Special Interest Hypocrisy

by Mario Rizzo 

President Obama is complaining that the “special interests” are threatening his as-yet uncertain healthcare proposals. (Recall there is no Senate bill and nothing says that House bill won’t change significantly.)   

There is an interesting lesson here. What is meant by “special interests” and “general interests”? For the classical liberal the general interest means the interests of each individual. Of course, this will be only approximated in many specific cases. However, the idealization is a useful guide. It is closely related to the great economist Knut Wicksell’s unanimity principle: A tax should be imposed for a public (goods) purpose only if it can command universal consent.

Concretely, what does this mean? Property rights and the transfer of property only by consent are examples of general principles (rules) that are in the interests of each and all. We all benefit from the social cooperation they make possible. 

Accordingly, very few of the functions of the government today are in the general interest.  

Obama wants to continue and expand redistribution of burdens in healthcare. The poor and middle class will benefit. The “rich” will pay. Forget for a moment the obvious falsity of the claim. Let’s take the rhetoric literally. Such a program is not in the general interest. It allows the beneficiaries to throw the costs of their healthcare onto others. Such a plan does not pass even the approximate unanimity test.  

Today’s statist liberals reinterpret the “general interest” as something quite vague. Among the possibilities are the following. (1) Those interests that will enable me to get elected; (2) Those interests that survive the test of a more equitable distribution of wealth according to wealth-distribution philosophers; (3) Those interests which are more important in some utilitarian sense – the people who want more healthcare will be made happier than those who are taxed for it are made less happy – according to someone’s hedonic-meter; (4) Some interests are “objectively” more important than others according to, say, Professor Amartya Sen.  

I am sure there are more, but you see the pattern. These are “top-down” conceptions of the general interest. The classical liberal conception is “bottom up.”  

The point is simply this. When we leave the classical liberal conception of the general interest everything is special interest.

11 thoughts on “Special Interest Hypocrisy

  1. Is there any activity for the support of which taxes are currently appropriated that can command unanimous consent? Or close to unanimous consent? Surely the answer is no. I’m happy to accept the criterion as stated, but how would Wicksell—not, I take it, an anarchist—avoid the obvious anarchist conclusion? Would he maintain that some activities really would command unanimous consent? That some would if everyone were fully informed? Or . . . ?

  2. This is purely an intellectual experiment. The idea is that if it can be shown that some rules or policies are in the interest of virtually all people, then those pass the “general welfare test.” It would be rational for all to approve. Keep in mind that the advocates of most legislation today do not show anything near this — except in the perverse way that a second substitute government intervention (“reform”) might be cheaper than the prior one — and therefore everyone one benefits from that baseline. Most of the time if they try to show benefit to the whole society it is in terms of metaphysical notions of Society as some form of supra-individual entity.

  3. “but how would Wicksell—not, I take it, an anarchist—avoid the obvious anarchist conclusion?”
    The same way Frederic Bastiat didn’t, although his disciple Molinari did. People take what they have been raised in ‘for granted’ to a degree far beyond what they themselves are often ever aware of. Take the example of most classical liberals and libertarians making qualified defenses of democratic governments, although judging from experiments around the world it’s most common results are socialism and genocide.

  4. OK, so—since no one else has dived in—perhaps I can presume on you by following up. My background is in law, philosophy, and law, rather than economics, so perhaps I’m missing something. But it seems as if Wicksell’s thought-experimental test works only if he’s got an objective way of determining that an outcome is “in the interest of virtually all people.” Was his approach fairly conventionally utilitarian?

  5. How about the following as being in “most people’s” interest:

    1 Courts of law, to adjudicate every individual’s rights according to objective law

    2 Police, to protect people from criminals who would violate their rights

    3 Defensive military, to protect citizens from foreign invasion

    The only obvious objectors to any of these “interests” are those who would like to violate the objectively-defined individual rights of others.

  6. Dr. Rizzo, its about time I’ve found an Austrian minarchist other than Reisman and Kirzner. I was under the impression that virtually all professional Austrian economists were anarchists.

    John Kannarr,

    It sounds like you are familiar with Objectivist politics. Nicely done.

  7. Professor Rizzo, I’m not asking you to become an anarchist. I’m just trying to understand Wicksell’s argument. It seems to me that, if he doesn’t think it’s necessary to show empirically that everyone does, in fact, want a particular public policy, he’d need to show that everyone would want it under some set of idealized conditions or that everyone should want it. But it also seems as if, the farther we move from what people actually want toward what someone thinks people ought to want, the less his criterion seems to achieve what he appears to want it to achieve. And it further seems to be the case that, for him to show that everyone would or should want something, he’s likely to need some sort of putatively objective means of ranking or otherwise evaluating individual choices. Do you have a sense of what, in Wicksell’s own case, that was?

  8. Mario’s distinction between “top-down” vs. “bottom-up” views of general interest really throws light on the murky health care debate. Here’s a huge new entitlement program, presented with hugely false promises. Its proponents claim to represent an undefined general interest. The point is, once you accept such a claim, there’s no end to what can be done under its auspices. It’s a blank check.

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