This article was originally published in The New York Times
Market competition, under the proper circumstances, has the power to make a business better serve its customers. Cellphone companies, for example, compete via cheaper prices, clearer connections and better apps. Political competition, though no less vigorous, is conducted on very different terms — and often ends up stifling innovation instead of encouraging it.
When viewed through an economist’s lens, the quest for voter approval helps explain some recent developments in domestic politics, including the stalling of health care reform and the proposed freeze on the federal government’s discretionary spending.
Economists approach political competition with a simple but potent hypothesis called the “median voter theorem.” Anthony Downs, a senior fellow at the Brookings Institution, proposed the idea in his 1957 book, “An Economic Theory of Democracy.” Essentially, the idea is this: Any politician who strays too far from voters at the philosophical center will soon be out of office.
In fact, there is a dynamic that pushes politicians to embrace the preferences of the typical or “median” voter, who sits squarely in the middle of public opinion. A significant move to either the left or the right would open the door for a rival to take a more moderate stance, win the next election and change the agenda. Politicians will respond to this dynamic, whether they are power-seeking demagogues or more benevolent types who use elected office to help the world.
When it comes to the big issues, voters at the midpoint usually get the policies, if not always the exact outcomes, they want. In the federal budget, the largest line items include Social Security, Medicare, Medicaid and military spending — all very popular programs. The interest on the national debt is mounting because we don’t like paying higher taxes now for all those benefits, so our government borrows to postpone the pain.
Upon his election, President Obama stepped into a world already full of political constraints. He won the White House and significant Democratic majorities in both the House and the Senate — yet even if American voters were tired of the Republican Party, it’s not clear that their underlying opinions had changed very much.
Correctly or not, most Americans have failed to embrace the Democratic health care plans. And ever since the Republicans won the special Senate election in Massachusetts, even the Democrats in Congress have stalled on the legislation. It now appears that much of the initial support was thin.
Senate Democrats, for instance, could overcome a Republican filibuster through a parliamentary process known as reconciliation, but they are waiting, evidently out of fear that voters aren’t with them on this issue.
Many people are increasingly worried about deficits. That may have led Mr. Obama to announce a freeze on nonmilitary discretionary spending, and yet this freeze refuses to target major, popular budget items like Social Security. The public seems to want the self-image of being tough on spending without giving up the goodies. President Obama may well know better, but he is doing his best to oblige, if only to prevent a Republican landslide this November.
The point here is not to belittle or praise the president, but to point out that his hands are tied. The biggest leftward move in American economic policy occurred during the Roosevelt and Truman years, when the Democrats had the upper hand for five consecutive presidential terms. Because of depression and war, people were looking for real change. Competitive forces in politics were relatively weak, and the Democrats had the chance to make their policies stick.
The Supreme Court’s recent ruling on campaign spending also comes into clearer focus through the median voter theorem. The court ruled that the government may not ban political spending by corporations in candidate elections. Critics fear that the political influence of corporations will grow, but some academic specialists in campaign finance aren’t so sure.
For all the anecdotal evidence, it’s hard to show statistically that money has a large and systematic influence on political outcomes. That is partly because politicians cannot stray too far from public opinion. (In part, it is also because interest groups get their way on many issues by supplying an understaffed Congress with ideas and intellectual resources, not by running ads or making donations.) It is quite possible that the court’s decision won’t affect election results very much.
Of course, the median voter theorem is far from a complete explanation of politics. Sometimes politicians lead public opinion and talk voters into accepting new ideas, as when President Bill Clinton promoted Nafta. And voters often favor conflicting or contradictory policies, like wanting to pull troops out of Iraq but also not wanting Iraq to explode into chaos.
Finally, most people aren’t very well informed about politics and can be downright irrational or stubborn, which is another reason that political competition isn’t always as beneficial as economic competition.
THE median voter theorem doesn’t predict that the legacy of the Obama administration will be a wash. But it does imply that we might find the most important achievements in areas that don’t always linger on the front page. For instance, the president’s ideas on education, which involve accountability and charter schools and pay for performance, may please the American public and thus make their way into policy. And because education transforms the knowledge and interests of the median voter for generations to come, such acceptance could make for a lot of other improvements.
If you’re looking for change to believe in, and change that will last, the odds are best when political competition is pushing the world in your direction.