Definition and origins
Public choice theory holds that government cannot be treated as a set of aggregate institutions acting for the public good, but must be understood as individual people with their own goals and incentives. Mike Munger, in an episode devoted to the subject, described it as an approach to political science that says we cannot assume virtue and good action on the part of the state, and that rules must prevent bad action even when people who work for the government may not have a strong moral sense. He traced the theory to the late 1950s and early 1960s, when it arose as a response to a functional theory in political science that described how the President and the Congress serve the public. Public choice, by contrast, asks what sort of people government attracts and how they react to the incentives they are presented with. Munger characterized the field as the study of the interaction between rules for choosing and the likely behavior of the very real human beings who occupy offices, merging psychology, political science, and economics. A central concept is aggregation: what are the aggregate consequences of individuals acting according to their self-interest? Mike Munger is Taking Public Choice Seriously (2019)
Bob Zadek, in the same episode, asked Munger to explain James Buchanan’s public choice theory as a separate matter, noting that it was revolutionary at the time and yet so obvious. Munger’s answer placed the theory’s origin in the late ’50s and early ’60s and identified its core move as rejecting the treatment of government as aggregate institutions in favor of seeing individual people with their own goals and incentives. He contrasted politics with the market: in the market, the baker makes bread and the butcher provides meat, and people acting in their own self-interest benefit others through the price mechanism; public choice asks whether the same is true in politics, and the answer is generally no unless there are good rules. In the United States, Munger said, the Constitution put together a set of protections for political and economic rights that was either a work of genius or great good fortune, and generally led politicians acting in their own self-interest to benefit the public interest. But one cannot assume that self-interest and public interest are the same. Mike Munger is Taking Public Choice Seriously (2019)
Cronyism, bribery, and the availability of favors
In the same episode, Zadek proposed that in any society with a government there are always individuals who seek to curry favor outside the economic system, offering the example of bribing a policeman to avoid a speeding ticket or a building inspector to approve a building. Such an act, he argued, does not indict an economic system; it is simply a criminal act, like robbery, a felony, and not an example of a weakness in capitalism. He equated crony capitalism with bribery writ large. Munger disagreed on the legal point: bribery is illegal, while cronyism is not illegal but merely immoral. Munger then agreed that the real problem is that government makes these favors legally available, and that democratic governments in particular do so. He offered Singapore as an example of a capitalist country that is not a democracy, and framed the heart of the question as why government would not make such favors available. Mike Munger is Taking Public Choice Seriously (2019)
Munger described a paradox in public choice: given that it is the government’s fault for offering these favors, public choice at once says you cannot assume good people are in the government, and yet we need good people or otherwise the favors will be offered to corporations. He said that for the policeman not to accept the bribe, or for the member of Congress not to accept the campaign contribution, would require good people, and that is the one thing public choice tells us we cannot assume. He described officials as operating in their own self-interest, serving their own careers and padding their own pockets, and said that is the nature of politics. Zadek interjected that this is not per se bad, and Munger agreed: people operating in their own self-interest in a system that causes that self-interest to operate for the public good is the institutions we are trying to devise; assuming people will be altruistic is the path to destruction. Mike Munger is Taking Public Choice Seriously (2019)
Rent control as a case study
In an episode on rent control, Zadek applied the theory directly to housing policy. He said politicians must cobble together 51% to be re-elected, that 51% of the landlord vote is not attainable but 51% of the tenant vote is a lock, and that catering to the majority in urban areas, where the majority are renters, is a calculation done to ensure re-election. He called this, in a way, public choice theory: politicians behave as they should in their self-interest, and their self-interest is to get re-elected by pandering to 51%. The Rent Control Bomb (2019)
Zadek stipulated hypothetically that rents are too high and that relief is needed, while stating he does not agree with that premise because the market takes care of it. Under that stipulation, he argued the solution would be subsidies, governmental checks, or tax relief for tenants, rather than picking landlords to bear the economic burden. He called the selection of landlords arbitrary, random, and unfair, and asked why not pick bankers or accountants to subsidize tenants instead. He then turned to the adverse consequences: if a landlord is limited in raising rent and is determined to make a profit lest he abandon the property, and cannot increase income, the only option is to decrease costs. Charlie Deist answered that the costs decreased would be maintenance and upkeep, and that the landlord would become sloppy. Deist said the stereotype that landlords are rich oppressors and tenants are poor victims is a recipe for bad policies, and cited a case in the city of Oakland where a couple was sued for ending their lease and had to pay $12,000 to their tenants just to reoccupy their property after their circumstances changed; the family had two young kids and the payment was a huge hardship. Deist added that the poorest neighborhoods are often hit hardest by rent control, because landlords who cannot raise rent neglect the property hoping tenants will find it so squalid they leave. The Rent Control Bomb (2019)
Earlier in the episode, Deist described Oregon passing the first statewide legislation capping rent increases at 7% a year, and said Kamala Harris called it a bold step. He said California was copying Oregon with a bill he identified as AB 1452 or 1451, 1482, initially more ambitious at 5% and eventually modified to 7%. He called this bizarro federalism, the reverse of the usual pattern in which a state tests a successful policy that then gets copied, and noted that Oregon and California have the worst housing situations and bad homelessness problems. He cited a Los Angeles Times quote that nine of the 15 metropolitan areas with the highest median home values are in California, and asked whether there is cognitive dissonance among people pushing policies that seem to make the problem worse. Zadek rejected the phrase cognitive dissonance and said the behavior is more sinister than that. The Rent Control Bomb (2019)
Bureaucracy and incentives
Michael Strong, in a 2017 episode, described public choice theory as an analysis of why governments do what they do, and said most people are motivated by what they are rewarded for; if officials are not rewarded for performance in a way that matters to the population, they will not care about improving things. He said most developing-world governments are dysfunctional, that ministers and bureaucrats often arrive an hour, two hours, four hours, or a day late, and that bureaucrats typically get rewarded for being there longer rather than for quality of work. He offered Singapore as a contrast, sometimes described as Singapore Incorporated, where some public officials get bonuses based on the previous year’s GDP growth of the nation, producing business-like incentives for bureaucrats. Michael Strong on Creating a World in Which All Humanity Flourishes (2017)
Strong said that if progressives want to believe in good government, they should see what is actually going on in most developing-world governments, and asked why policies have not changed decade after decade if enlightened government is the answer. He credited the World Bank’s Doing Business index and Hernando de Soto’s The Mystery of Capital with drawing attention to the fact that the developing world is massively over-regulated, and said the Doing Business index was created by a former Bulgarian who had been in Eastern Europe under communism and knew what a mess governments were. He said progressive professors he has talked to are unaware of this, that Peter Singer had been completely unaware that the developing world is over-regulated until Strong and his wife met him in person to explain it, and that when the evidence is put in front of them, most of these laws and regulations cannot be justified as rational. Michael Strong on Creating a World in Which All Humanity Flourishes (2017)
Constitutional design and faction
Ilan Wurman, discussing a proposed constitution, said the drafters had no illusions that senators would still find ways to engage in rent-seeking and to bully people into giving campaign finance contributions in order to enact favorable legislation. He said the hope was that an oath to promote the common good and long-term welfare of the nation, rather than the interests of any party or class, would put a thumb on the scale and nudge senators’ consciences toward deliberating for the common good. He invoked Madison in Federalist 10, who recognized the problem of faction and thought he solved it by the extended republic, where there would be too many factions to actuate the impulses of a majority. Wurman said Madison might have been wrong, because we now have public choice theory, and one of its insights is that factions are still good at getting their policies enacted: factions are intensely interested in one particular issue that the rest of the general public is only diffusely interested in, so a legislator will take money from the faction that is intensely interested and vote their way on that issue. He said he did not know whether the proposed constitution had a solution for that, but that deliberating in secret might have helped, and that a small Senate, no re-election, and a pledge to legislate for the common good would put a thumb on the scale. The Conservative Constitution (2021)
Across episodes
The topic recurs across episodes from 2017 to 2021, with the treatment shifting from definition to application. Michael Strong in 2017 treated public choice as an analysis of why governments do what they do, grounded in incentives and the dysfunction of developing-world bureaucracies. Mike Munger in 2019 gave the fullest definitional account, naming James Buchanan, locating the theory’s origin in the late 1950s and early 1960s, and distinguishing cronyism from bribery. Bob Zadek and Charlie Deist in 2019 applied the theory to rent control, with Zadek framing re-election incentives as the mechanism. Ilan Wurman in 2021 treated public choice as a constraint on constitutional design, arguing that Madison’s extended republic may not solve the faction problem. The excerpts show no explicit disagreement among the guests about what public choice theory is; the development is in the range of applications.
What the sources do not cover
The excerpts do not state the founding date of public choice theory beyond the late 1950s and early 1960s, nor do they identify the specific works in which Buchanan advanced it. The excerpts do not state the outcome of the California rent-control bill or the Oakland case beyond the facts given. The excerpts do not state whether the proposed constitution Wurman discusses was adopted or what body considered it. The excerpts do not give the full name of the World Bank Doing Business index’s creator or the title of Munger’s book beyond the reference to it in the episode description.