Some Problems with Technocracy
What's wrong with putting experts in charge?
Progressives and conservatives have not necessarily stuck to their relative positions on issues. On free speech, there has been a complete reversal in my lifetime. In the 1950s, conservatives were responsible for “cancel culture.” Of course, it was not called that then—it became known as McCarthyism.
But one difference that persists concerns the role of technocracy. Progressives like the notion of public policy being formulated and carried out by experts. Conservatives, and especially libertarians, are skeptical.
Libertarians prefer leaving problems to be solved by individuals and by the market. The results will never be perfect, but we will enjoy our own freedom and agency. And we will not be stuck with a government policy that does more harm than good.
We offer at least three reasons to be skeptical of technocracy: the selection problem, the knowledge problem, and the corruption problem.
The Selection Problem
It sounds appealing to turn a policy problem, such as health care or poverty, over to an expert. But in reality, who will end up in charge?
The political process will select for people who display confidence that they have a solution. But such confidence is the opposite of wisdom.
Thomas Sowell is famous for saying “There are no solutions, only trade-offs.” That is sound thinking, but politicians do not want to hear it from economists or other would-be technocrats. And voters do not want to hear it from politicians.
Accordingly, we end up with policy makers who are very low in the trait that psychologists call honesty/humility. Recall that
Persons with very high scores on the Honesty-Humility scale avoid manipulating others for personal gain, feel little temptation to break rules, are uninterested in lavish wealth and luxuries, and feel no special entitlement to elevated social status. Conversely, persons with very low scores on this scale will flatter others to get what they want, are inclined to break rules for personal profit, are motivated by material gain, and feel a strong sense of self-importance.
An official who is low on honesty/humility will do whatever it takes to get ahead. He will undermine potential rivals. He will flatter and deceive his bosses. Once in a high position, he will be very concerned with preserving his personal reputation and power. He will think of himself as entitled to make rules for others, without necessarily following those rules himself. He will deceive the public “for their own good.”
Someone who is high in honesty/humility is less likely to reach a high position. She will lack the ruthlessness and sense of entitlement that motivate those who are successful in organizational politics.
The Knowledge Problem
In economics, the knowledge problem is that it is impossible for a single person to gather all of the necessary information to predict the impact of a policy change. As Friedrich Hayek pointed out, much of what consumers and producers know is “tacit knowledge,” meaning knowledge that they act on but cannot articulate.
The market price system provides a decentralized mechanism for processing all of this tacit knowledge. We learn the appropriate trade-offs between various goods by observing market prices. Once a regulator tries to step in, some of this signal gets lost. See The Regulator’s Calculation Problem.
Consider policy during the pandemic. In principle, regulators should have carefully calculated the trade-offs involved in closing schools and restricting people’s activities. In practice, they lacked the means to do so. They made some very costly errors.
The Corruption Problem
Government regulation creates opportunities and threats for private-sector actors. If there is a subsidy, there is an opportunity to obtain it. If there is a tax or prohibition that threatens an activity, there is a motivation to try to evade it.
Economists use the non-intuitive term “rent-seeking” to describe the efforts that private-sector actors undertake to exploit the opportunities and evade the threats created by regulation. The layman’s term for “rent-seeking” is corruption. One of the problems with technocracy is that the regulators can become corrupted by special interests. And even if regulators were pure of heart, their regulations still will get gamed by clever agents.
Conclusion
Technocratic regulation is not as good in practice as it sounds in theory. Conservatives and libertarians recognize this. Progressives rarely do.
Meanwhile, progressives are happy to criticize the straw man of “free-market fundamentalism,” which they characterize as the view that markets are always perfect. Markets produce flawed outcomes, and a good libertarian or conservative will acknowledge this. But the market process often does a better job of correcting itself than the process of trying to put a government expert in charge of fixing it.
Sharp post.
When officials misbehave, we naturally wonder: How much is due to incompetence? And how much to malice? In Arnold's terms, we may wonder: How much is due to the knowledge problem? And how much to selection and corruption?
In the case of the pandemic, I would lean more than Arnold to selection and corruption.
For example, Arnold writes: "Consider policy during the pandemic. In principle, regulators should have carefully calculated the trade-offs involved in closing schools and restricting people’s activities. In practice, they lacked the means to do so."
School closures persisted *much* longer than any knowledge problem might have initially fueled. Compare Casey Mulligan's study, "The incidence and magnitude of the health costs of in‑person
schooling during the COVID‑19 pandemic," _Public Choice_ (2021). Here is an un-gated link:
https://link.springer.com/article/10.1007/s11127-021-00917-7
(Mulligan's working paper was circulated in winter 2021. The final MS is dated 21 May 2021.)
Mulligan writes:
"Abstract
The health costs of in-person schooling during the pandemic, if any, fall primarily on the families of students, largely owing to the fact that students significantly outnumber teachers. Data from North Carolina, Wisconsin, Australia, England, and Israel covering almost 80 million person-days in school during 2020 help assess the magnitude of the fatality risks of in-person schooling, accounting for mitigation protocols as well as the age and living arrangements of students and teachers. The risks of in-person schooling to unvaccinated teachers are, for those not yet elderly, small enough to challenge comprehension. Valued at a VSL of $10 million, the average daily fatality cost ranges from $0.01 for a young teacher living alone to as much as $29 for an elderly teacher living with an elderly spouse. For each 22 million unvaccinated students and teachers schooling in-person for a 5-day week during the pandemic, the expected number of fatalities among teachers and their spouses is one or less."
The upshot: Officials and regulators who closed schools could and should have known better. Many (most?) probably did know better. Corruption and pandering to squeaky wheels.
There is an interesting experiment underway that speaks to this issue I think: are expert forecasts of the election outcome (based on statistical models such as those published by FiveThirtyEight, the Economist, Silver Bulletin) more accurate than prediction markets (PredictIt, Polymarket, IEM). I am evaluating precisely this and have done so in earlier work.
I think the answer is likely to be domain specific. For elections, predictions markets may well be better. For hurricanes passing through population centers I would bet on experts.
More generally, it would be good to have an empirical program that tests these claims. And my intuition tells me that competition among experts and freedom of expression will be critically important variables to consider.
A recent post that may be of interest:
https://open.substack.com/pub/rajivsethi/p/on-models-markets-and-disagreement