Political commentators are currently expending much energy trying to explain (what we might call) the Nick Clegg phenomenon – including one contribution to this blog already.
Policy analysis offers an interesting perspective. Cass Sunstein has developed the idea of an availability (or social) cascade. An availability cascade takes place when very little information is generally known about a given topic, so that a small amount of widely-held information is constantly reinforced as people talk with one another and encounter few people who hold contrary views or possess alternative information. This available information then “cascades” throughout society until it becomes widely accepted, even though it may be incorrect or erroneous.
Recent concerns over the drug mephedrone would appear to be a classic example of an availability cascade. Most people know very little about mephedrone other than its apparent implication in some recent tragic deaths. As people speak to one another about this topic this one piece of information is reinforced and no contrary information is encountered. Hence, an availability cascade is created and government is pressured to act under the weight of public opinion.
A similar phenomenon would seem to happening in the case of Nick Clegg: before the first leaders’ debate the majority of the population probably had no clear opinion about the Lib Dem leader, but his impressive performance has led to an availability cascade in which this one piece of information is reinforced and not challenged.
The danger of an availability cascade, however, is that it can lead to poor choices if policy-makers act on the basis of, or in response to, limited or partial information.
Ultimately, this is a danger of political decision-making: a drug is banned or an individual may be elected to a position of extraordinary power on the basis of very little and possibly erroneous information.
The solution, as IEA authors have long pointed out, is to allow as many choices as possible to be taken by people in private markets guided by the information signals provided by the price mechanism. Of course, people will mistakes when choosing in markets, but these mistakes are not imposed on the whole of society and are more easily identifiable and therefore correctable when people’s actions are informed by the signals of profits and losses that exist in the marketplace.
Politics and markets are both imperfect and both prone to “fail”. The question, however, is whether political failure is more problematic than market failure? There is evidence to suggest that this is indeed the case.