10 July 2012

Put ME in charge!

Every ad was a variation on "do the right thing"
...because we tell you to.
I was attending a session on the EU's Common Agricultural Policy (CAP) at Greenweek in Brussels a month ago.

During the Q&A, I asked for a show of hands from those attendees (most of them from bureaucracies, NGOs and "civil society" rather than businesses) on whether it would be better -- from the perspective of environmental sustainability -- to replace the CAP with local agricultural polices.

This question has two easy answers:
  1. Yes, replace the CAP (with its known distortionary subsidies) so that national governments can find their own "appropriate" ways to protect their environment.

  2. No, leave the CAP in place, to force national governments to adopt "EU-appropriate" environmental protections.
Now you probably know my answer to this question (#1 in case you don't), but I was curious to see what some of the other 120 people in the room thought. All of them, bar one, agreed with #2.[1]

So there are two potential explanations for this result. People either thought that the CAP was good for the environment (a notion that fails the laugh test), or they thought the CAP was the best way to deliver environmental sustainability.

Now why would that be? Perhaps because people in Brussels think they can specify environmental programs that will work from Greece to Denmark, from Spain to Estonia. Those policies -- rendered through the CAP, remember, not the Water Framework Directive[2] -- would then be implemented effectively by local authorities. Note that such a result would require BRILLIANT planning and execution from Brussels, and who could do that but... ... the people in the room!

So, here's why I think that 118/120 people thought that the CAP was a good tool for delivering environmental quality, given that it doesn't now: All the people in the room thought that they -- and not necessarily the people next to them with their hands up -- would be able to implement those plans. In other words, they could do the job if they were in charge.

Now, I am just going to say right now that I've got no practical reason to accept this response, since it (1) rejects "subsidiarity" -- or pushing policy implementation down to the lowest level and (2) supposes that an agricultural subsidy program can deliver environmental goals -- a violation of the "one tool per task" law of policy design.[3]

But (3) may be more important. Who were the people raising their hands? Bureaucrats with a certain "by the book, command and control" personality that is quite different from that of entrepreneurs -- the people with a known ability to motivate people to change behavior and adopt new ideas.[4]

These "master planners," in other words, have a very slight chance of success and a much greater chance of failure even if they are motivated and smart. (It's more likely that they are biased or corrupt.) Their answers implied that they do not respect disaggregated, bottom-up solutions that empower those subject to the environmental standards, since those 118 people knew more about protecting all of the EU's 200 plus environmental niches than locals did.[5]

Bottom Line: Lots of people think they should be put in charge, but they shouldn't. Empower people to defend themselves (via bureaucratic regulation/laws/etc.), so they can find local solutions to local problems.

[1] True, they had to raise their hands for #1 and do nothing for #2 (the default option), but I have no problem with the fact that some people are too shy to raise their hands. The one guy who agreed with me, in fact, just nodded in my direction and said "yes" -- he didn't raise his hand.

[2] Not the topic, but I'd also argue that the CAP will only be effective in setting standards for "good environmental quality," while leaving implementation and enforcement to local authorities with the flexibility to find their own solutions -- a situation that is not -- informally -- allowed within the CAP just now.

[3] Read Hayek on the knowledge problem, or how bureaucrats are myopic.

[4] I thank JP -- a senior bureaucrat -- for this helpful insight. Also read this interesting article reporting that 35% of entrepreneurs suffer from dyslexia. Compare this number with 10% of the population as a whole and 1% of professional managers. Dyslexics may not be good managers, but they are sure better at spotting and finding solutions to problems!

[5] But isn't it better to put the EU in charge if locals cannot get the power to remove vested interests who are blocking good environmental policies? No, because those local power brokers are not only going to be able to block or delay the EU. What's necessary, instead, is a form of "local empowerment" that gives local environmental groups a property right in a clean environment. That's what they will need -- per Coase -- to change their local situation. Read my paper on top down vs bottom up delivery of international aid -- a topic that Bill Easterly has covered for years.

3 comments:

Freude Bud said...

What evidence do you have that bureaucrats are "more likely biased or corrupt" than entrepreneurs (or anyone else for that matter?) Why doesn't a wild generalization like that require serious investigation to be considered credible? Meanwhile, yesterday in the US another entrepreneur at Peregrine was found to have filched segregated customer accounts, on the heels of LIBOR and MF Global, led by that serial entrepreneur Corzine.

Eric said...

Interesting post.
Thanks for the poll.
I agree with Fruede Bud that your conclusions appear to be overly generalized.
My hypothesis about the poll is that
1. The people in the room chose the jobs that they did because they thought that a centralized solution would be a best solution.
2. Once a lot of hands started to go up it would have taken more courage or stupidity to keep your hand down especially if your boss or colleagues were raising their hands.

David Zetland said...

@Eric -- agreed.

@Freude -- Good question. Maybe everyone is biased and corrupt but bureaucrats (monopoly power) can do far more damage. Read this.