Tuesday, January 19, 2010

Filibuster and Pirates

I thought of the filibuster as I was reading The Invisible Hook: The Hidden Economics of Pirates yesterday.

Leeson explains that pirates had to unanimously consent to living under the constitutions governing pirate crews. This minimized external costs of governance because nobody lived under rules that they didn't agree to in advance. While this lowered the external costs, eliminated them actually, it greatly increased the cost of governance, which is to say that it was difficult to get everybody to agree. The filibuster is a mechanism that lowers the external costs of governance while increasing the cost of governance itself, which is to say that by pushing the required votes from 51 to 60 it lowers the number of people who fall under a law that they don't agree with.

Many decisions have low external costs. Nobody cares what the font on a DMV form, for example, is. Some bureaucrat can make it and nobody gives a shit. In these cases, better to just appoint somebody to make the decision, and we'll all live with the external cost of governance.

But some decisions are too important. Example from the piratical world include the division of the spoils and various prohibitions on-board ship. Examples from the current political world include health care reform.

Now, for economists this boils down to a cost equation that can be minimized mathematically. This isn't exactly how things happen in real-life. However, the filibuster, to the extent that it lowers external costs, can be beneficial, even if it increases the costs of governance. Then again, when mitigating the external costs of governance simply means increasing pork and pay-offs it's less appealing.

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