Daniel Klein: Why Do Government Officials Believe in Goodness of Bad Policy?

Based on a paper titled Why Do Government Officials Believe in Goodness of Bad Policy?, Daniel Klein talks about bad policies that prevail and persist throughout time even though most economists agree are bad. He discusses one of the possible answers, which is cynicism and villainy usually described as “rent seeking”. On the other hand, the alternative interpretation is that they are systematically wrong, not necessarily evil. For Klein, is a question of culture. I believe that most people are systematically believing bad ideas on a lot of political matters, I think they should be more liberal”. The core elements of Klein’s answer to this question, are self-sorting, screening and belief plasticity and lock-in. He talks about the different options that a person has when there is a conflict of its beliefs regarding policies or ideas and the institutions’, and how do these options really work. Another scenario is that the person doesn’t have prior beliefs on a subject; in this case the beliefs often adapt to the prevailing culture, this is called “belief plasticity”. This ideas come from social psychology, that says that people rely on social cues. "This does help to explain why things can go wrong and can keep going wrong”. Another psychological principle is self-consistency and commitment: people fancy themselves wise and consistent beings. Afterwards Klein shares Adam Smith’s ideas on commitment and self-consistency and the correction mechanisms in private organizations and governments. Klein then discusses cultural systems like technological systems and Paul David’s theory of “lock-in”, specifically the path dependence features: quasi-irreversibility, technical interrelatedness and economies of scale. "All this suggests that government organizations will exhibit a culture that is quite uniform, inert and impervious”. This leaves us with a conclusion regarding the genealogy of organizational culture, that Daniel Klein explains, and also gives principles about incentives and origins: self-exaltation principle, and the founding of the organization. Both suggest that the uniform cultural within the government organization will be pro- governmentalization. Finally Klein gives a final thought from Thomas Jefferson about the cultural challenge and the possibility of correction.