Elite Biases Make Policy Biases

A 2014 paper predicted U.S. policy changes over four years for 1,779 issues, using the positions of four groups of influencers: business-based interest groups (55), mass-based interest groups (31), median public opinion (6), and elite public opinion (100), i.e. that of people at the 90th percentile of income. (I’ve listed their relative influence in parenthesis. Criticism says mid-class (not poor) influence is bigger.) While elite and median public opinion had a 0.78 correlation, the other pairs were uncorrelated. (A poll sets median influencer at 92% income percentile.)

What this says is that, even in a democracy, the ~90th percentile rich have the most influence, business interest groups have about half as much, and mass interest groups have about a third as much. We less rich folks only get what we want, to the extent we do, mainly because these elites mostly agree with us, and because we sometimes influence mass interest groups.

This median influencer household has income of $210K/yr and wealth of $1.2M, and households above this cut pay 70% of US Federal income taxes. This income is near the median doctor ($207K) and U.S. District Judge ($218K), more than the median full professor ($141K), lawyer ($139), lobbyist ($115K), judge ($109K), and CEO ($103K), and much more than the median federal civil servant ($64K) and high school teacher ($63K). (The median household made $64K, while the median CEO of the top 500 firms made $12.7M.)

These elites who set policy get most of their status and income from labor, not capital, and they are quite comfortable with, and in fact love, large bureaucratic organizations. Their highest hopes tend to be of gaining positions in, getting promoted in, or creating, such organizations. When they have dreams for the world, they dream of new versions with higher mandates and bigger budgets. (Think socialism.)

They can distinguish each other by their elite accomplishments, school credentials, org affiliations, and styles of talk, dress, etc. And their internal dynamics are dominated by status and gossip. That is, they are very social and join mutually-supporting coalitions which help get them the right jobs, party invites, speaking invites, etc. Via extensive gossip, they quickly form an apparent consensus on the policy issues of the day, on who is higher status among them, and on who should be ostracized and expelled from their ranks. Today these elite communities of gossip and status are integrated across the world.

Simple as it is, this account of who most influences policy seems to me promising as the basis of a theory of policy bias. That is, the natural biases of the group who most influences policy may plausibly explain many of our overall policy biases.

For example, policy set by elites may give elites too much benefit of the doubt, and defer too much to their status-gossip system. As elites tend to see their internal status-gossip processes as sufficient to discourage malfeasance and encourage excellence, they tend to see little need for other forms of track records, incentives, or accountability within elite professions and organizations, including government agencies. They see themselves as mostly good people, trying to do good things, who should be supported not hassled.

As another example, when there are groups that elites see as more outside of themselves, as rivals competing with them for power, then elites may push for policies that control, suppress, and disrespect such rivals.

The most obvious candidate for such a rival group is business. Even though these elites are richer than most of us, like most of us they focus more on those who are above them in status, relative to those who are below. Furthermore, the study above says that business is in fact their main rival for influence over policy. And while most business profits go to elites, elites don’t think of themselves as having their main influence on the world via business; elites instead identify more with their roles as org leaders and elite gossipers.

Furthermore, while elites see themselves as mostly well-meaning good people, they see business as transparently and dangerously selfish. Elites see businesses as tending to do what makes them more money, even when their leaders are ostracized and not invited to the right parties. Meaning that the usual pressures that work on most elites may not work on business and the super-rich. Thus elites support harsh, intrusive, and punitive business taxes, regulations, and legal liability. Yes when the super-rich are taxed, these elites are also taxed, but that may seem worth the price to take them down a peg or two. Most ordinary people miss this conflict by not distinguishing these two different kinds of “rich”.

Even though ordinary people seem to have little influence on policy, and mostly agree with elites on policy, elites are still wary of them as individuals. After all, we outnumber them at least five to one, we might revolt, and they must rely on us to do most of the things that need doing. So as employees, we must be tracked, assigned, and incentivized. As consumers and investors, we must be regulated. As authors and voters, our thoughts must be shaped and channeled via teachers, censors, media, interest groups, and politicians. As potential criminals we need to be tracked and threatened with punishment. And the poorest of us need even more direct management, such as via social workers and parole officers. All of which not only keeps us under control, but asserts elite status via the fact of their managing such controls.

Mass-based interest groups mostly don’t seem to scare elites as a whole, because usually such groups are dominated by elites at their top levels. It is only when a mass-based group seems to oppose elites as a whole that elites close ranks and warn against the dangers of such “populism”. While our society gives a lot of lip service to populism, populism is usually crushed aggressively whenever it actually seems threatening.

So how does this theory do empirically? It seems to me that policy does tend to be overly trusting of elites and their status-gossip system, and overly punitive and disrespectful of rival groups. For example, policy pushes us to pick docs, lawyers, and other prestigious professionals based more on the prestige of their affiliations, and less on track records or incentives. Business does seem greatly overly regulated, and taxes seem overly punitive. And policy seems to rely too much on the consensus of elite gossip, relative to more accurate sources like experts or prediction markets.

While roughly half of all regulation of individuals seems to be justified as protecting people from themselves, warnings seem just as helpful but would be far less controlling. Free speech (really free hearing) would be as effective at informing as is censorship. Pandemics could be more efficiently handled via law. And the poor could be helped more via simple cash transfers instead of expensive intrusive management of their lives.

Our legal system has high costs of suing people (from not using lotteries) but no required liability insurance. This makes law available to elites to sue each other, and to punish business, but not available to ordinary people to sue elites or each other. Elites can protect themselves well from ordinary people via strong prosecutor powers of plea bargaining together with broad surveillance and huge numbers of crime laws on the books, and also judges who are elites and give elites the benefit of the doubt. Oh and living, shopping, and working in separate neighborhoods.

And that’s my simple theory of who runs society, and policy biases that naturally result from their rule.