Marginal Politicians

In economics, “marginal” refers to trade-offs faced in making choices, which typically involve getting more of one thing and less of another. However, political rhetoric commonly misrepresents them as all or nothing. That is why we could use more politicians who are marginal in getting the relevant tradeoffs right, rather than in being “barely adequate, if that.”

Failing to think at appropriate margins is a staple of politics. For instance, politicians are always telling people what they are for. But that is typically not what citizens really want to know, since politicians largely claim to be “for” the same things (e.g., peace, our “general welfare,” etc.) and “against” the same things (e.g., corruption, special interests). What we really want to know is often the terms at which they would trade off one thing they are for against other things they are for, or at which they would accept what they are against to get more of something else they are for–i.e., what it will take to “sell us out” on various issues.

Political abuse of “need” reflects failure to think at the margin. Since choices are typically between different “needs,” it diverts attention from the actual choices faced. And since its primary political use is to assert that someone ought to have something they don’t, it distracts from the redistributive payoff: How much will A’s supposed need require B to pay for A’s benefit?

“We” also generates confusion when government provides some special treatment, because of disproportionate distributions of benefits and burdens. One illustration is that when people assert “we” should provide certain goods and services, they usually mean “someone other than me” should pay, whether through taxes or other mechanisms (e.g., property owners forced to provide habitat for endangered species at their expense, although any benefits are shared by all). Without clearly spelling out who will actually be forced to pay how much, as is typical, we cannot analyze the real tradeoffs involved.

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Categorical language represents another marginal misunderstanding. One thing (e.g., food) is often asserted to be categorically more important than others. However, the relative values of goods actually depend greatly on circumstances and preferences (e.g., food might be “more important” than sleep, but most people disagree when their alarm goes off in the morning). And claims to such “special” status are made for everything anyone wants subsidized, implying that everything is special compared to everything else, which is logically impossible.

The mirage of central planning “solutions” also fails the marginal thinking test. Those who claim planning is the cure for every social ailment ignore the fact that markets and the prices they generate are the only way we can accurately discover people’s marginal willingness to trade off among goods. When government short-circuits market processes (e.g., price controls or government takeovers of privately provided goods and services), it makes that crucial information unknowable. That, in turn, requires that centralized planning necessarily throws away massive mutual gains markets enable.

Failing to think at the margin blinds many to trade’s mutual benefits. They think market exchanges involve equal values or even harmful exploitation, rather than recognizing that exchanges create wealth because voluntary arrangements occur only when all parties expect their incremental benefits to exceed their incremental costs. Misunderstanding gains from trade, they fail to see the harm society suffers from restricting it, a fallacy behind a host of harmful government policies.

Marginal misunderstanding permeates public policy, particularly because people think less carefully about other people’s money than their own. That is why marginal thinking provides valuable protection against political snake oil. There is no other way to force politicians to spell out and defend the real positions and tradeoffs they would impose on citizens, by stripping away such misrepresentation and misdirection.

Gary M. Galles is a Professor of Economics at Pepperdine University and author of Faulty Premises, Faulty Policies (2014).

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