Economists are frequently accused of being advocates for unfettered and unregulated laissez-faire markets, but anyone who has ever taken a basic introductory economics class knows that this caricature is untrue. The basic intro econ class does spend time on explaining what markets do well. It also spends considerable time on the category of “market failures” where markets often do not do so well, including externalities like pollution, investment in public goods, poverty and inequality, provision of information, encouraging competition rather than monopoly, and other categories. But as Jason Brennan and Christopher Freiman point out in “Against laissez-faire democracy” (Economics & Philosophy 2026, pp. 1–17), many of these conceptual problems arise, albeit in different forms, in democratic elections as well. Thus, arguments in favor of rules and regulations to govern the operation of economic markets are also aguments for rules and regulations to govern elections. For example, they write:
“First, good governance itself suffers from public good problems.” For economists a “public good” is something where just about everyone benefits, but it is hard to charge the beneficiaries individually, and so the good is often underprovided. Examples would incluede scientific knowledge, national defense, and highways. For voting, the public good would be voters who take sufficient time and energy to become well-informed about issues and candidates, because society as a whole would benefit from them making such efforts.
“Second, voting clearly suffers from information and asymmetric information problems. For one, empirical work on voter knowledge overwhelmingly finds that many to most voters are ignorant, not merely of the specific social scientific knowledge needed to form policy opinions, but of the most basic political information, such as general social trends, how their government works, what parties and candidates propose to do and who their incumbent election officials are and what they did while in office … While most voters have low information, most politicians and government officers have high information. Just as auto mechanics, used car salespeople, medical doctors, dentists, roofing inspectors, and other market agents could use their differential knowledge to exploit or defraud consumers, political parties and candidates could use their differential knowledge to exploit or defraud voters. For instance, since voters are generally incompetent to engage in retrospective voting, politicians are liberated to make campaign promises they do not intend to keep. … Relatedly and more generally, principal-agent problems occur in democratic elections as well. In governments, realistically, politicians, bureaucrats, and other have a significant independence and only limited and attenuated oversight from voters. Just as the president of a company or the Gen-Ed committee of a university can use their appointed power for self-promotion, so can elected government agents. …”
“It’s an open question whether political competition would be most efficient if it mimicked competitive markets, or whether instead less than fully competitive political competition is best. Nevertheless, in many places, political competition is high constrained. For instance, in the United States, thanks to first-past-the-postvoting, only two parties have any real chance of winning any election. Further, government itself is by nature overwhelming monopolistic. All things equal, in markets, we expect reduced competition to lead to lower quality and higher prices; reduced competition between suppliers usually benefits suppliers at the expense of consumers. We should expect this applies to politics as well. If we think of the parties and candidates as suppliers and voters as buyers/consumers, then the party duopoly and government monopoly should reduce quality and increase costs. It should tend to benefit suppliers (elected officials and government agents) at the expense of consumers (voters).”
“Finally, democracies also suffer from obvious externality problems. Indeed, this is the key difference between markets and politics. Market decisions are usually and mostly internalized; negative externalities are seen as an anomaly to be corrected. Political decisions are by nature public. For instance, about 37% of the eligible voting public, and 26% of the entire population of the UK voted in favour of Brexit, but the effects of Brexit are borne by everyone else, including losing voters, eligible voters who abstained, children and other citizens ineligible to vote, future generations, and foreigners.” Similarly, an existing renter can vote for rent control, without bearing costs of future renters who will be unable find an apartment.
What sort of regulation of voting and democracy do the authors have in mind? Their tone is deliberately non-radical and experimental here–more about possible policies to be considered rather than hard-edged advocacy. They write:
Consider the problem of public goods. The standard market ‘fix’ is to tax, compel, or provide subsidies to ensure provision. The democratic analogue, which would preserve equality, would be to create participatory incentives, such as stipends for voting or taxes and penalties for non-voting. It could include some sort of reward (or penalty) system for engaging with low-burden information deliveries, such as nonpartisan voter guides.
With regard to information asymmetries, the standard market fix is to have mandatory disclosure and labelling laws – such as nutrition and ingredients lists on food – as well as licensing providers (e.g., medical doctors). Governments could require standardized,i ndependently audited candidate disclosures. Governments could require public registration of campaign promises, which are then monitored and fact-checked by independent boards. Access to public debates and public funding of campaigns could depend on compliance with transparency rules. The standard fix for principal-agent problems is to require and monitor fiduciary duties with third-party auditing. Here, the democratic analogue would be to have public promise trackers with sanctions for deceptive claims, such as fines or media scorecards. Public performance scorecards – such as promise-keeping – could determine eligibility for public campaign funding.
The standard fix for problems of bounded and limited rationality is to control the choice architecture and change the default rules. The democratic analogue would be neutral language and uniform ballot designs. Questions and candidates should be listed in randomized order with plain-language summaries. There could be automatic delivery of voter guides and automatic voter registration with opt-out clauses. Ballots could quiz citizens of their preferred policies and map them onto the registered policy-platforms of parties and candidates.
The standard fix for problems of externalities is to impose Pigouvian taxes, quotas and caps, or pollution and emissions standards. The democratic analogue might to be to have narrow output safeguards for certain democratic decisions. This could include requiring supermajorities for some decisions, judicial review for others, or subjecting some democratic decisions to independent expert review with some sort of veto capability that could later be overturned with a supermajority. The standard fix for problems of limited competition is to impose antitrust rules and to ensure platform neutrality. The democratic analogue would be to have great ballot access equalization, and more transparent and neutral inclusion rules for
debates.
An obvious concern about rules and regulations to govern elections is that they are likely to be captured by special interests or political parties. Would Democrats favor a set of rules to be run and monitored by minions of President Trump? Would Republicans have favored a set of rule to be run and monitored by minions of President Biden? But as the authors point out, there’s a kicker here. If you are not willing to consider trust rules and regulations to facilitate elections, because of concerns over how they will be implemented, then you should have similar concerns over how government run and implement economic regulations as well. The authors write about the idea of regulating democracy: “Note that the burden here, as with market regulation, is not to show that regulation will decisively solve all problems, but rather than it will perform adequately, with the benefits exceeding the costs. (We doubt most readers think that market regulation must be perfect and problem-free to be justified. They should apply this same standard here.)”
The post The Challenges of Laissez-Faire Democracy first appeared on Conversable Economist.
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