Politics: Necessarily Murkier than Economics

The Friday quotation is a day late this week, but worth the wait. Paul Pierson observes that, compared to economics,

politics is a far, far murkier environment. It lacks anything like the measuring rod of price, involves the pursuit of a wide range of largely incommensurable goals, and consists of processes that make it very hard to observe or measure important aspects of political performance. And, if we believe that a system is not performing well, it is still more difficult to determine which elements in these highly complex systems are responsible and what adjustments would lead to better results. The reliance on elaborate procedures to handle collective-choice situations in politics is inescapable, but it undermines transparency—that is, it greatly increases transaction costs. The complexity of the goals of politics, and the loose and diffuse links between actions and outcomes, renders politics inherently ambiguous. As North has argued, “political markets are far more prone [than economic markets] to inefficiency. The reason is straightforward. It is extraordinarily difficult to measure what is being exchanged in political markets and in consequence to enforce agreements.” ~Paul Pierson, Politics in Time: History, Institutions, and Social Analysis (2011)




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