Political Markets

"Now, Joe, I think you'd better go back into the Senate and keep those senators lined up."
--James Taylor (Mr Smith Goes to Washington)

These pages have frequently viewed politics as markets for political favor. However, Lew Rockwell suggests relating politics to markets amounts to superficial comparison.

Unlike traditional markets where confidence in what is being exchanged is usually high, voters are uncertain about what they will get in exchange for their vote. For example, there may not be enough like-minded voters to constitute a majority, or elected officials may not deliver on past promises.

Unlike nearly immediate feedback on decision quality available in many markets, long lags often characterize the time between trading a vote for political action. Moreover, while cost/benefit analysis underpins many markets, voters are prone to perceive perceived benefits bestowed by the state without grasping their costs.

While interesting points, Rockwell's argument does not invalidate the connection between politics and markets. Elections and other political activities still constitute people engaging in trade (e.g., votes for favor).

More accurate, it seems, would be to state that political markets tend to be inefficient.