Public Choice Theory and False Consciousness

In an article called “The World Trade Constitution,” 114 Harv. L. Rev. 511 (2000), law professors John McGinnis & Mark Movsesian assert that “Because free trade creates wealth for each nation, one would expect national majorities to favor free trade policies over policies that benefit special interests at the majority’s expense.” The article proceeds from this premise to explain why anti-free trade policies nevertheless often prevail in the U.S. and other democracies and how the World Trade Organization’s review and rejection of such policies reinforces democracy in WTO member nations.

Basically, the point here is that concentrated interest groups—the steel industry, for instance—have disproportionate power in democracies for “public choice” reasons, and use this power to enact policies that benefit them “at the majority’s expense.” The benefits of free trade (cheaper goods) benefit the undifferentiated mass of consumers, but these benefits are too small to make it worthwhile for individual consumers to take political action in support of free trade policies; the costs of free trade, however, are borne disproportionately by concentrated groups who have the means and motivation to take political action. So there’s a political market failure. And market failures should be remedied, right? So when the WTO dispute settlement body (a group of particularly unelected judges (horrors!)) declares a member’s democratically-enacted law in violation of its WTO obligations, and authorizes trade sanctions severe enough to coerce that nation to repeal or substantially alter the law, it’s actually reinforcing democracy, not undermining it. After all, free trade policies benefit national majorities, and WTO obligations are only violated when national legislation protects domestic industries and acts as a restriction on international trade. So striking down WTO-inconsistent legislation reinforces the systematically under-represented preferences of the pro-free trade majority. Note that this same stuff happens in U.S. constitutional theory—J.H. Ely and Carolene Products “discrete & insular minorities” against B. Ackerman and public-choice theory’s “diffuse and anonymous” victims of interest groups.

It’s not that the majority is actually pro-free trade. After all, these laws, enacted by democratic, majoritarian processes, aren't pro-free trade. Note the populist appeal of protectionist sentiments (“the Nafta took our jobs” and so forth) in the current presidential campaign and in Congressional opposition to the U.S.-Colombia trade agreement. Rather, the majority ought to be pro-free trade: “one would expect” it, because it’s in their economic self-interest.

Why would someone vote against their economic self-interest? Only because of market failures; because they don’t understand the import of all those little triangles and squares of “deadweight losses” and “transfers” on the graphs showing what happens to your utility when you don’t have free international trade. Democratic majorities are poorly informed; perhaps there are lobbyists afoot, subverting the people’s true will; whatever the reason, democratic majorities are clinging to anti-trade sentiment. And it reinforces democracy to override democratically-enacted legislation when such legislation is mistaken, because the people (at least a majority of the people) actually want good laws that make them better off, instead of stupid laws that benefit special interests.