I ran across a concept the other day that explains a lot about how and why certain things are happening today — and why we voters are virtually powerless to stop it.
The concept is “rational ignorance,” and was coined by George Mason University professors Gordon Tullock and James Buchanan.
When I went looking for a simple explanation, of course, I found it in a 2001 column by one of our favorite columnists, George Mason economics professor Walter E. Williams. Read it for yourself here.
What Williams describes explains a lot about such things as why our politicians are so hot to subsidize certain industries such as auto makers, green power companies, public employee unions, etc. While it costs each of us voters a few dollars, it is worth millions to a few, who find it worthwhile to lobby, cajole and bribe the powerful to get what they want.
“Politicians exploit rational ignorance by conferring large benefits on certain constituents whose costs are widely dispersed and borne by the general population. Take the sugar industry,” Williams writes. “It pays the owners and workers to organize and tax themselves to raise money to lobby Congress for tariffs on foreign sugar. If they’re successful, it means millions of dollars in higher profits and wages. Since they are relatively small in number the organization costs are small and the benefits are narrowly distributed. The Fanjul family, who owns large sugar farms in the Florida Everglades, capture an estimated $60 million annually in artificial profits.”
The cost to the average consumer of sugar is a dollar to two, Williams says.
But when you take all the tariffs and sops and handouts to various groups, even back in 2001 before the flood gates opened, the cost to the average American family was $5,000 to $6,000 a year.
Cap and tax alone could add several thousand more a year.
What’s the solution?