When the Rules Become the Prize

One of the quiet miracles of American democracy is that it has rarely required Americans to agree on policy. For nearly two and a half centuries, citizens have argued - often bitterly - over taxes, immigration, trade, war, civil rights, environmental protection, and the proper role of government. Elections have produced dramatic shifts in priorities and occasionally sweeping reforms. The New Deal expanded federal power in ways the framers would scarcely recognize. The Reagan era rolled back regulatory ambitions that had seemed permanent a decade earlier. Civil rights legislation rewrote the legal relationship between citizens and their government more thoroughly than most constitutional amendments. Through all of it ran an unspoken understanding: while politicians fought over what government should do, they largely accepted the constitutional framework within which those debates occurred. You could lose the argument over policy and still trust that the game itself - the courts, the electoral process, the separation of powers, the basic rules for how power changes hands - would still be standing after the votes were counted.

That assumption is eroding. And I don’t think it’s eroding for the reason most commentary assumes.

The usual story is cultural: we’ve lost faith in institutions, tribalism has poisoned everything, social media has made us cruel and credulous, cable news has turned politics into entertainment, partisan sorting has stripped away the cross-cutting identities that used to soften conflict. There’s truth scattered through all of that. But it’s also a strangely weightless explanation. It treats institutional erosion as a kind of mood that descended on the country - a collective loss of manners - rather than something with an identifiable cause and a predictable trajectory. Moods can be willed away. Structural incentives can’t.

I want to argue for a less comfortable, more structural explanation: the fights over the rules of the game are intensifying because the prize for winning them has gotten so much bigger. This isn’t a story about worse people or a coarser culture. It’s a story about a very large, very discretionary state, and what any state of that size inevitably does to the incentives of the people trying to control it. And if that diagnosis is right, the fix isn’t a national renewal of civic virtue, however pleasant that might be to imagine. It’s making the prize smaller.

The recent attention surrounding the Democratic Socialists of America illustrates the shift. Once a fairly obscure political organization, the DSA has grown substantially in both visibility and influence, aided by a handful of high-profile electoral wins and a base of younger voters who came of age during two financial crises and a pandemic that scrambled their expectations about what government owes people. Its near-term policy agenda includes proposals familiar from European social democracies: universal health care, stronger labor protections, tuition-free public colleges, expanded public housing, a more generous social safety net. Whether you support or oppose these ideas, they sit well within the range of policies adopted by functioning democratic nations. A country can debate the merits of a single-payer health system without thereby calling its constitutional order into question; Canada and the United Kingdom manage this without ceasing to be liberal democracies.

Its longer-term aspirations go further, and this is where the character of the movement changes. The DSA’s founding documents and platform materials describe a gradual transformation of economic ownership itself - greater public ownership of major industries, worker control over firms, democratic management of large sectors of the economy that are currently organized through private capital and markets. It questions whether capitalism, as practiced in the United States, should remain the dominant organizing principle of economic life at all, rather than simply arguing for a more regulated or redistributive version of it. Critics, including a range of commentators across the political spectrum, have described aspects of this vision as communist in the classical sense - not as a slur, but as an accurate genealogical claim about where the ideas descend from. Others reject that characterization, arguing that democratic socialism seeks to preserve and even deepen democratic institutions while expanding economic democracy, and that the comparison to Soviet-style central planning is a category error. Reasonable people disagree about where democratic socialism ends and socialism-in-the-older-sense begins, and I don’t think that argument is likely to be resolved by an essay like this one.

A parallel development has emerged on the political right, and it would be a mistake to treat it as merely a reaction to the left, since it has its own intellectual lineage stretching back through decades of conservative legal and administrative theory. Project 2025 has generated intense controversy for its proposals to significantly restructure the federal government - consolidating political control over agencies that have historically operated with a degree of independence, replacing large numbers of career civil servants with political appointees, and reorienting the machinery of federal enforcement toward the priorities of whichever administration currently holds office. Supporters argue that the modern administrative state has grown so large and so insulated from electoral accountability that it now functions as a fourth branch of government, unaccountable to voters and only nominally supervised by the elected officials nominally in charge of it; on this view, restructuring it isn’t an attack on democratic norms but a restoration of them. Critics contend that many of the plan’s recommendations would concentrate executive power to a degree the constitutional design was specifically built to prevent, weaken institutional checks that have functioned as guardrails against abuse regardless of which party controls them, and alter the relationship among the branches of government in ways that would be very difficult to reverse once entrenched.

I want to be careful here, because it’s tempting - rhetorically satisfying, even - to flatten these two movements into mirror images of one another, and they aren’t. DSA is an advocacy organization operating largely outside of government, with essentially no near-term capacity to enact its economic vision at the federal level; it works through persuasion, primary challenges, coalition-building, and the slow accumulation of local offices. Its power is aspirational and its timeline is long. Project 2025 was authored by people with direct experience staffing a presidential administration, a number of whom returned to government in senior positions, and significant portions of its recommendations have moved from blueprint to active implementation through executive action and personnel decisions. One of these things is a set of ideas competing for public attention and future electoral coalitions. The other is a plan that has been, in meaningful part, executed by people holding the actual levers of the state. Treating them as equivalent in power would be dishonest, and an essay that did so wouldn’t deserve to be taken seriously.

But I’m not making a claim about equivalent power. I’m making a claim about equivalent incentive - and incentive is the more interesting and more durable thing to study, because power shifts from election to election while the incentive structure that produces movements like these tends to persist regardless of who currently holds office. Both movements reach the same starting premise: that America’s existing institutions no longer constrain outcomes the way they’re supposed to, that the normal channels of legislation and litigation and persuasion have become too slow, too captured, or too rigged to produce the outcomes their adherents believe justice requires. And both conclude, from that premise, that the appropriate remedy is to redesign the machinery of government itself rather than simply to keep winning arguments within the existing one. One targets the organization of the economy. The other targets the organization of the state. Different diagnoses, different prescriptions, same underlying impulse: when enough power becomes available to capture, the rules stop being a neutral backdrop to politics and become one of the central objects of it.

The question worth asking isn’t “which side is worse,” a question that mostly just sorts people back into their existing camps. It’s “why does this keep happening, from both directions, at more or less the same historical moment?” That’s a question with an actual answer, and it isn’t a satisfying one for partisans on either side, because it doesn’t let anyone off the hook.

Here is where I think institutional economics and public choice theory earn their keep, and where a moderate libertarian reading of this moment has something genuinely distinctive to contribute, rather than just splitting the difference between two other explanations.

James Buchanan and Gordon Tullock, in laying the foundations of public choice theory in The Calculus of Consent, made a point that’s easy to state and easy to underestimate: political actors respond to incentives in essentially the same way market actors do. This sounds almost too obvious to be worth stating, but it cuts against a persistent and comforting assumption in a lot of civics education - the idea that politicians and voters, once they enter the political arena, are motivated by something nobler and more disinterested than the self-interest that governs ordinary economic life. Buchanan and Tullock’s insight was that this assumption is mostly wishful thinking. People bring the same basic psychology to politics that they bring to markets. They respond to costs and benefits. And critically, they respond to the size of what’s at stake.

Nobody fights very hard over decisions that don’t matter much. Neighbors can disagree calmly about which color to paint a shared fence because the cost of losing that argument is trivial. People fight hard - sometimes viciously, sometimes in ways that abandon ordinary norms of fair play - over decisions that carry enormous, life-altering stakes. This isn’t a moral failing unique to our current moment. It’s a rational response to the structure of the game, and it would show up in any population, in any era, once the stakes crossed a certain threshold.

Now apply that logic to the size and discretionary reach of the modern American state. When government’s authority over economic life, over regulatory bodies, over the administrative machinery that touches daily existence is relatively limited, losing an election costs the loser relatively little. You wait four years. The basic architecture of your life - your property, your business, your ability to associate, speak, worship, and raise your children as you see fit - doesn’t hinge dramatically on which party controls Congress or the presidency. Tullock’s later work on rent-seeking extended this logic in a way that’s directly relevant here: the amount of resources people will rationally spend fighting over a prize scales with the value of the prize itself. When a government contract, a regulatory ruling, or a piece of legislation can transfer enormous wealth or power from one group to another, rational actors will spend up to the full value of that transfer trying to capture it - not just through ordinary lobbying, but eventually through more corrosive means, including attempts to change the rules that determine who gets to compete for the prize at all.

But as the state’s discretionary scope over economic life, industrial policy, healthcare, education, immigration enforcement, and the vast administrative apparatus that implements all of it keeps expanding, the cost of losing an election rises in step with it. Eventually the state controls enough - directly or through the agencies and regulatory bodies that answer to whoever occupies the White House - that losing isn’t merely disappointing. It becomes, in the minds of the people who just lost, existential. And when losing starts to feel existential, “the rules themselves are illegitimate” stops being a fringe position confined to the political margins and starts becoming the rational conclusion for whoever just lost, regardless of which side they’re on. Mancur Olson’s work on collective action adds a further wrinkle: concentrated interests - whether an ideological movement, an industry, or a faction within a party - organize far more effectively than the diffuse public that bears the costs of institutional erosion, which means the people most motivated to rewrite the rules are often the very people best positioned to do it, while the broader public, who would bear the long-run costs of a less stable system, remains comparatively disorganized and slow to respond.

This is, I’d argue, the actual mechanism behind the DSA and Project 2025 both arriving at institutional maximalism from opposite directions at roughly the same historical moment. It isn’t a coincidence of timing, and it isn’t evidence of some shared cultural rot or a simultaneous, unrelated collapse of civic character on both the left and the right. It’s exactly what you’d predict from a state whose discretionary footprint has grown large enough that capturing it - or permanently reshaping it before the other side can capture it back - is worth fighting dirty for. Shrink the prize, and you shrink the incentive to burn down the rules in order to win it; that relationship holds regardless of which faction currently benefits from a large state.

This is also, not incidentally, why Friedrich Hayek spent so much of The Road to Serfdom arguing that concentrating economic control and concentrating political control aren’t two separate projects - they’re the same project, viewed from different angles. Hayek’s argument wasn’t primarily a moral one about liberty in the abstract; it was a structural one about what central economic planning necessarily requires. A state large enough to plan or heavily direct the economy is, almost by logical construction, a state large enough that whoever controls its levers controls everything else worth controlling - because economic power and political power become impossible to fully separate once the state is the primary allocator of both. Seen through that lens, DSA’s economic maximalism and Project 2025’s executive maximalism aren’t really opposites, however much their partisans would resist the comparison. They’re the same lesson, learned independently by two different factions, about what kind of prize is now sitting on the table and what it would take to secure it permanently.

It’s worth pausing on a distinction that political scientists and institutional theorists draw between different sources of legitimacy, because it explains why this dynamic feels different from ordinary political disagreement rather than more of the same. Legitimacy can rest on inputs - whether the people affected by a decision had a fair opportunity to participate in making it; on procedure - whether the process by which a decision was reached followed rules that were transparent, consistent, and applied evenhandedly regardless of outcome; or on outputs - whether the decision, whatever its origin, produced results people regard as fair or beneficial. Healthy institutions typically draw on all three, and can survive a temporary shortfall in one so long as the other two remain intact. A decision reached through a fair and transparent process, by representatives the public had a genuine opportunity to elect or remove, retains a good deal of legitimacy even when its results disappoint people - because the losers can tell themselves, accurately, that they’ll get another fair shot next time.

What both of the movements described above are reacting to, whether or not they’d use this vocabulary, is a sense that the procedural leg of that stool has gone wobbly - that the ordinary channels for contesting outcomes (courts, legislatures, elections, the civil service) no longer function as neutral arbiters, but have themselves become instruments of whichever coalition currently controls them. Once procedural legitimacy is in doubt, output legitimacy can’t compensate for it, because a “good” outcome achieved through a process you no longer trust doesn’t actually reassure you - it just proves the other side is capable of using the same tainted machinery you’re worried about. This is why the argument in this essay isn’t simply an elite, symmetry-obsessed complaint about tone. It’s a claim about which leg of democratic legitimacy is actually load-bearing, and about what happens when both major coalitions independently conclude that leg has failed.

None of this is unprecedented in American history, and looking at an earlier episode is useful precisely because it lets us examine the dynamic without the emotional static of the current moment.

In 1937, fresh off a landslide reelection and frustrated that the Supreme Court had struck down several major New Deal programs, Franklin Roosevelt proposed what became known as the “court-packing plan” - legislation that would have allowed him to appoint an additional justice for every sitting justice over the age of seventy, potentially expanding the Court from nine seats to as many as fifteen. The stated justification was judicial efficiency; the actual purpose, widely understood at the time, was to secure a friendly majority that would stop invalidating his economic program. The plan failed, decisively, and it failed in large part because enough members of Roosevelt’s own party recognized what it actually was: not a policy dispute but an attempt to reshape a constitutional institution because the existing one had produced outcomes its author found intolerable.

What’s instructive about that episode isn’t just that the plan failed, but why contemporaries treated it as a genuine crisis rather than ordinary political hardball, even though Roosevelt had an enormous democratic mandate and a case that could be made on its merits about an unelected Court obstructing popular will. They recognized, correctly, that a court expanded today to produce one set of outcomes could be expanded again tomorrow by the other party to produce the opposite outcomes, and that once the size of the Court became a variable subject to whoever currently held power, the Court would stop functioning as an independent check on anybody. The stakes of that particular institutional fight were, in the end, judged too high a price for the policy win it would have purchased - not because Roosevelt’s economic program was wrong, but because the mechanism he proposed to protect it would have converted a constitutional institution into a spoil of ordinary partisan victory.

That’s the pattern worth watching for today, on both sides of the current divide: proposals that might be individually defensible as policy, but that work by converting a previously neutral piece of institutional machinery into a permanent extension of whichever coalition happens to control it at the moment of the change.

Economists have long understood why institutional stability matters beyond the immediate political fight, and this is the part of the argument that a moderate libertarian is particularly well positioned to take seriously, because it’s measured in something more concrete than constitutional theory.

Douglass North’s work on institutions and economic performance made the case that markets don’t flourish simply because governments adopt low taxes or light regulation. They flourish because investors, entrepreneurs, workers, and consumers believe that the rules governing contracts, property rights, courts, and political authority will remain reasonably stable over time, regardless of who wins the next election. Businesses invest today because they trust that tomorrow’s government will largely respect today’s legal framework. Families buy homes because they expect property rights to endure across administrations. Entrepreneurs start companies, take on debt, and hire employees on multi-year time horizons because they trust that courts will enforce contracts and that regulatory ground rules won’t be rewritten from scratch every time political control changes hands. Daron Acemoglu and James Robinson later extended this line of argument, drawing a distinction between “inclusive” economic institutions - which protect property rights broadly and allow genuine competition - and “extractive” ones, which exist primarily to funnel wealth and opportunity toward whichever faction currently controls the state. Their central finding, drawn from centuries of comparative history, was that societies don’t fail because they lack resources or talent; they fail because their institutions get captured by narrow interests who then have every incentive to prevent future challengers from displacing them, at which point the rules stop serving the public and start serving the incumbents.

Call the thing that erodes here institutional credibility. It’s an economic asset in the fullest sense of the word, and like any asset, it can be run down faster than it can be rebuilt.

If every election carries the live possibility that the nation’s fundamental economic or constitutional framework will be substantially rewritten, uncertainty rises accordingly, and it rises in ways that show up in measurable economic behavior rather than just in survey data about trust. Investment horizons shorten. Long-term capital projects - the kind that take a decade to pay off and depend on a stable regulatory and legal environment for that entire period - become harder to finance, because lenders and investors have to price in the risk that the rules they’re relying on won’t exist in their current form by the time the project matures. Skilled workers and capital become more mobile, more willing to relocate to jurisdictions that look more stable, which in the American context increasingly means state-to-state migration as much as international emigration. None of this requires an actual collapse of institutions to happen; the mere plausibility of instability is enough to raise the cost of capital and slow the rate at which an economy compounds growth over time.

You don’t have to look abroad for evidence of what a more severe version of this looks like, though it helps to look abroad to see the mechanism at full strength rather than in its early American form. Argentina - a country I’ve been thinking about a great deal recently for other reasons - offers a vivid illustration of what happens when a state’s discretionary reach over the economy grows large enough that each change of government brings not just a change in policy emphasis but a wholesale rewriting of the rules governing currency, contracts, price controls, and property. The country has spent decades in a cycle where each new administration treats the prior one’s economic architecture as illegitimate and disposable, to be replaced rather than merely adjusted, and the result has been chronic instability that no single administration, of any ideological stripe, has been able to fully escape. That isn’t a story about Argentine culture or a national character flaw, whatever some observers like to imply. It’s what you’d predict from the same incentive structure described above, run for longer and at higher stakes than the United States has yet experienced. It’s a useful, sobering data point rather than a prediction of imminent American collapse - but it’s the kind of thing institutional economists have in mind when they say credibility, once spent, is expensive to rebuild.

Most essays diagnosing this problem end with an appeal to civic virtue - be better citizens, extend good faith to your opponents, remember we’re all Americans underneath the disagreement. I don’t think that’s wrong, exactly, and there’s a strand of scholarship, notably Steven Levitsky and Daniel Ziblatt’s account of democratic breakdown, that puts real weight on informal norms like mutual toleration and institutional forbearance - the willingness of those in power to refrain from using every technically legal tool available to them, simply because doing so would set a precedent the other side could later use against them. Those norms matter, and their erosion is real and worth mourning. But asking a country to restore norms that have already broken down is asking people to override a structural incentive with willpower alone, and that’s a bet history doesn’t generally favor. Norms erode fastest exactly when the stakes are highest, which means the moments we most need forbearance are the moments it’s least likely to appear on its own.

The more durable answer is the one the American constitutional system was originally built around, and the one modern government has spent the better part of a century quietly abandoning: don’t just trust the players to behave well - structure the game so that losing doesn’t cost so much in the first place. James Madison’s argument in Federalist No. 51 - that ambition must be made to counteract ambition, that no single set of hands should hold enough power to require restraint through virtue alone - was never really about recruiting good people for office. It was an argument about designing a system where bad incentives couldn’t do much damage even when the people occupying office responded to them exactly the way self-interest would predict. Madison assumed, correctly as it turned out, that virtue was an unreliable foundation for a durable republic, and built accordingly.

Translating that logic to the present moment yields a fairly concrete set of institutional priorities, not just a mood. It’s an argument for federalism over centralization, because a policy decision made badly in one state doesn’t have to become a decision imposed on all fifty, and because a citizen unhappy with their state’s direction has an actual exit option - relocation to a different jurisdiction - that doesn’t exist when the same decision is made at the federal level. It’s an argument for genuine, durable constraints on executive and legislative reach: not as a partisan weapon to be invoked only when the other side holds power and quietly shelved when your own side does, which is how these arguments are typically deployed in practice, but as a standing limit that both coalitions accept applies regardless of who currently benefits from ignoring it. It’s an argument for sunset provisions and supermajority requirements on the kinds of institutional changes that are hardest to undo once made - court size, agency structure, the scope of executive emergency powers - so that a single election cycle, however decisive, can’t permanently redesign what earlier generations built with much broader and more durable consent. And it’s an argument, more broadly, for keeping as much of economic and social life as possible outside the reach of whoever happens to win the next election, not because markets are morally superior to democratic deliberation in every instance, but because a decision made through voluntary exchange between consenting parties doesn’t require anyone to lose in the first place, in the way that a zero-sum political fight over a fixed prize necessarily does.

None of this requires a heroic renewal of the national character, and it doesn’t depend on either side suddenly developing more goodwill toward the other. It requires accepting that the size of the prize is itself a policy choice, made through decades of accumulated legislation and judicial deference to the administrative state, and that a state with a narrower discretionary reach is, almost mechanically, a state that people can afford to lose an election to.

Two objections deserve a direct answer, because ignoring them would make this essay weaker than it needs to be.

The first is that this argument functions, in practice, as cover for the status quo - that “lower the stakes” is a comfortable position for people who are already relatively well served by existing arrangements, and a much less comfortable one for people who believe those arrangements are themselves unjust and unlikely to be fixed through patient, incremental channels. There’s real force to this. A civil rights movement that had waited patiently for procedural consensus rather than pressing hard against existing institutions would have waited a very long time. The honest response isn’t that ambitious reform is illegitimate, but that there’s a meaningful difference between reform that expands who gets a fair hearing within existing institutions - broadening the franchise, dismantling legal barriers to participation, enforcing rights that already existed on paper but not in practice - and reform that concentrates the power to decide such questions permanently in the hands of whoever wins the next election. The first kind of change has, historically, made American institutions more durable by making them more legitimate to more people. The second kind, however well-intentioned in any particular instance, is the pattern this essay is actually warning against.

The second objection is that a smaller, less discretionary state is not a neutral or apolitical solution - it’s itself a substantive policy position, one that happens to track fairly closely with the author’s own priors, and dressing it up as pure institutional design rather than an ideological preference is a bit of a rhetorical sleight of hand. This is fair, and worth stating plainly rather than pretending otherwise: shrinking the size of the prize is not a view from nowhere. It’s a libertarian conclusion, arrived at by libertarian premises about the value of limiting concentrated power, and someone who believes a large, active state is necessary to secure justice or prosperity will not find this diagnosis fully persuasive even if they accept the public choice mechanism underlying it. What I’d claim is more modest: whatever your view of how large government should be, the relationship between the size of the prize and the intensity of the fight over the rules is a real empirical pattern, observable across ideologically opposed movements and across other countries’ history, and any serious plan for restoring institutional trust has to reckon with it rather than simply asking people to be nicer to each other.

Healthy democracies require vigorous disagreement. They require competing visions of justice, prosperity, and the common good, argued for honestly and sometimes won decisively. They even require ambitious reform, including reform that unsettles people who benefit from how things currently stand. What they cannot easily survive is the conviction, spreading across the political spectrum simultaneously rather than confined to one faction, that every election should decide not merely who governs, but what kind of government - what kind of economic order, what kind of constitutional structure - will exist after the votes are counted.

America has repeatedly reinvented itself, and profoundly so. Slavery ended. Women gained the right to vote. Civil rights expanded to cover people the founding generation excluded from its promises entirely. Markets evolved from an agrarian to an industrial to a digital economy, each transition disruptive in its own right. Those transformations happened within a constitutional framework that, imperfect as it was and remains, proved durable enough to survive them and, in most cases, to be improved by the argument rather than destroyed by it. That durability wasn’t an accident of especially virtuous leadership, though there was some of that too. It was, in significant part, a function of a state that hadn’t yet grown large enough, in discretionary reach, to make every single election feel like a fight for the whole country’s future - which meant the people who lost a given round could afford to keep playing by the rules while they organized for the next one.

Winning elections has always mattered, and will keep mattering. But in a constitutional republic, winning has never been enough on its own, because a victory purchased by permanently rewriting the rules of the contest isn’t really a victory within the system - it’s the end of that system, however much its architects might insist otherwise. The system itself has to remain worth losing within. That’s not an abstraction, and it’s not primarily a matter of national temperament. It’s a condition we can actually design for, deliberately, by making the prize small enough that losing stays survivable - which has the added virtue of being a project that doesn’t require either side to trust the other, only to recognize what’s actually driving the fight they’re both currently losing.

Acemoglu, D., & Robinson, J. A. (2012). Why nations fail: The origins of power, prosperity, and poverty. Crown Business.

Buchanan, J. M., & Tullock, G. (1962). The calculus of consent: Logical foundations of constitutional democracy. University of Michigan Press.

Hayek, F. A. (1944). The road to serfdom. University of Chicago Press.

Levitsky, S., & Ziblatt, D. (2018). How democracies die. Crown Publishing.

Madison, J. (1788). Federalist No. 51: The structure of the government must furnish the proper checks and balances between the different departments. In A. Hamilton, J. Madison, & J. Jay, The Federalist papers.

North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge University Press.

Olson, M. (1965). The logic of collective action: Public goods and the theory of groups. Harvard University Press.

Tullock, G. (1967). The welfare costs of tariffs, monopolies, and theft. Western Economic Journal, 5(3), 224–232.