Public Choice Theory Explains SO MUCH | Episode 33 | Everything is Everything

We tend to think of the government as the solution to all our problems. But governments are people. And people respond to incentives.
Welcome to Episode 33 of Everything is Everything, a weekly podcast hosted by Amit Varma and Ajay Shah.
In this episode, Amit and Ajay talk about a branch of economics that they both love: Public Choice Theory. This is the study of how politicians, bureaucrats, special interests and voters all respond to incentives -- and why this often goes against the interest of We the People. This is why government failure is ubiquitous.
This is an essential episode as a stand-alone -- but you can also watch it in conjunction with our earlier episodes on the state:
1. Understanding the State -- Episode 25 of Everything is Everything: • Understanding the Stat...
2. When Should the State Act? -- Episode 26 of Everything is Everything: • When Should the State ...
If you like watching Everything is Everything, please like, subscribe, share, comment. :)
TABLE OF CONTENTS:
00:00 Packaging
00:13 Introduction: The Bodybuilders
00:37 Chapter 1: Why We Love Public Choice Theory
06:01 Chapter 2: Some Resources
08:05 Chapter 3: The Incentives of Politicians
15:38 Chapter 4: The Role of Special Interests
26:10 Chapter 5: The Incentives of Bureaucrats
35:55 Chapter 6: Now Let’s Talk About Voters!
49:46 Chapter 7: The Importance of a Constitution
USEFUL RESOURCES:
1. Amit on Twitter: / amitvarma
2. Ajay on Twitter: / ajay_shah
3. The Seen and the Unseen -- Amit's audio podcast: seenunseen.in/
(Also on all podcast apps. And KZbin, though less than 1% of listens come from here: www.youtube.com/@TheSeenAndTh...)
4. Ajay's organisation, XKDR Forum, on KZbin: / @xkdr
5. In Service of the Republic -- Vijay Kelkar and Ajay Shah: amzn.eu/d/hwGILb3
6. The Art of Clear Writing -- Amit's writing course: indiauncut.com/clear-writing/
7. Public Choice Theory -- Episode 121 of The Seen and the Unseen: • Ep. 121: Public Choice...
8. Public Choice - A Primer -- Eamonn Butler: iea.org.uk/publications/resea...
9. The Calculus of Consent -- James M Buchanan and Gordon Tullock: amzn.eu/d/4EsBJdZ
10. The Logic of Collective Action -- Mancur Olson: amzn.eu/d/65DWdCe
11. An Economic Theory of Democracy -- Anthony Downs: amzn.eu/d/icd5Mgi
12. Where Have All the Leaders Gone? - Amit Varma: tinyurl.com/3nynebsa
13. Price Controls Lead to Shortages and Harm the Poor -- Amit Varma: indiauncut.com/price-controls...
14. Politics -- Amit Varma's limerick: indiauncut.com/politics-and-m...
15. A Few Thoughts on Limericks -- Amit Varma: indiauncut.com/a-few-thoughts...
16. Restaurant Regulations -- Episode 18 of The Seen and the Unseen (w Madhu Menon): • Ep. 18: Restaurant Reg...
17. The Great Redistribution -- Amit Varma: indiauncut.com/the-great-redi...
18. Government's End: Why Washington Stopped Working -- Jonathan Rauch: amzn.eu/d/gzQ7KeG
19. William A Niskanen on Amazon: tinyurl.com/2nnrndza
20. Parkinson's Law -- C Northcote Parkinson: amzn.eu/d/bykwKPE
21. The Life and Times of KP Krishnan -- Episode 355 of The Seen and the Unseen: • Ep 355: The Life and T...
22. Housefull Economics on Pragati: www.thinkpragati.com/category...
23. The Economics of Voting -- Amit Varma: tinyurl.com/yx5cmz9d
24. A Life in Indian Politics - Episode 149 of The Seen and the Unseen (w Jayaprakash Narayan): • Ep. 149: A life in Ind...
25. The Gentle Wisdom of Pratap Bhanu Mehta -- Episode 300 of The Seen and the Unseen: • Ep 300: The Gentle Wis...
26. Arrow's impossibility theorem: tinyurl.com/5a4tw56c
27. The Anti-Defection Law - Episode 13 of The Seen and the Unseen (w Barun Mitra): • Ep. 13: Anti-Defection...
28. Our Parliament and Our Democracy - Episode 253 of The Seen and the Unseen (w MR Madhavan): • Ep 253: Our Parliament...
29. Vitalik Buterin Fights the Dragon-Tyrant -- Episode 342 of The Seen and the Unseen: • Ep 342: Vitalik Buteri...
30. The First Assault on Our Constitution - Episode 194 of The Seen and the Unseen (w Tripurdaman Singh): • Ep 194: The First Assa...
31. Shruti Rajagopalan on our constitutional amendments: • Shruti Rajagopalan on ... .
Produced by Amit Varma
Shot by Vaishnav Vyas and Nomsita MS Haritashya: / vaishnav.vyas
Edited by Nomsita MS Haritashya: / nomsitaharitashya
Thanks to Gaurav Chintamani for helping with sound: / gaurav_chintamani
Chapter images & additional illustrations by Simahina: / i_am_simahina

[@maheshsingarapu]

Request the cameraman to cut to show Mr. Shah's face whenever Mr. Varma makes a dad joke.

[@amitvarma]

He loves them.

[@dylanfernanes]

Ajay Shah bench pressing all the piled up guys bench pressing from the New Year's episode of TSATU.

[@rushabhsagara8766]

That initial "bench press" banter was just so Shifu and Po like of Ajay and Amit!!🤣🤣 And to that "Houseful Economics" section - a big YES!! Bring that on, Amit!

[@sohamdas]

Oogway and Po.. Oogway was the kind, understanding, gentle and wise teacher that Ajay is.

[@pune4321]

A big yes for Houseful Economics to be included in all episodes of this podcast

[@mohakmathur]

Yes, pls do the 'Housefull Economics' in EIE, would love to see that! I so relate with Ajay's point on the role of Bollywood (and have been trying to make this point among my social networks for years)... Thanks for this episode! ❤

[@sathyendrababu7868]

Ajay"s take on bureaucracy, voting vis a vis cost benefit,, the elite writing the Constitution ,how a small community captures power to destroy nation/ continent were mind blowing 😅 revealing🎉 & mentally exherating❤ Amit's take how a fairly liberal Constitution was put on a illiberal society is equally mind blowing 🎉 This episode is to be downloaded & saved for ref 🎉

[@sriharshsharma4547]

Thank you for this ! An introduction to so much I wanted to learn about but never knew where to start !

[@gokulnair5618]

Messrs Ajay and Amit - thank you for the public service that you guys have embarked upon, one episode at a time.

[@hgabliddilbagh]

Thanks for introducing the term Administrative state and the masterful explanation.

[@rijzone]

Back-to-back masterpiece,!! At first few seconds, I couldn't focus on the words as I was struck by the exquisite framing. But the implications of this discussion soon gripped me. I love the debate on the voting systems and often ponder on this. I think in India, we can perhaps elect only the Rajaysava in a proportional system. It can give us a stable government in the centre but policies will always need a popular mandate to pass. Please do one episode on 'what both of you would do if you ever come to power'. I think it would be interesting to hear what the first week of Ajay Shah's government would be like. Perhaps a bit like Xavier Millet but slightly less whacky. Also, please consider building a community around this channel. If there's any way we can interact with you guys more actively and perhaps ask questions, it would be super exciting.

[@Dokja0]

I dont want to stop.. Haha. This is so freaking good.

[@ajayshah5705]

There is a huge back catalog...

[@harsh1kumar]

Awesome stuff. This captures a lot of interesting ideas in a one hour video, so would be a great reference material to share with friends and family.

[@kazimustaqeem]

Here after 12 min of uploading. This is what addiction looks like.

[@amitvarma]

Everything is Everything. Making India smarter, one dopamine hit at a time.

[@chintandave9352]

Yes for Houseful Economics

[@Ghazalmetal]

Benchpressing…tell me where to stop…Amit - Too cute you are. BIG YES to the housefull thing. Also, Ajay should be made to do that section once a month where he has to see a film that is recommended by subscribers of this channel. Amit can run that poll on youtube.

[@RaghurajHegde]

My one vote for Housefull economics. I know my one vote may not change my material life but I’m doing my duty as a consumer of Everything is Everything! 😅

[@maany86]

Please include a Housefull economics. A huge fan of it when it was published in Pragati. Glad that page exists even now.

[@aritraray3068]

Excellent episode once again. Can you guys do an episode on the landscape of the various economic schools of thought out there? Marxism - Keynesian Economics - Adam Smith - Chicago School of Economics i.e. Milton Friedman - Austrian School of Economics i.e. Hayek/Mises (perhaps even the differences between their ideas) and maybe even Anarchism ?

[@ajayshah5705]

You could. It's more interesting to try to figure out the world from first principles, without attachment to an ideology.

[@aritraray3068]

@@ajayshah5705 Of course. I just feel a discussion on the various philosophies out there (looking at them from a bird's eye point of view) and how these philosophies came to evolve might make for an interesting episode.

[@amitvarma]

That's a good idea from the point of view of the history of thought. We'll do it someday!

[@rohinibhattacharyya7452]

Houseful economics type will be great , pl start it

[@Puranpoli_eaters_collective]

One addition to the list of books on the topics covered in this episode is Milan Vaishnav's 'When Crime Pays: Money and Muscle in Indian Politics'. His thesis discusses the incentives of babus that Amit mentioned and focuses on a nexus between Gundas and Babus, a force of coercion perhaps partly used to employ unofficial regulations to support the business interests of a block of wealthy voters.

[@amitvarma]

Milan has been on The Seen and the Unseen discussing that book: kzbin.info/www/bejne/p3zRZ2mhbNBmnck

[@oflavia2910]

😅 the monk and the gun film.😊 Peace vs conflict!

[@cosmicwarriorx1]

Amit is sooo funny 🤣

[@vinaysuchedeutube]

I wish you guys could get into the YT shorts game. Explain these concepts in small clips (perhaps if possible in Hindi, Gujarati, Bengalli since you guys would be proficient in it), though I understand it will be tough to do it. I have heard Amit rant about (liberal) constitution being thrust upon illiberal peoples. The way to fix this would be make this content accessible to illiberal poeples as well. I interact with illiberal (generally with fascist tendencies given the current climate) peoples everyday and one of the reason they are such is that they will never watch a one hour video if I share it with them. I want to share these ideas to peoples who are not aware of them. It can be done only in short doses. Also I believe its not an exercise in futility to engage with them. Good episode as usual btw!

[@amitvarma]

I agree that we should do this. Fiding the time and bandwidth is hard!

[@ajayshah5705]

Many, many things are required. Books, papers, 8.5 hour podcasts, 1 hour videos, newspaper op-eds, blog articles, YT shorts, local languages, etc. We're doing many! But not all. You do know Amit does two releases a week? He needs to take bath also.

[@vinaysuchedeutube]

@@ajayshah5705 if only there were waterproof books .. he could shower while he does his research .. :D

[@vinaysuchedeutube]

kzbin.info/www/bejne/Z2bTpqJjmbh4f7ssi=P7TRpuAiGR6ZGiBp

[@mamunurushankar3358]

Nice Episode. I read "Public Choice: A Primer" by Eamonn Butler on a recommendation from Amit Varma. It can be a good start for anyone interested in public choice theory. While Public choice theory would use an economic framework to understand political behavior our objective is not to understand but to create a Liberal society. It requires disincentivizing certain behaviors for a larger purpose. How do you think we could do that? Constitution with checks and balances in one such instrument-Agreed. Considering the present state of institutions we are no closer to the ideal. Then do we have to convince ourselves that social changes are glacial in nature? Or as a society, liberal democracy, with an emphasis on the individual, is against our grain?

[@ajayshah5705]

Good things take very long.

[@anmolagarwal5802]

LIMERICK BY AI: In the halls where the politicians play, Money talks in a grand display. Votes often get bought, And ideals are naught, As wealth paves the electoral way.

[@renujha2614]

There is NOTA... it will get counted and hence make the 'product' change.

[@nerdlearner0403]

Great start with a dad joke.

[@rishavprashar2609]

u should start doing the "housefull economics" already!!! :)

[@Puranpoli_eaters_collective]

sorry guys, but I'm going put it out there. the bench press joke was the highlight of the episode. insightful discussion as always.

[@amitvarma]

Finally we have a discerning viewer!

[@devleenas]

Yes to "Houseful Economics" and "Everythtng" else :)

[@divyabharthidulasiraman5714]

Requesting for an episode on Education, schooling, and the legislative mandates around that. Especially the Right to Education Act, and the 12.1.c mandate within that. Thank you!

[@kratebug]

The Seen and the Unseen episode 19.

[@manasjyotitalukdar2683]

Oohoo.. Quite thoughtful comparison of JLN with PBM. I think it will be great to have an episode of that line, comparing historic figures with contemporary ones. And big yeah to houseful economics too. Can't wait. Keep on bringing the good stuff, chief.

[@muralineel]

Consensus on the constitution- seems to be the sum of Arghyas book - the colonial constitution. It may be colonial but it was a constitution that had wide consensus at the time.

[@renujha2614]

As a First Year Law Student, we have Jurisprudence as a subject in the second term. Our Prof, a very very gentle and sweet man said that we seem to be studying all theories from the Americans and the Europeans... could we read Sant Dyaneshwar and Tukaram, Shankaracharya etc too as they as well as many others were propagating equality, freedom, rights etc much earlier than the Europeans. I thought for a minute... Lo shuru ho gaya saffronisation. But I started listening to your podcasts and see your shownotes... the books and recommendations are not Indian from a pure philosophy part.. Or conceptual writing around duties, rights, morality etc. Could you suggest some if they exist or is this Make India Great Again thinking?

[@ajayshah5705]

There is a lot of good in high Indian philosophy. The modern crudity does injustice to Hinduism. But nobody in India got to the Magna Carta.

[@renujha2614]

@@ajayshah5705 Thank you Sir. Would you be kind and recommend some in your next episode please... largely around equality, justice, morality, rights, duties... I understand that you don't like this word....

[@ajayshah5705]

@@renujha2614 We have duties to each other as individuals. I would just keep this word out when discussing the state.

[@Dokja0]

So my reason for voting is simple. I vote NOTA. But I vote simply because in a sense that is one of the few ways to express my opinion on who should govern. It then does not matter whether or not my vote is consequential or not. NOTA is inconsequential but it atleast shows that i am eager to vote but none of the options convince me.

[@ajayshah5705]

KZbin comments is a good way to express your opinion!

[@Dokja0]

@@ajayshah5705 I guess both are equally effective..

[@miheerkarandikar5148]

Household economics yes please @amitvarma

[@asmodude]

Big fan of Shah sab! Just have one very pertinent question, whats that watch he is wearing? Wonder if there’s a story there

[@ajayshah5705]

See the Declutter episode

[@judhajitsarkar1852]

Why no recommendations?

[@amitvarma]

We put in plenty of recommendations in the episode itself, and they're all in the show notes.

[@randomlee3590]

✨✨✨✨✨

[@vijaymocherla7074]

Lol!, you may have just made babu's realise, that podcasting can be taxed :) They'll now come up with innovative ways to regulate your mode of distribution.

[@amitvarma]

Shhh!

[@saiprudvi5641]

Please bring JP Narayan to a episode.

[@rutvikrs]

This was a fantastic podcast encapsulated why I am a lapsed libertarian and am seriously into Hindutva. 1. Chapter 6 went into some detail on how an liberal thinks a constitution ought to be constructed on harm reduction principle. 2. We don't have the sociology of an industrial society where regulation of unintended consequences of mechanisation, chemacalization and atomization are so freely available. How many kids in India "construct lasers or reactors in their garage", a media trope that is surprisingly frequent. 3. The absolute best part is the guilt collection guised as best practice manual. We have the only liberal section that seriously acts as if we have some role in or are responsible for colonialism, slavery, nationalism, capitalism, mercantalism, corporate lobbying, feudalism, phasiwad and Notseeism. And we have the unique burden of constructing a state minus statecraft.

[@twenty-twenty]

Okay we need a dad jokes episode now. I’m tired of searching for them.

[@yj9032]

I’ll let that bench press joke pass

[@IndiaTides]

There is sense in here that the Indian constitution is somehow much more flawed that American constitution. Do some analysis on it. You would find many rational flaws and practical problems American constitution raised. Indian constitution within defined period of time is more successful than American constitution. I don't think Indians will lose freedom or sense of rights. They will evolve. The flexibility of the constitution is necessary in my opinion else rigidity ends it. The basic structure doctrine gives the rigidity to necessary flexibility.

[@ahmednadim5859]

Your model of a non voter is probably wrong. "good governance" can be seen as a public good. Hence if you don't vote you're a free rider.

[@ajayshah5705]

Freedom includes the freedom to free ride.

[@renujha2614]

Amit your puns are bad. Please dont do them.

[@rijzone]

Puns are never meant to be good.