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In his book Human Action: A Treatise on Economics, Ludwig von Mises states:
Human action is necessarily always rational...When applied to the ultimate ends of action, the terms rational and irrational are inappropriate and meaningless. The ultimate end of action is always the satisfaction of some desires of the acting man. Since nobody is in a position to substitute his own value judgements for those of the acting individual, it is vain to pass judgement on other people's aims and volitions. No man is qualified to declare what would make another man happier or less discontented. The critic either tells us what he believes he would aim at if he were in the place of his fellow; or, in dictatorial arrogance blithely disposing of his fellow's will and aspirations, declares what condition of this other man would better suit himself, the critic. (pp 18-19)
While Mises spends whole chapters defining his words with rigor, Caplan is sloppy by comparison, inferring his definitions and often sliding them around. Caplan falls right into the pattern predicted by Mises, accusing democracy of "failure" and voters of being "irrational" because they fail to move toward "beneficial" policies, but this of course includes the unexamined assumption that other people view "benefit" the same way Caplan does.
Likewise, he mistakes "democracy" for majoritarian rule or even sometimes collectivism. Take, for instance: "Democracy could be far more limited than it is now without risking civil unrest." (p 1) and, "In democracies the main alternative to majority rule is not dictatorship, but markets." (p 3) If we take "democracy" as a shorthand for representative government and individual freedom, then free markets are to economic activity what ballots are to the political arena. The two are not in conflict but two sides of the same coin. One shudders to think what Caplan has in mind to become more to fill the vacuum as "democracy" becomes "far more limited."
We get a glimpse at his proposed alternative when he states, "and economists, like other experts, deserve the benefit of the doubt..." (p x) Americans had their fill of "experts" murdering their fellows by the tens of thousands during the peak of the COVID-19 pandemic, not to mention causing serious and lasting economic, educational, and social harm. These same "experts" twisted political power and popular media/social media to suppress the handful of experts brave enough to challenge the accepted-though-wrong consensus in the so-called Great Barrington Declaration.
Speaking of expert consensus, Caplan pretends to an almost universal consensus among economists that just happen to match his own point of view, making light of all the popular perceptions of there being more opinions than economists in the field. He cites extensively from one source of empirical data--the Survey of Americans and Economists on the Economy (SAEE)--which conveniently seems to back his magical consensus finding. Mixed generously with his quotations and tables of empirical data from this survey, one finds Caplan continuously injecting his own suppositions and hypotheses, making it incumbent on the reader to go slow and be careful to avoid absorbing one of these off-hand assumptions as something data-driven. For example, "The public presumably lacks such a sophisticated argument, but happens to reach the same conclusion." (p 60) "Presumably?" "Happens to?" Sophism indeed.
Yet Paul Krugman, from whom Caplan quotes generously, may seem to accept this consensus in his technical writings and his Nobel-earning work. But he completely challenges this consensus in his day-to-day writings for the New York Times where he opposes even basic supply-demand theory by denying a relationship between minimum wages and employment, or, more infamously, in his 5 July 2015 piece about Greece declaring that the Greeks did everything right, despite having the benefit of 20/20 hindsight showing Krugman and the world that in fact, they did not (at least if economic prosperity was the intended goal, which is Caplan's unexamined assumption as to what underlies "rationality").
This highlights the wider problem, that even if in academic circles there is an economic consensus around the Chicago School and that Keynesians and Modern Monetary Theorists and Socialists (like Joseph Schumpeter, from whom Caplan also quotes generously) and Anarchists and others simply did not exist, the "economics" that the public mostly consumes is often at extreme variance. It is an article of faith that trade deficits are bad, never mind that running the highest possible trade deficit is always best (do you want a few groceries for your hundred dollars, or carts full of them?). CNN once "fact-checked" the notion of minimum wages causing unemployment by citing a study by named economists that said otherwise. Never mind that anyone who thinks a study, which is an opinion or an assessment or a conclusion--but not a fact--should be used in "fact-checking" should be permanently disqualified from fact-checking.
More of Caplan's insensitivity as to what motivates people, what makes their choices rational to them, comes out quite clearly in his comments about immigration. Sure, to an economist capital and labor must meet, and whether the capital flows to the poor country in terms of foreign direct investment or the labor flows to the capital in the form of immigration, it makes no difference. But to those stubborn xenophobic "irrational" people, it might just be that they value their culture and may wonder at the impact of absorbing large numbers of people from other places where child brides or female genital mutilation are common, or other cultural attachments that may seem incompatible with a receiving country. One of particular concern might be the fact that these people are fleeing a poor country. Countries are poor because of gross misgovernance, empirically verifiable by looking at the rush to prosperity that happens in places where people are free and the rule of law adequate. Such people rushing to better governed countries may bring their expectations and practices of corruption and kleptocracy with them. Yes the economic benefit of migration is easily demonstrated, and the free flow of people, goods, money, ideas, etc., is one of the major goals of the Liberal world order. But in reality, there may be limits as to what any one place can usefully absorb at one time and asking questions about this does not instantly make a person an ignorant xenophobe or "irrational."
When, late in the book, Caplan gets around to tossing around alternative ideas about what "rational" means, he seems to settle on "unbiased" or "truth-seeking." He completely overlooks, even while bringing it up himself, that people have complex motivations and varied, competing, and yes, even conflicting goals. Caplan is naive about people's truth-telling about their desired end goals, as most people do a great deal of self-deception even on a day-to-day level (talk to the psychologists about defense mechanisms, for instance). So while they may intend to be honest when stating a goal, like a New Year's Resolution, there may be a great deal of subtext that they themselves are trying not to face.
Caplan's solution to the fact of people stating a goal and then not choosing the most efficient path toward it is to use the absurd label "rational irrationality." His description of it is really worth working through and there is much merit in it. But it overlooks the starting point, that only each of these individuals can decide for themselves what is actually "good" and what paths are best to take them there, especially since they have multiple goals competing for their time and resources. Much easier for Caplan to assume that all individuals really want the goals of the Chicago School of Economics and everything they do or say suboptimal of this makes them irrational, but these other factors, like their feelings (yuck!) make such "irrationality" "rational."
Take how he allows, "If individuals get a sense of meaning and identity from their worldview, cost-benefit analysis counts it a benefit," but, "the social cost of irrationality exceeds its benefit." (p 145) So what is this "social cost" that Caplan conveniently is able to exactly calculate? Why, it's the reduction of per capita income by $10,000 a person, of course! Never mind those like Mahatma Gandhi or Mother Teresa who make poverty a preference... Those who gain a benefit from meaning and identity may also gain a benefit from solidarity with the proletariat and not amassing wealth out of proportion to their actual needs, making it all benefit with no cost whatsoever!
Just as blind to the impossibility of knowing the good for others, Caplan declares, "The self-interested voter hypothesis--or SIVH--is false." (p 149) And how do we know this to be categorically true? "In the political arena, voters focus primarily on national well-being, not personal well-being." (p 149) Spend five minutes watching Fox News, then tell me what is in the "national well-being." Now spend five minutes watching MSNBC, and tell me if they are agreed as to "national well-being." No one can factually speak to what is the good for a single other individual, not to mention a diverse nation of 340 million people of varying backgrounds, religions, beliefs, goals, strengths, weaknesses, hopes, fears, etc. Lucky for Caplan, all that is in the "national well-being" can be measured by GDP and other convenient Chicago School tools. True love, romance? Bah humbug!
Caplan thoroughly discounts the importance of what is presented to the public in terms of what is presented in so-called news, social media, entertainment, popular culture, propaganda, and yes, the politicians themselves. He allows that politicians have wiggle room around the margins to play fast-and-loose with voter preferences but figures them pretty well tamed by voters otherwise. This discounts the many times in history when elected leaders boldly moved in very unpopular directions but won voters' trust and support by means of their results with the benefit of time.
Caplan likewise diminishes the significance of voters ignorance, rational or otherwise. Given the above, he greatly underestimates the amount of information that voters eagerly consume that is wrong to begin with, in terms of economic theory. Therefore, even those who intersect with many of Caplan's goals may really think the methods they have been taught their whole lives might be true, no matter how Frédéric Bastiat may have exploded such sophisms centuries before in his entertaining, enlightening, and little-read works.
Even Caplan's own empiricism tends to run counter to some of his arguments. He claims that owing to voter distrust, "...asymmetric information leads to less government." (p 106, emphasis in original). Yet in the United States--Caplan's main focus--we have steadily more government over time, which consumes ever more of the GDP, promulgates ever more thousands of pages of legislation, regulation, and tax code, and fills ever more prisons with criminals. It is curious Caplan does not even pause to reflect on this obvious contradiction, even as he makes mention of it on page 189.
Caplan is sore that some of his other critics called him out for being light on prescription. But much of what he prescribes is inferred, not spelled out or examined in terms of Henry Hazlitt's famous "and-then-what" single lesson in economics. For instance, he unreflectively notes, "democracy can be limited, regulated, or overruled." (p 190) casually throwing out some examples such as "judicial review" or "supermajority rules." But this misses Thomas Hobbes' point that if there is a check or balance upon Leviathan, then it is the check or balance that is Leviathan. Given Caplan's fuzzy and sometimes shifting notions of what "democracy" even is, it is dangerous to see him playing around with ideas about further limiting it (as if the growth of the unaccountable bureaucratic-administrative state and its endless "experts" were not check enough upon it already). Caplan himself is perfectly aware that, "In a dictatorship government policy is often appalling, but rarely baffling." (p 1)
As exasperating as it could be at points, it was enjoyable reading the book. Caplan's investigations and thought processes are worth following and exploring, and many others are now familiar with the work and likely to cite it, for better or worse. Those with an interest in economics or democracy (whatever that means!) or both are well recommended to read it, though read it carefully for yourself.