PUBLIC CHOICE I—THE MEDIAN VOTER RULE
During the election season, many Catholics wonder why so many Catholic politicians do not vote according to their professed beliefs. It is disheartening to have one famous Catholic politician say publicly that he takes his faith very seriously and a woman’s right to choose abortion very seriously as well. The answer can be found in a relatively new school of economics called Public Choice. Since economics studies the actions of people in general, the laws of economics, logically, apply to the actions of persons in public office as anywhere else. In this case, we will study what is called the “median voter rule.”
A normal statistical curve looks somewhat like a camel’s hump with a line straight up the middle. That middle line is the average. Assuming that this is a curve of voters, 68.2% of all the voters fall within one standard deviation of either side of this average voter. This is the majority. Now, the United States, not being a Catholic country, cannot boast of the average voter agreeing with the most of the tenets of the Church on moral-political issues. So unless the candidate is from a state or district where the mean (or median) voter agrees with the Church on public issues, he will not be able to get majority support. This is why, at times, a candidate will speak to religious groups and assure them that he agrees with them, and then, if he happens to get elected, votes inconsistently—if he wants to keep his job. This politician might have gotten elected the first time by avoiding any controversial stands, so that even the median voter liked him. But in office, a stand must be taken on issues that appear in legislation. This becomes public record, and that is when we see a movement to the “center,” i.e., waffling on serious issues. After all, who wants to come home and tell his wife that after moving all the way to Washington, they now have to go back home and he has to get a real job?
PUBLIC CHOICE II—PUBLIC SERVICE
Now let us talk about the notion of public service—the idea that governmental people are in their jobs only to help others.
One of the basic premises of economic theory is that people generally act in their own interest. Contrary to what you may have heard, this is not necessarily a bad thing. If we did not act in our own interest, we would not be able to put food on the table, or go to the doctor when ill, or go to school, or marry the person with whom we are in love. The world would be topsy-turvy. We would work for no pay and starve to death; we would die of a curable illness, and our married life would be a living hell. This does not preclude working for others—as any legitimate occupation is automatically done for others, or no one would pay you for it.
But things change when it comes to working for the government, and especially on the margins. Self-interest leads men to produce products and services their customers need or want. In government, self-interest produces programs that some people want at the expense of others, with one main beneficiary being the one who administers the program for pay. In the market, when a product or service is no longer wanted or needed, people stop purchasing it, and the business fails, or produces another one that people are willing to buy. In government, if a program no longer works, it does not go away, but continues year after year, wasting more and more of peoples’ hard-earned money, and, in some cases, such as welfare dependency, ruining peoples’ lives. On the margin refers to when a politician gets stuck in a dilemma. Suppose a politician takes a strong stand in favor of issue A. Suppose then his district changes its views and generally opposes issue A. If he continues his strong stand, he will get voted out. This means he will have to change if he wants to stay in office, or he will have to waffle on it to make his stand acceptable to the new demographic in some way. This will lead him to make distinctions, subtleties, etc., which will make him seem to support both sides. His new stand will depend on how you read his remarks.
Why, then, do so many Catholics look to government as the solution for social problems? The answer seems to be that they have fallen for the “racket.” Politicians would not get elected if they admitted what they were up to, so they must persuade the population that they are out for the public interest. Since most of the people have never studied these things in any serious fashion, they believe the propaganda. This is not to say that there are not any sincere politicians out there, but, again, on the margin, they will be exposed.
Since economics is a part of a science of human action, we can relate some basic human behaviors to their effects on economics. One of these is the penchant for what is called “instant gratification.” People generally have what is called a high time horizon, which means that they prefer things now rather than later. Would you like $100 dollars now or next June? Obviously you would want it now. If I am going to put it off, you will want it with interest, because $100 dollars in June is worth less than $100 now, firstly, due to inflation, and secondly, the wait.
But a good person must learn to temper this natural human tendency for instant gratification, and the failure to do this leads to a lot of trouble. Let’s take a few examples.
1. Two 17-year-olds are dating, and they both realize that, as far as they can tell, they are meant for each other. The natural tendency of those who have found each other is marriage, and with it, conjugal privileges. But that means that these two lovebirds have to wait until circumstances permit the tying of the permanent knot, hardly the case at 17 in this modern society. But the drive for the conjugal privileges is there now. If they have no ability to temper this above named tendency, they will lose their virginity, and a possible pregnancy will result when neither is ready to care for this new life.
2. A person is raised in a comfortable family. The person is not spoiled, but he or she has always had whatever he or she needed. The parents were good providers. They went on nice vacations, the person went to private schools, got music lessons, etc. Then they graduate from college and get an entry-level job. They are used to living the comfortable life, not only for their whole childhood, but even in the college they went to where everything was provided for them. They did not have to cook or work, etc. But now their salary cannot provide that type of life. They are paying a high rent, which eats up a large part of their pay. Then there are the utilities, transportation, clothing, and so forth. To the rescue comes the credit card, or even the bank loan for that house so that the person does not have to live in an apartment. The result—massive debt. Why? The failure to control the time horizon has resulted in a failure to wait until, like his parents, he could afford to live a better life.
3. Every year or quarter accountants issue the financial statements of companies. The statements have their purpose. They give a picture of the health of the company. But what happens if the company lost money this quarter? Well, to the trained eye, factors can be seen that can explain the losses. Coupled with other sources, and an examination of the economy, one can make a reasoned judgment about what the company should do, or stop doing, to get out of the hole. But this loss is not a cause for panic, all things being equal. The function of the management is to enhance the wealth of the stockholders. This task is a long-run job, and at times, just like my alma mater’s basketball team, might require a few years of “rebuilding.” But since most people have a high time horizon, they want instant gratification. They want the stock price to go up now; they want to be rich today; they are unwilling to wait for the company to grow. So they dump their stock. When the economy recently began to decline, one guy on a financial channel advised folks to dump all of their stocks and go into cash. This was totally foolish advice, and if you had a high time horizon, you are just the person who listened to this advice. The company should produce a positive return now, or good-bye.
The effect of this growing attitude of the public on CEOs is dangerous, because now they will fear to grow the company if this means taking a loss for a period, because they will be punished by the stockholders for their long-term plans. They will then do things to look good in the short term—things which might be to the detriment of the company in the long run, such as entering into a deal for a new product without much forethought because the publicity will make the company hit the news just before the financial statements come out. Those who have studied for an MBA know better, but the big CEO salary creates an interest that might trump knowledge, and even morality.
But the source of this problem is the society in general. This is why in my Thanksgiving Reflections I reminded all of us not to be hyper-critical; to take the beam out of our own eye before taking the speck out of our brother’s eye. Our materialist society more and more has encouraged the high time horizon attitude. No one wants to put off anything anymore; no one can see the long-term benefits in things. No payoff now and I’m not interested. This has even affected the Church, where so many people think that serving God doesn’t pay off now (of course it does, but you have to experience it before you realize it, or you have to trust the saints) or you refuse to abide by the teachings. Prayer is useless to so many people if it is not a “gimme” prayer, and God’s answer is “no.” This may even be a cause of college students’ binge drinking. It is possible that they see no intrinsic value in the long-term study process they are engaged in, so they hide in alcohol and rampant sexuality.
We need to teach each other and our youth that a low time horizon is a good thing. Waiting pays off bigger than instant gratification. Self-control is a virtue, and the widespread acquiring of this virtue will be reflected in a better society, and a more healthy economy.
There are many more implications to this, but space will not permit me to follow them up now. One line of thought is the Federal Reserve’s constant expansion of the money supply to give the illusion of prosperity. Perhaps next time.
The Pharisee stood up and prayed about himself: "God, I thank you that I am not like other men—robbers, evildoers, adulterers—or even like this tax collector. I fast twice a week and give a tenth of all I get." But the tax collector stood at a distance. He would not even look up to heaven, but beat his breast and said, "God have mercy on me, a sinner." I tell you that this man, rather than the other, went home justified before God. For everyone who exalts himself will be humbled, and he who humbles himself will be exalted." — Luke 18: 10-14.
A good question one might ask oneself is: When I thank God on Thanksgiving, what exactly am I thanking God for? Pride is the most insidious flaw in our nature, and many of us have not learned to identify it and control it. The reason I bring this up is that many people are obsessed with morality when it comes to business and economics.
Early on in the 1800s the Church had this notion that anyone who went into business was by nature ruthless and materialist, and therefore, like a spoiled child, business had to be reminded constantly, if not forced by the state, to be moral. A conversation with a student last week reminded me that this attitude is alive and well in Catholic circles. I even had an undergraduate professor who was convinced that business people were evil until they entered politics. Then they became saintly. Hence, it made sense to him that government had to ride business, because government was essentially better morally, even if it were composed of former businessmen.
But why this obsession with morality? I argue that business people are no more or less fallen creatures than any other human beings. In fact, studies have shown that business people and those in the military are the most frequent churchgoers in our society. Well, I think there are a couple of reasons for this obsession that can be readily divulged. Firstly, there is the ideological component, which I just wrote about above. Then there is the neglect to realize that people in business, as well as in every other field, are not infallible. They, like all of us, make mistakes: they miscalculate; they fail to predict changes in the market or the economy; like most of us they seek security, as when they push governments to impose tariffs or to give them bailouts. We all have done similar things in our life. Why do we expect that business people be perfect? We aren't!
Lastly, and this takes us back to the quotation given in the beginning of this essay, I think it is possible that Catholics get infected with a holier-than-thou attitude (as displayed by the Pharisee the Gospel passage quoted above). This happens from envy (whether detectable or undetected) of those who are more financially successful, work harder, or have original ideas and are reimbursed for those ideas. In this case, Catholics who are not in business might feel justified in looking down on Catholics in business, and thus feel better about themselves. Think of your childhood. We all knew kids who did this, or remember doing this ourselves. If a kid got rewarded for doing something cool, there was always someone there who would ridicule that kid, or minimize what he or she did. They could never feel happy for the one rewarded.
This can also be a result of not adequately admitting that we are sinners, which can give us license to project our sinfulness onto others. The big targets, like business people, are the most available, since it couldn't be government people, because the ideology says that sinfulness in a politician is an aberration.
The remedy for this problem has been given by Our Lord—don't judge another person. It is perfectly alright morally to play Monday-morning-quarterback and say, "Well he should have done such-and-so," but to sit there in all one's glory and say that these people are just immoral is unacceptable.
So what are you really thankful for? Think about it. St. Paul writes: "What do you have that you did not receive? And if you did receive it, why do you boast as though you did not?" Perhaps we should all court the blessings given to each of us, and refrain from counting the faults of others.