My old CFC albuterol inhaler is much more effective than my new non-CFC inhaler. The medicine is the same, but the delivery system is awful.
I’m dreading the day that my old inhaler runs out. Yes, I follow the directions on the new one, and I know that it’s used differently. I know about priming and cleaning and all that. It doesn’t matter. The old inhaler works. The new one, if it works at all, may take around twice as many applications. (…)
But enough about asthma per se. The public choice aspect of the problem seems to run counter to the usual, doesn’t it? Here we have a concentrated group of people taking a huge utility loss. Being unable to breathe is one of the most unpleasant experiences you could possibly imagine. The old inhalers fixed it instantly. That’s what was lost.
The gain from this legislation is tiny, hard to notice, and literally diffused among all the people of the entire world — There are slightly fewer CFCs in the atmosphere. (CFCs are a problem, yes, but CFCs from inhalers were never a serious problem when considered alone.)
Why should it be that in this one case, the tiny, diffuse benefits win out over the large, concentrated ones?
I think it’s because the ban on CFC inhalers is not at all the result of classic public choice dynamics. This nicely demonstrates the limits of public choice theory in understanding politics. As Caplan and Stringham show, most inefficient policies are not the result of concentrated interests having their interests served against the preference of a powerless majority. Policymakers are tightly constrained by public opinion, and cannot normally simply accept bribes in exchange for creating unpopular rules to enrich special interests. We have bad policy because that’s what voters want. The public gets warm fuzzies from banning CFCs, and doesn’t much think about the costs (thinking about costs is, afterall, a downer).
Public choice theory in general and The Logic of Collective Action in particular has opened our eyes to many important aspects of the political process. The good old tyranny of the majority, though, remains of paramount importance. Democracy requires that politicians pander to the whims of the majority, even when there is strong pressure from concentrated interests to do otherwise. Interest groups do have an effect on political outcomes, but can only operate in the cracks of majoritarian democracy. Small, well-organized interest groups can achieve their goals when issue salience is low and voters will not punish politicians; when there is a compelling moral or public-interest argument to accompany their preferred policy; or when there are already legislators in favour of their preferred policy (which obviously depends on a significant constituency) whose legislative efforts they can subsidize. When these factors are absent, the majority will prevail even when there are huge utility losses to a minority.
The upshot of this is that anyone wishing for social change should focus on preferences at least as much as incentives.