widespread voter participation, which will make the voter base more manipulable because it will force those with the least interest in voting to vote, will appeal  to elite interests that stand to benefit from loose monetary policy and government favoritism.

Country	Age of Eligibility for Mandatory Voting
Argentina	18
Australia	18
Belgium	18
Bolivia	18
Brazil	18
Congo, Democratic Republic of the	18
Costa Rica	18
Dominican Republic	18
Ecuador	18
Egypt	18
Greece	18
Honduras	18
Lebanon	21
Luxembourg	18
Mexico	18
Nauru	20
Panama	18
Paraguay	18
Peru	18
Singapore	21
Thailand	18
Uruguay	18

Source: CIA World Factbook via PBS

Long Live the Electoral College

I favor the Electoral College. Direct democracy was a failure in Athens; it is a failure in the US. The American people are easily manipulated by special interests and hardcore, tyrannical socialists like Bernie Sanders.

American politics has become a debate between two self-interested, elite interest groups: the Democratic Party, including academics, professional interests like psychologists, schoolteachers, and lawyers, and some investment banks; and the Republican Party, including economic special interests like pharmaceutical companies, natural resource interests, agribusiness, and some investment banks.

Direct democracy represents one or the other of the corrupt special interest constellations, so it has failed. Big government is incompatible with direct democracy. The delusion of direct democracy is one of the principle methods that the Democrats use to manipulate the public into imagining that the Democrats' corrupt special interests somehow represent the public,

The public has done much worse since the establishment of the current presidential primary system and the ending of the republican principle by the 16th, 17th, and 18th Amendments.

The founders saw the need for a republican form of government, one that combines majority and aristocratic rule. Overt aristocratic rule by the Senate led to the best American statesmanship, a point that De Tocqueville explicitly observes in Democracy in America.

American workers fared much better before the Progressive era than they do today. There was more freedom; wages increased every year; savings rates were at 30%. The use of eminent domain to steal private property was comparatively rare. There was more income equality (less income inequality) under the republican system than under the Progressive and post-New Deal systems.

One of the safeguards the founders put in place was to limit the power of urban areas. Urban areas are prone to totalitarian, extremist impulses, and we witness that today with Mayor de Blasio's Red Guard-like lynching of history and his eagerness to smash statutes of Christopher Columbus and Theodore Roosevelt.

The states signed on to a Constitution (a) that was limited to delegated powers and (b) that weighted voting power to limit the authority of the totalitarian-tending masses in urban areas. One of the ways it did this was the Electoral College.

The principle of delegated powers was overthrown by authoritarian, urban elites (in the person of Hamilton and the party of the Federalists) almost as soon as the Constitution was passed; the principle in the Declaration that government exists by the consent of the governed was overturned in the Civil War; the republican principle was overturned by the Progressives in the 16th, 17th, 18th Amendments. All of these centralizing policies were mistakes, but only the 18th Amendment, Prohibition, was repealed.

The people of rural America would be fools to favor ending the Electoral College.

Federalism and Elitism

The evolution of Hamiltonian Federalism and the American Constitution preceded the centralization of power that occurred in the 20th century. In order to understand why Americans have been ready to accede bureaucratic and money-creating power to the federal government, it is helpful to look at the country's earliest establishment. In that light, progressivism and post-World War II liberalism can be viewed as extensions of the Constitutional convention in 1787. The Constitutional convention reflected the federalist ideas of Hamilton and Madison and emphasized the importance of a central bank, federal support for business, and raising federal taxes. But this federalist impulse was rejected in 1800 by the election of Thomas Jefferson, and the America of the 19th century was not so much a Hamiltonian creation, was not so much federalist, as it was anti-federalist. Jefferson and then Jackson limited the federalist reforms. Thus, the Hamiltonian vision was very much a 20th century vision with respect to government and economics.

Hamilton was a close intellectual follower of the economic ideas of David Hume. Hume advocated a system that anticipated Keynesian monetary policy. Hume believed that a central bank should have the power to create money via credit and that allocation of the credit should be to a business elite. He believed that merchants, by which he meant bankers as well as manufacturers and traders, were more rational than the general public and could determine the best uses for created money. Hume, as well as James Madison, who wrote about the inflation that followed the Revolutionary War, did not believe in that expanding the money supply would be inflationary. Rather, Hume argued that if the productivity of assets in which the business elite invested exceeded their borrowing cost, then expansion of the money supply would not be inflationary and credit expansion would result in an expanding economy. Madison's argument followed Hume's. He argued that the inflation that followed the Revolutionary War occurred because of the public's expecations about the "redeemability" of the money. This is linked to the argument put forward today that inflationary "expectations" cause inflation.

In England in the 1690s, King William III of England was waging war against Louis XIV of France and needed financing. William Paterson and a group of merchants lent 1.2 million pounds to the king, and in exchange received a charter to found the Bank of England, which gave them the power to issue notes. As the British government borrowed money, it grew and established a bureaucracy. In the early 18th century, Sir Robert Walpole developed a system of allocation of patronage to provide incentives for those in power to cooperate with the king. As Stanley Elkins and Eric McKitrick point out in The Age of Federalism* Walpole's allocation of patronage assured "government of dependable majorities for its policies". English aristocrats in the country opposed the increasing power of the king's court. As Elkins and McKitrick point out, a similar process occurred in America. The Federalists, especially Hamilton, advocated centralized government power, the establishment of a central bank and the use of credit to create a strong economy. The country aristocrats were the Virginians who disliked speculation and finance and did not trust a strong central state.

*Stanley Elkins and Eric McKitrick, The Age of Federalism: The Early American Republic 1788-1800.