Politics Cannot Be Fixed
There have been many complaints recently about the way Washington works — or rather its recent failures to efficiently implement Obama's policy priorities.
Paul Krugman compares the present state of American politics to the gridlock that afflicted 17th-century Poland. Use of the Liberum Veto froze the Polish parliament (the Sejm). Now senators are holding up new legislation in America. Many others have added complaints about special-interest groups and an alleged need for public financing of elections.
Evan Bayh cites partisanship and gridlock as reasons for his departure from the Senate. Bayh claims that it was easier to serve the public "in the old days." Generally speaking, there is a feeling among many that the legislative process can and ought to work better, and that elected officials can and should do a better job of serving the public.
While critics of the status quo in Washington are no doubt sincere, there are good reasons to see their views as naïve. Ideology does influence the way many senators vote. According to one study, voter preferences are a minor influence on how senators vote, except for senators who face strong opponents in upcoming elections. In highly competitive politics, politicians must ignore more ideological and extreme viewpoints in favor of the centrist positions that Bayh favored. It is, however, quite normal to lack competition in a two-party system. There is a lack of competition in many areas of American politics, but this is normal.
Special-interest politics is nothing unusual either. Narrow special-interest groups are easier to organize than large groups, especially if large groups are geographically dispersed and diverse. Consequently, special interests wield seemingly disproportionate influence over policy issues. Special-interest influence is not a sign that politics is broken. On the contrary, highly active and influential special interests are a perfectly normal part of democracy.
Some people believe that special interests have assumed a greater role in politics in recent years. This may be true. Last year special interests spent a record $3.5 billion on lobbying. This sounds like a lot of money, but it is actually quite small compared to all that can be gained or lost in competing for political influence, given the large role that government plays in the American economy.
Bayh may be right that it used to be easier to serve the public "in the old days." This reference to the old days may refer to his father's career as a senator, which began in the 1950s. The federal government was much smaller back then. Hence, there was less at stake for special interests, less reason for them to lobby. Given the expansion of government since then and recent proposals for further expansion, we should expect competition between special interests to intensify. The system is not broken; this is how large democratic regulatory-welfare states are supposed to work.
There have been renewed calls for campaign-finance reform, especially since the Supreme Court ruled in favor of political speech by representatives of private corporations. Of course, corporate influence over pubic policy can impose costs on others. However, the proposed alternative of publically financed elections could be worse. It is very obvious that incumbent politicians would use public financing to their own advantage. Public financing could seriously limit political competition. As previously noted, the lack of competition (due in this case to proposed public financing of elections) would give senators and other elected officials greater latitude to implement politics in accord with their own personal ideologies, causing a dilemma in American politics.
The idea that both interest–group-driven and ideologically driven politics are defective poses a dilemma to those who favor a large role for government in the economy. Those who want greater governmental control over industry see the ineffective nature of the democratic process. Friedrich Hayek explained the incompatibility of democracy and government planning in his book The Road to Serfdom. When democratic assemblies assume responsibility for "running the economy," these institutions are overwhelmed by the task of trying to agree on how industry ought to be run. The lack of any objective criteria (i.e., profit and loss figures) in the politics of evaluating different plans for the economy leads to endless debate and paralysis over policy. Legislatures become "ineffective talking shops" and "dissatisfaction with democratic institutions" follows.
Ultimately, people lose confidence in democracy and defer to "experts" in public bureaucracies. The act of transferring power from elected legislators to bureaucrats does not, however, bode well for democracy. Increasing bureaucratization impairs economic efficiency and ultimately destroys political freedom. Recent experience has borne out the first part of Hayek's predictions. This is not simply a matter of the current Congress being unpopular. People are frustrated with the democratic process itself.
We face a dilemma in that most Americans are committed to democratic governance and many Americans want elected officials to assume responsibility for matters that they cannot manage. We cannot and should not tolerate endless political bickering over something as important as healthcare. Yet this is how democracy works to "manage" the economy. We certainly should not give bureaucrats power over healthcare — or any other commercial industry for that matter. There is, however, a third option. Strictly limited constitutional government is relatively immune to both special interests and ideologues. Constitutional government limited to providing internal and external security can be evaluated by objective criteria. A return to limited government would, of course, mean much greater reliance on private enterprise and unhampered markets. The record of private institutions is, when carefully examined, strong.
American politics is not broken: it is working in the dysfunctional way that it should be working, given its unwieldy size and scope. What may be breaking are naïve idealistic beliefs that politicians can use a large and intrusive government to serve "the people." And the demise of such beliefs would be a good thing.
The idea of public-spirited politicians acting through large and unlimited government is utopian. Fortunately, few Americans have resorted to the belief that experts can "run the economy" as bureaucrats. Both democracy and bureaucracy have poor track records historically, and neither system works well in theory. On the contrary, free enterprise and limited government have a proven track record and sound theoretical underpinnings.
The basic lesson here is that politics cannot be fixed; we therefore need to avoid it to the greatest extent possible.
 Steven D. Levitt, "How Do Senators Vote? Disentangling the Role of Voter Preferences, Party Affiliation, and Senator Ideology." The American Economic Review, Vol. 86, No. 3 (June 1996), pp. 425-441.
 See M. Olson, The Logic of Collective Action (Harvard University Press, 1965).
 Mises (Human Action 1949) points out how the attainment of internal and external peace can be objectively discerned without referring to market data.