The adverse selection of political "moderates"

On the lemons among our leadership

A recent post from

Arnold Kling

discusses the adverse selection problem in large bureaucracies:

We can think of an ambitious person playing one of two games. The Favorable Game is trying to achieve the goals of the organization. The Adverse Game is trying to get to the top of the organization. These goals are not necessarily aligned.

A classic example is in the military, in which The Adverse Game works in peacetime but wartime requires The Favorable. In peacetime, generals are rewarded for filling out reports properly, flattering their superiors, and conforming to established doctrine. In wartime, they have no idea how to win. They lack drive, the ability to inspire followers, and the ability to improvise when the standard doctrine is not working.

Civilian bureaucracies suffer from the same adverse pressures. The people who get promoted tend to be people who stick to the party line. They never question superiors. They distrust creative thinkers. Their goal for power is stronger than their goal to serve the public. When they get to the top, they value people like themselves. The agency gets captures by the players of the Adverse Game.

I think of Kling as offering microfoundations for Vilfredo Pareto’s famous circulation of the elites thesis, which drew on Machiavelli’s similar distinction between adventurous leaders, or “foxes,” and the conservative “lions” who climb organizational ladders by playing it safe. Lewis Coser summarized Pareto’s view thusly:

The ideal governing class contains a judicious mixture of lions and foxes, of men capable of decisive and forceful action and of others who are imaginative, innovative, and unscrupulous. When imperfections in the circulation of governing elites prevent the attainment of such judicious mixtures among the governing, regimes either degenerate into hidebound and ossified bureaucracies incapable of renewal and adaptation, or into weak regimes of squabbling lawyers and rhetoricians incapable of decisive and forceful action. When this happens, the governed will succeed in overthrowing their rulers and new elites will institute a more effective regime.

This was written in 1977, distilling a theory from 1935. Nonetheless, it seems scarily apropos of America’s current predicament, from the “procedure fetish” of our administrative state and the so-called “everything bagel” approach of contemporary liberalism, to the overabundance of lawyers and geriatrics in elected office.

The Market for Moderates

You would think that moderates in Congress would try to reform ossified bureaucracies, as declining state capacity and the loss of trust in public institutions is what gives their populist opponents so much energy. Yet if you think about it, the “moderate” label is itself subject to an adverse selection problem.

Ideally, “moderate” denotes an even temperament, a pluralistic conception of the good, and a pragmatism directed at solving problems and building consensus. Who could be against that? On the other hand, the more a politician is captured by special interests the more it pays to feign moderation, avoid unnecessary controversy, and to embody the Current Thing. The resulting adverse selection of Manchurian candidates into the moderate camp thus sullies the broader brand — an ideological version of the classic market for lemons.

There’s nothing extremist about a belief in dynamic government. But so long as self-described moderates show more concern for restoring the SALT deduction than reversing institutional decay, the establishment can’t be counted on to “reform thyself.” It’s a kind of innovator’s dilemma: Political incumbents struggle to coordinate on institutional rejuvenation even when the internal contradictions are staring them in the face.

Alana Newhouse put it well in a column last November: “The real debate today isn’t between the left and right. It’s between those invested in our current institutions, and those who want to build anew.” This latter camp are what Newhouse calls the brokenists: “people who believe that our current institutions, elites, intellectual and cultural life, and the quality of services that many of us depend on have been hollowed out.”

Our elites weren’t always so compromised. Take President Dwight Eisenhower, whose “modern Republicanism” represented a substantive vision of political moderation. Despite occupying the middle ground in most domestic matters, Eisenhower launched DARPA and NASA, authorized the interstate highway system, and obtained a truce in the Korean war. At the same time, he balanced the budget in three of his eight years, cut the federal workforce by more than 10 percent, and slimmed federal expenditures from 21 to 15 percent of GNP. As Geoffrey Kabaservice put it, “Eisenhower was in fact an exemplar of effective conservative governance.”

America could use another Eisenhower right about now. But how would we know one when we saw one? Information is asymmetric, and the moderate label has lost all its value. A more credible signal of commitment is now sorely needed; something that separates the reformist wheat from the establishment chaff. Until then, don’t be surprised when self-described “moderates” aren’t exactly who we brokenists go rooting for.