Public choice theory - the application of economics to politics - is inspired by classical liberal principles of free markets and limited government. With its focus on government depredations on individual liberty, it clearly favours an appointed chamber over the elected option.
First, in the principle of enlightened self-interest, public choice overturns the belief that in our public personas, we act contrary to individual desires. Politicians are no exception.
‘Instead of assuming that government aims at some particular goal,’ explained Gordon Tullock in The Vote Motive, ‘and then calculating how it should be achieved, students of economics of politics assume that the individuals in government aim at raising their own utility, that is, serve their own interests within certain institutional limits, and then inquire what policies they can be expected to pursue.’
This view was shared by Frédéric Bastiat. ‘If the natural tendencies of mankind are so bad that it is not safe to permit people to be free,’ he argued in The Law, ‘how is it that the tendencies of these organisers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind?’
There should be little expectation that an elected House of Lords will be resistant to the practice of holding out the allure of taxpayer-funded largesse for electoral support. Tullock stated the matter without illusion:
‘The market operates by providing a structure in which individuals who simply want to make money end up by producing motor-cars that people want. Similarly, democracy operates so that politicians who simply want to hold public office end up by doing things the people want.’
F. A. Hayek was rather more pessimistic, lamenting in Economic Freedom and Representative Government that ‘...even a statesman wholly devoted to the common interest of all the citizens will be under the constant necessity of satisfying special interests, because only thus will he be able to retain the support of a majority which he needs to achieve what is really important to him.’
With an elected House of Lords, public choice theory points to more government programmes and more taxation to pay for them. By contrast, the appointed chamber - with members selected for the variety of professional experience and expertise they bring to legislative oversight - displays an independence from electoral politics that translates into impartial, ‘vote-free’ considerations of policy. Even party whips are not assured of complete compliance (which is exemplified on the crossbenches).
‘Government failure’ is the second tenet of public choice theory that bears upon House of Lords reform: while most economists will agree that markets are not perfect, the conventional wisdom that these shortcomings can be corrected by the state is wrong. Government failure is a greater problem than its market counterpart as incentives for self-correction are largely absent.
Yet this faith in government extends to proposals for an elected House of Lords, where it is taken as given that ‘more democracy’ will result in better government, when public choice theory suggests otherwise. Where now the House of Commons serves as the ‘confidence chamber’, with the Lords acting in a complementary role of scrutinising and revising legislation - a system where, as Tullock conceded, the aims of limited government can be achieved - two elected chambers will clash as each exerts its mandate to represent the will of the people.
Writing for the Parliamentary Campaign for an Effective Second Chamber, Professor The Lord Norton of Louth observed that two elected chambers will divide, not enhance, accountability, as core accountability becomes shared. Deadlock may ensue, with the two chambers horse-trading to reach a compromise for which no one voted. Britons have had a taste of this democratic dish with the legislative programme of the coalition government.
Such is the likely future of an elected House of Lords, competing not only for votes and power, but for spoils as well. An ‘escape’ from this species of over-government already exists in the form of an unelected - and thus ‘restrained’ - upper chamber.
Public choice theory, then, has much to teach proponents of House of Lords reform who, in like measure, favour individual liberty and fear the growth of government. An appointed chamber is more likely to preserve freedom and restrict the reach of the state than the elected alternative, where expansive and activist tendencies are inherent.