Greg Mankiw writes about a question he was asked in Michael Sandel’s course on Justice: “If you economists are so in favor of voluntary exchange, would you extend that conclusion to letting a person sell his right to vote to another?” His answer is no, because of the externalities involved. A may buy B’s vote for an inefficient program, the costs of which fall upon C.
Here’s one way to think about the difference between that and a simple case of exchange between A and B. A prefers $1 to a glass of beer; B prefers a glass of beer to $1. So, they exchange goods, and both end up better off. There’s no noticeable harm to anyone other than A or B. If A buys B’s vote, in contrast, there may well be noticeable harms to others.
Caveats: (1) That there are no noticeable harms does not entail that there are no harms, of course, for large numbers of imperceptible harms may add up to a perceptible harm. (See Derek Parfit on “Mistakes in Moral Mathematics” in Reasons and Persons.) (2) A and B are better off after voluntary exchange only if (a) the exchange truly was voluntary and (b) A and B were accurate in their judgments about their own self-interest—or, more cautiously, their preferences were stable. Coerced exchanges don’t necessarily benefit both parties, and exchanges made on the basis of deception, inadequate information, momentary whims, or simple foolishness don’t either.
Buying votes these days is relatively rare (though stories about the distribution of “walking around money” on election day still circulate every four years), but vote trading (also known as logrolling) is routine in legislative bodies. There, the externalities fall on us. Each one is imperceptible in its harmful effects on individual taxpayers, but the total harm done by pork barrel spending, unnecessary projects and programs, etc., is significant. Think of the bridge to nowhere in Alaska, the Woodstock museum in New York, etc. Those two projects got enough attention that federal funding was denied. But many more pass. Look at this list of pork barrel projects in the pending Housing and Urban Development Bill for 2008. My favorite is the National Mule and Packers Museum in Bishop, California. That’s only $50,000, however; for the real money, you need to go to the Defense Department funding bill, which includes such vital defense programs as “The First Tee,” whose mission is “To impact the lives of young people by providing learning facilities and educational programs that promote character development and life-enhancing values through the game of golf.” That gets $3,000,000, not just in this bill, but in a variety of unrelated bills over the past several years. Or how about $2,000,000 for brown tree snakes in Hawaii? (What do snakes do with $2,000,000, anyway? Why is this a defense appropriation? Maybe they’re highly trained anti-terror snakes.) That makes me feel a lot safer!