If only we had the right people in government, then everything would be fine. This is an illusory idea. We should focus on checks and balances and leave as much decision making power as possible to individual citizens.

It might not be an entirely economic idea, but one that is very common among economists and policy wonks: If only we had the right people at the top of government, then everything would be alright and the economy would thrive. John Maynard Keynes expressed this idea in a letter to Friedrich August von Hayek in June 1944, reacting to Hayek’s famous The Road to Serfdom, praising it as a “grand book,” but then continuing: “… Moderate planning will be safe if those carrying it out are rightly orientated in their own minds and hearts to the moral issue…What we need is the restoration of right moral thinking—a return to proper moral values in our social philosophy….”

To ground economic policy in this way of thinking is fallacious on several accounts: First, everyone, independent of their position, is somehow self-interested; moreover, there is nothing wrong with that. Officeholders will regularly experience tensions between their personal and the general interest, regardless of their moral values. Second, there is no reason why public officials should be morally better than people in other spheres of life. To quote Blaise Pascal’s famous saying, they too are “ni anges, ni bêtes.” They will sometimes put their interests first, they will not always behave morally, and, occasionally, they will violate their own and society’s moral principles. Third, since moral values are not evenly distributed, but rather bell shaped, it is impossible to guarantee that only those with the highest moral standards will hold high public office. The idea that only the morally best will be in charge of the state and economic policy must remain wishful thinking. Fourth, power corrupts, and absolute power corrupts absolutely, as Lord Acton pointed out. Therefore, even those with the highest moral values might, once in office, change their thinking and their behavior for the worse.

Of course, we all know that “the right moral thinking” on one hand and the rule of law on the other are communicating vessels. A society with a high level of broadly distributed moral values can get along without a very elaborate and dense legal framework. Therefore, this is not an argument against morality, but an argument against the belief that we can select the morally best people for public office and thereby protect the freedom of citizens. We should not put our hope in public-minded people working wholly for the public good. Plato’s philosopher kings would lead to a totalitarian state and a stagnating society.

On the contrary, in search of an open and free society, we should stick to the following guidelines: We should, as much as possible, align private and public interest for those in office, as we try to align the agents’ interests with those of the principal within companies. It is entirely a question of incentives, be they monetary or otherwise. Further, we should create a legal framework, which gives those in office not too much leeway. Since we cannot rely on their moral standards, we have to make do with the same instruments that are applied in other realms of society whenever we want to avoid misuse of power—adopting rules and clearly sanctioning any violation of these rules. And lastly, we should leave as much decision power as possible to the individual citizen—and as little power as possible to the collective, the state, and those who hold public office.