Letter: Views from a public choice economist
Jackson explains public choice theory in response to a recent letter to the editor about North Dakota's workforce shortage.
As an economist and researcher, it’s always a pleasure to talk with people interested in understanding economic theory and the real-world implications. I recently had the opportunity to speak with Forum reporter Jeremy Turley as he prepared an article about the impact of Gov. Doug Burgum’s decision to end federal unemployment benefits in North Dakota. I thought our conversation was well-represented in Turley’s article but, understandably, he was not able to include everything that we discussed. It was therefore disappointing to see my views, and my field of study, maligned in a recent letter to the editor .
For that reason, I want to expand on my views and the important contributions of public choice economics.
First, I agree fully that the availability and cost of child care is a major concern for families as they decide to reenter the labor force. I spent considerable time discussing North Dakota’s daycare shortage with Turley.
Second, I am a proponent of immigration and previously opined about this issue in a Forum column titled “There is plenty of work available for North Dakotans and immigrants alike.” In that piece, I discuss economic research by the Brookings Institution that found immigrants improve the living standards of Americans “by boosting wages and lowering prices.”
Third, I suggest that many factors play a role in the current labor shortage. This means, as quoted in Turley’s article, that incentives – such as the federal unemployment benefits – do matter. But it also means there is likely no magic-bullet public policy – including ending the benefits – that will fix North Dakota’s long-standing workforce shortage. It is the marketplace that provides a solution. The interaction between supply and demand would lead to higher wages as the market adjusts. As Mike McFeely points out, “ capitalism is a two-way street. ” That is why I believe “the firms that will be able to continue operating are those that can offer their employees a benefits package that makes them want to work for them.”
Lastly, I want to touch on public choice theory. This theory was partly established by the late, eminent economist and NDSU alumnus Mancur Olson. Far from not taking actual people into account, public choice seeks to inject humanity into the economist’s understanding of society.
Prior to the advent of public choice theory, the economics discipline viewed public policy as if executed by an all-knowing government that perfectly maximized social welfare; every decision in society was reduced to solving a system of mathematical equations. Public choice theorists, including Nobel laureate Kenneth Arrow, pointed out that this view was flawed because the actors inside the political process are themselves human with their own individual behaviors and preferences leading to widespread disagreement and the impossibility of a clearly defined concept of social welfare to maximize.
All humans, including policymakers, make choices in accordance to their preferences. Some may have purely selfish preferences while others heavily regard the interests and needs of others. Public choice theorists, including myself, believe individuals’ preferences are formed by their individual belief about what brings about the greatest “quality of life that people yearn for and that should make North Dakota a really desirable place to live.”
Jeremy Jackson is the director of the Center for the Study of Public Choice and Private Enterprise and professor of economics at North Dakota State University. His views are his own.
This letter does not necessarily reflect the opinion of The Forum's editorial board nor Forum ownership.