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Political Philosophy as Institutional Design

June 21, 2019

Are differences in political philosophy really just differences about the efficacy of different types of institutions? For a while I have believed that we should be extremely skeptical of government because it is far worse institution than those that operate in a market (e.g. a company) because even in a democracy, voting for elected officials is a far cruder mechanism for reflecting preferences of the people affected by that institution than the signals and incentives of the price system that governs the market.

First a definition: What is the proper measure for efficacy of an institution? Let’s say: an increase in the aggregate welfare of those that interact with it.

I think insight above about government is accurate, but I wonder if it can be generalized (and taken to a higher level of abstraction) to apply to other questions about institutions. For example, do we have more reason to trust the operation of a small town government than a large monopolist (at least in the short term)? How should we think about the efficacy of self-perpetuating boards of non-profit organizations, e.g. churches or universities? Do we have reason to defer to them when they conflict with contrary government desires? Do we have reason to put more faith in decisions of state governments in the US where people can easily move out of a state with a poor government and into a state with a better one?

Slightly more concretely, in the US does this framework help us analyze whether courts should we defer than decisions be made by administrative agencies? In what circumstances? Does it depend on the specific court and the specific agency involved? If so, can we generalize at least somewhat?

At this point I don;t have great (elegant?) answers, but perhaps that will come upon further thought

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