Delegating Economic Policy to the Technocrats, and Away from Democracy

In a column in The New Republic, Peter Orzsag, President Obama’s former budget director, argues for making the country’s policy-setting less dysfunctional by making it “less democratic.” One means for reducing politicized gridlock, he says, is to delegate more authority to “depoliticized commissions” of experts.

This is similar to the rationale behind establishing the Federal Reserve as an independent body: The Fed, at least theoretically, is shielded from short-term political interests. It can instead make decisions based what is good for the long-term interest of the economy, as determined by immutable economic laws and objective academic research. (In reality, of course, there have been many attempts to put political pressure on the Fed over the years, and within the central bank there is still broad disagreement about what’s best for the long-term interest of the economy.)

CATHERINE RAMPELL

Dollars to doughnuts.

Mr. Orszag also notes some other expert commissions, such as the military-base closing commissions, and the Independent Payment Advisory Board (IPAB), created by last year’s Patient Protection and Affordable Care Act to make changes to the Medicare payment system. The military-base closing commissions have generally been effective, and the jury is still out on the nascent IPAB.

Dollars to doughnuts.

On narrowly defined (and often technical) policy issues, expert panels can be useful. But as I wrote in an article last year about politicians’ poor incentives, delegating policy authority to technocratic panels is more problematic when dealing with larger economic matters that involve social value judgments, like austerity measures and tax reform.

These policy areas may sound like dry academic subjects. But they are thoroughly infused with, and ultimately shaped by, moral beliefs.

There are, after all, infinite combinations of spending cuts and tax increases that can add up to the same bottom line. Deciding what should get trimmed and what taxes should be increased or decreased involves questions of favoritism, welfare, compassion, fairness and all sorts of other subjective judgments not answerable by the “laws” of economics.

It’s not clear that a doctorate in economics (or, for that matter, in theology) gives a person any more moral authority than anyone else. That’s why such decisions are decided through a republican democracy — both lower case — and not by genius academics, however messy and dysfunctional the resulting process may be.

An Alarm Clock for Congress

Via Mashable, I see there’s a new iPhone app that donates money to charity every time you hit “snooze” on your phone’s alarm clock.

CATHERINE RAMPELL

Dollars to doughnuts.

It’s not an entirely original idea — Peter Orszag, for example, has said that he contributes to a charity he dislikes when he doesn’t achieve his running goals — but it’s a creative idea nonetheless, and a nice application for behavioral economics.

Dollars to doughnuts.

I wonder: Would it be possible to design a similar mechanism for Congress?

After all, legislators keep giving themselves a deadline by which they must decide on fiscal policy reforms, and then at the last minute they defer action by saying they’ll come up with a new policy proposal by a new deadline. And when that deadline comes, the process repeats itself, creating even more uncertainty with each iteration. I’d say that all these deferments are the equivalent of hitting snooze on the debt clock.

What constructive penalty could motivate them to finally wake up, as it were?