Stiglitz y el interés público

A propósito de nada –ok no, la discusión sobre soluciones regulatorias a la cocentración de medios masivos en México me hizo recordar que… ok, tampoco, un tuit de Pepe Merino me recordó un gran paper de Stiglitz (de esos que hay que leer 3 veces). Aquí un extracto de la introducción del artículo (el énfasis es mío). Si lo leen con cuidado notarán por qué el punto de vista de la economía es tan importante a la hora de discutir reformas de gran calado o políticas públicas particulares.

Joseph Stiglitz. “The Private Uses of Public Interests: Incentives and Institutions“. Journal of Economic Perspectives, 1998.

As a long-time student of the public sector, I welcomed the opportunity to come to Washington as a member of the Council of Economic Advisers and later to become the Chairman of the Council, partly because it gave me an opportunity to study at first hand this immensely important part of our economy and society and to test my ideas against the reality of government in action.

To be sure, I came also as an activist, if not with a fully articulated agenda, at least with a view about what it was that government should, and should not be doing. My reference point was the fundamental theorems of welfare economics which, as some describe them, proved that the market left to itself would produce efficient allocations. Many saw in these theorems the vindication of Adam Smith’s faith in the invisible hand leading the self-interested decisions of each person to maximize the well-being of the nation as a whole. Today, many of us look at the fundamental theorem not as a description of the world, but as an explication of the conditions under which a market equilibrium will be Pareto efficient. These conditions are quite strong. The importance of some of the more explicit assumptions—like the lack of externalities and the completeness of markets—has long been known. In the last two decades, we have explored much more seriously the consequences of the informational assumptions implicit in the belief that markets are efficient. In particular, it has been shown that in the presence of imperfect information or incomplete markets, the economy will not be Pareto efficient; in other words, there will always be some intervention by which the government can make everyone better off (Greenwald and Stiglitz, 1986).

Nineteen ninety-three was a great year to arrive in Washington. The first two years of the Clinton administration were extremely active. The ideas and policies that had been pent up in the Democratic party during the previous 12 years of Republican presidents were all discussed in concurrent meetings. Although certain issues dominated the attention of the economics team—the budget, trade relations with Japan, and health care, for example—there was also space for a lot of independent initiatives, some small, some large. Later, I shall describe the fate of several of these.

Some of my friends who had spent a spell in Washington suggested that I would return a bit wiser for the experience, a bit more jaundiced about the role of government. That seems a shared experience: a better understanding of government failures to counterbalance the market failures that have occupied so much of my thinking as a professional economist.

Today, I want to share with you some of my thoughts about the possibilities and limitations of government. These thoughts are focused around a simple question: Why is it so difficult to implement even Pareto improvements? I knew the immense complexity of political decisions involving trade-offs among different groups. But surely, if we as economists had anything to contribute, it would be to identify Pareto improvements, changes (perhaps complex mixes of policies) which held out the prospect of making some people better off without making anyone worse off. I quickly saw that although a few potential changes were strictly Pareto improvements, there were many other changes that would hurt only a small, narrowly defined group (for example, increasing the efficiency of the legal system might hurt lawyers). But if everyone except a narrowly defined special interest group could be shown to benefit, surely the change should be made. In practice, however, ‘‘almost everyone’’ was rarely sufficient in government policy-making and often such near-Pareto improvements did not occur. My major theme will be to provide a set of explanations for why this might be so.

Of course, to critics of the role of government, these disappointments should not have come as a surprise: they were the predictable consequences of the government failures that are no less marked than the market failures to which I alluded earlier. I was, of course, aware of these government failures, and indeed had written about them. One of the reasons I looked forward to coming to Washington was to study them more closely, and Washington gave me a wealth of experience on which I shall draw for years to come. But the analytics of government failure have always seemed to me to be on less firm ground than the analytics of market failure. For instance, critics of the role of government have put forward two, somewhat inconsistent arguments. One is that government is not needed: Coasian bargaining leads to efficient solutions, even for situations, like externalities, where interventionists claim that government has a role. The other is that government is rife with inefficiencies, such as those associated with rent-seeking. The argument seems to be that while Coasian bargaining works in the private sector, it fails to work in the public sector, for reasons that are not usually explained. If Coasian bargaining worked well, surely Pareto improvements would quickly be agreed to, both within the public and private sectors. However, the conditions under which Coase’s conjecture is correct are sufficiently restrictive as to provide little guidance either for when markets might fail or government actions might improve matters.

I shall put forward four hypotheses in this lecture, each of which provides part of the explanation for the failure in at least one instance of a proposed Pareto improvement. These hypotheses, like much of the literature on government failures, focus on the role of incentives: how misaligned incentives can induce government officials to take actions that are not, in any sense, in the public interest.

I should remark at the outset that the limitations run deeper, into the sociology and anthropology of the political scene. When I was in the lawyer- and politician-dominated White House environment, I often felt that I had arrived in another world. It was not just that another language was spoken. I understood and expected that; every culture (including that of economists) creates its own language to set itself apart. It was that often another system of logic, another set of rules of reasoning, applied. I had expected lower standards of evidence for assertions than would be accepted in a professional article, but I had not expected that evidence offered would be, in so many instances, so irrelevant, and that so many vacuous sentences, sentences whose meaning and import simply baffled me, would be uttered. A so-called foreign policy expert would claim with fervor that we must maintain our ‘‘credibility.’’ Surely, no one would dispute that. The issue was, what was the theory and evidence concerning the relations between particular actions and ‘‘credibility,’’ however that was defined. What credibility meant and how it was established seemed issues beyond rational inquiry.

Empirical evidence—at least beyond an anecdote or two—and theoretical analysis should have been able to shed light on the merit of alternative policies. While that is where the conversation should have begun, it almost never got that far. What occurred was often worse than Gresham’s Law: it was not only that bad arguments seemed to drive out good, but good economists, responding to implicit incentives, adopted bad arguments to win their battles. In a process of cognitive dissonance reduction, possibly combined with some intellectual atrophy, sometimes good economists even seemed to come to believe their specious arguments.

Nevertheless, there were also some Pareto or near-Pareto improvements that were successfully done: some with surprising difficulty, some with—given the difficulties of getting anything done—surprising ease. Before embarking on our discussion on the reasons for some of our failures, let me describe two of our successes.

 

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