The Implications of Kludgeocracy

Steven Teles tells us in the fall issue of National Affairs that over the next decades, the challenge of “kludgeocracy” will come to the forefront of national politics:

In recent decades, American politics has been dominated, at least rhetorically, by a battle over the size of government. But that is not what the next few decades of our politics will be about. With the frontiers of the state roughly fixed, the issues that will define our major debates will concern the complexity of government, rather than its sheer scope.

Teles is certainly right that the underappreciated costs to our economy of administrative complexity and regulatory compliance ought receive more attention in spending debates. The first step is to think about regulation as a form of government spending itself. When we usually think of government spending, we imagine the government taxes individuals and firms and spends their money for them. But government can also spend money in a different sense by issuing spending directives to those individuals and firms themselves. As documented in CEI’s Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State, the costs of regulation reached over $1.8 trillion in 2013.

A bigger challenge Teles presents for libertarians, however, is his argument that “kludgeocracy” is the result of our political system’s numerous obstacles to political action and Americans’ ambivalent attitudes toward government:

American institutions do, in fact, serve to constrain the most direct forms of government taxing and spending. But having done so, they do not dry up popular or special-interest demands for government action, nor do they eliminate the desire of politicians to claim credit for new government activity. When public demand cannot be addressed directly, it is met instead in complicated, unpredictable ways that lead to far more complex legislative solutions

…..

One of the clearest findings in the study of American public opinion is that Americans are ideological conservatives and operational liberals. That is, they want to believe in the myth of small government while demanding that government address public needs and wants regarding everything from poverty and retirement security to environmental protection and social mobility. The easiest way to satisfy both halves of the American political mind is to create programs that hide the hand of government, whether it is through tax preferences, regulation, or litigation, rather than operating through the more transparent means of direct taxing and spending.

Some commentators such as Ilya Somin have pushed back against Teles on this point and argued that complexity results from the size of government itself, rather than structural features of our institutions and voter opinion. Somin argues that Teles thinks we can separate the complexity of government from the size and scope of government, when in fact size is the causes of complexity.

One gap in Somin’s explanation is that it doesn’t explain how government expanded so much in the first place. But what if there were some way to combine Somin’s plausible argument that a large state entails complexity because of rent-seeking and bureaucratic self-interest with Teles’ structural account? In other words, what if the size of government and complexity are mutually reinforcing?

As Brink Lindsey has noted, complexity can increase the size of government by creating the illusion of a free lunch. American voters will prefer a bigger government so long as it doesn’t upset their “libertarian super-ego” in Lindsey’s phrase. Lindsey builds on Bryan Caplan’s observation that complex, indirect methods of legislation are palatable because they hide the real effect of coercive policies from the voting public. Demand for government, combined with the numerous hurdles legislation must clear to become law, means hurdles turn into “tool booths” that increase legislative complexity. The upshot is a large, complex state whose costs are largely invisible to voters.

A mutually reinforcing relationship between complexity and size of government also suggests a tentative path forward for libertarians. Instead of focusing on outward measures of government power, like marginal tax rates or spending levels, libertarians should focus on policies that align voters’ incentives with their ideologies. By making the costs of government more apparent, voters’ interests would reinforce their libertarian super-egos rather than oppose it. As Lindsey puts it, “such a strategy, more or less the polar opposite of the reigning one, would at least render Leviathan more visible – and, in doing so, might just make it easier to contain.” The irony, of course, is that in the short run such a strategy would look like an increase in the size of government and risk deep unpopularity. But in the long run, it may be a more effective way for democracy to contain government.