Wednesday, September 28, 2005

Why do benevolent politicians lie?

Some people say that the reason politicians lie is because the public doesn't want to hear the truth. People want to hear what they want to hear. When two candidates are running and one of the tells the truth and the other says what the public wants to hear, the one who says what the public wants to hear wins the election. Thus, and there are exceptions to this, if you want to win an election, you better start lying, because the guy who's telling you the truth doesn't have a chance.

The 1988 presidential election is an example of this. You will recall the famous lie, "Reeeaaad myyy llliiipsss, nnoooo neeewww taaaxxxeeesss" was the famous lie that Bush (father) told over and over again. Maybe Bush could say that the public misunderstood him and he was saying "Know new Taxes". I caught it at the time. I don't know why everyone else didn't see through it.

But Bush had to tell that lie because Dukakas said that in order to reverse the Reagan deficit, there's going to have to be a tax increase. But that's not what the public wanted to hear. The public wanted to be lied to. So Bush gave the public what they wanted. But had Bush told the truth, he would have lost the election to someone who would lie. In 1988 the public didn't want to hear that the Reagan debt was real and had to be paid back.

By 1992 the situation had changed. The deficit was growing exponentially and Bush didn't have a plan. "Read my lips" wasn't going to work twice. In 1992 the voters were ready for the truth about the deficit and wanted a man with a plan on how to fix it. In this case Clinton told the truth, but the public wanted to hear the truth and the Clinton plan had merit. Clinton run and one on the issue of fixing the economy and taking fiscal responsibility. But had Clinton run in 1988 and told the truth he would have lost. In 1992, the truth worked.

One of the final conclusions in Stokes is that policy switchers in Latin America 1990's did not act shirking, say, pursuing their own interest. In fact, they just wanted to remain in office, to be reelected, and in many cases they succeed. Those who promoted security-oriented agendas in campaign and after being elected, change their mind to efficiency-oriented (market) policies were succesful in addresing the economy. Markets were very jealous watchers of those politicians, and they knew that. Lenders buffered those governments to the neoliberal policies, but they also gave those switchers support, confidence and approval to stabilize their economies. And this tandem proved fabulous for a while, compared to consistent governments, who failed to produce growth and stability.

But, why do benevolent politicians lie? Are politicians forced to lie about their unpopular programs if they want to be the minimal chance of being in office? This would be a real unpleasant world if this was true. In that world, politicians only could be believed in their final goals, not in the means they say are the appropiate to get these goals. And one never is sure about the relation between means -that you can see-and goals -that you just can expect, at best.

Are cuts in taxes the best mean to stop the budget deficit in the US? Or, in a debt crisis, when a raise in taxes is needed, who should pay most for the new increase?
Obviously this is a game of winners and losers, specially in the case of unpopular policies. And each social group has it preference, if we can categorize them according to some criteria on the impact the new policy will have on them -tax the rich, tax the poor. Alesina and Drazen (1991)analyzed that to discover that this is a war-of-attrition game, in which both sides compete maintaining the unsustainable status quo, until some of both groups accepts to bear the biggest part of the painful reform. That explains why some unpopular policies are delayed more or less time: when a new election creates a majority that overcomes the equilibrium between both groups, or when one of the groups cannot shield itself much more time under the crisis (think on hiperinflation, f.ex.), the other group impose its economic receipt. And curiously they found that most of the times it is a regressive solution, against the poor.

In this social tension and conflict, politicians lie. And they switch their promises. They try to avoid those scenarios of mass discussion about the means, that delay and delay the painful reforms. And, additionally, increase the social costs of those reforms! Sometimes a quick reforming start is a second-best solution v. a big debate about who should bear the costs of the reform, specially if it is true that poor groups are more likely to lose the debate...


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