EconTalk: Steven Teles on Kludgeocracy


This Econtalk interview with Johns Hopkins prof. Steven Teles was sufficiently interesting that I've listened to the conversation three times (podcast link, partial transcript and supporting reading here at Econtalk).

Why do democratic governments tend towards increasing complexity? I have thought of that as fundamentally an issue of the incentives that are built into the electoral system – particularly when professional lifetime politicians are permitted. The incentives are:

  • Get re-elected, keeping all the power that one has accumulated so far;
  • Re-election is enhanced by promising “I will do this and that for you”, therefore the politician keeps her promises by working to pass new laws, generally adding to the scale of the machinery of government.

The consequences are:

  • There is no incentive to eliminate complexity, to reduce the scale cost of the machinery.
  • Every new law that is passed creates an ecosystem of interests who will fight to protect the benefits they derive from the law.

There are a variety of different institutional designs that would inhibit these negative consequences. Unfortunately, now that “the foxes are in charge of the henhouse” any reforms that threaten the status quo interests are very unlikely to be politically feasible. Regarding the current US political system, two of the important concepts discussed are the legislative “veto points” which function as “toll booths” for the politicians to collect their toll in exchange for allowing legislation to pass through their veto point. In his National Affairs essay Teles describes this source of sluggish complexity:

The most obvious reason why American institutions generate policy complexity is our system's numerous veto points. The separation of powers means that any proposal must generate agreement at three different stages — each house of Congress and the president. But opportunities for vetoes turn out to be more extensive than the simple text of the Constitution would imply. Most legislation has to pass through separate subcommittee and committee stages, each of which presents opportunities for legislators to stymie action. Many ambitious proposals are considered by Congress under “multiple referrals,” in which more than one single committee is given jurisdiction. This multiplies the number of veto points, as we saw with the Affordable Care Act, which had to pass through five separate committees in Congress. Finally, the super-majority requirement for breaking a filibuster in the Senate, combined with the intense partisanship that accompanies most major policy reforms, means that any single member can stall the progress of a piece of legislation, and a cohesive minority can kill it.

A superficial analysis would predict that this proliferation of veto points would lead to inaction, generating a systematic libertarian bias. In practice, however, every veto point functions more like a toll booth, with the toll-taker able to extract a price in exchange for his willingness to allow legislation to keep moving. Most obviously, the toll-taker gets to add pork-barrel projects for his district or state in exchange for letting legislation move onto the next step. This increases the cost of legislation, even if, as John Ellwood and Eric Patashnik have argued, it might be a reasonable price to pay for greasing the wheels of a very complicated legislative machine.

But the price of multiple veto points is much larger than an accounting of pork-barrel projects would suggest. First, many of our legislative toll-takers have a vested interest in the status quo. In exchange for their willingness to allow a bill to proceed, therefore, they often require that legislation leave their favored programs safe from substantive changes. Consequently, new ideas have to be layered over old programs rather than replace them — the textbook definition of a policy kludge. Second, the need to gain consent from so many actors makes attaining any degree of policy coherence difficult at best. Finally, the enormous number of veto points that legislation must now pass through gives legislative strategists a strong incentive to pour everything they can into giant omnibus legislation. The multiplication of veto points, therefore, does not necessarily stop legislation from passing, but it does considerably raise its cost and, more importantly, its complexity.

How to get out of this mess?