NationStates Jolt Archive

Public Choice Theory
by Jane S. Shaw (http://www.econlib.org/library/Enc/PublicChoiceTheory.html)

...One of the chief underpinnings of public choice theory is the lack of incentives for voters to monitor government effectively. Anthony Downs, in one of the earliest public choice books, An Economic Theory of Democracy, pointed out that the voter is largely ignorant of political issues and that this ignorance is rational. Even though the result of an election may be very important, an individual's vote rarely decides an election. Thus, the direct impact of casting a well-informed vote is almost nil; the voter has virtually no chance to determine the outcome of the election. So spending time following the issues is not personally worthwhile for the voter. Evidence for this claim is found in the fact that public opinion polls consistently find that less than half of all voting-age Americans can name their own congressional representative.

Public choice economists point out that this incentive to be ignorant is rare in the private sector. Someone who buys a car typically wants to be well informed about the car he or she selects. That is because the car buyer's choice is decisive—he or she pays only for the one chosen. If the choice is wise, the buyer will benefit; if it is unwise, the buyer will suffer directly. Voting lacks that kind of direct result. Therefore, most voters are largely ignorant about the positions of the people for whom they vote. Except for a few highly publicized issues, they do not pay a lot of attention to what legislative bodies do, and even when they do pay attention, they have little incentive to gain the background knowledge and analytic skill needed to understand the issues.

Public choice economists also examine the actions of legislators. Although legislators are expected to pursue the "public interest," they make decisions on how to use other people's resources, not their own. Furthermore, these resources must be provided by taxpayers and by those hurt by regulations whether they want to provide them or not. Politicians may intend to spend taxpayer money wisely. Efficient decisions, however, will neither save their own money nor give them any proportion of the wealth they save for citizens. There is no direct reward for fighting powerful interest groups in order to confer benefits on a public that is not even aware of the benefits or of who conferred them. Thus, the incentives for good management in the public interest are weak. In contrast, interest groups are organized by people with very strong gains to be made from governmental action. They provide politicians with campaign funds and campaign workers. In return they receive at least the "ear" of the politician and often gain support for their goals.

In other words, because legislators have the power to tax and to extract resources in other coercive ways, and because voters monitor their behavior poorly, legislators behave in ways that are costly to citizens. One technique analyzed by public choice is log rolling, or vote trading. An urban legislator votes to subsidize a rural water project in order to win another legislator's vote for a city housing subsidy. The two projects may be part of a single spending bill. Through such log rolling both legislators get what they want. And even though neither project uses resources efficiently, local voters know that their representative got something for them. They may not know that they are paying a pro-rata share of a bundle of inefficient projects! And the total expenditures may well be more than individual taxpayers would be willing to authorize if they were fully aware of what is going on...

That makes sense. It's scary, but it makes sense.

It's even worse when the populace of a country is not well-educated, because then they don't know the laws or have any hope of following the issues. That's why we have such evil politicians here in the U.S. :P

The funny part of all of this is that the Socialist believes that the government planning of an economy is a good thing. They further believe that people in general, left to their own devices, cannot possible do a better job of making decisions than that of an educated bureaucrat (preferably with socialist leanings).

Once you have a centrally planned economy, reason follows that democracy is sacrificed - and it continues to erode until you have a system of government that resembles dictatorship by a body politick.

That Socialist that was earlier on board the process might find him or herself quite shocked when they are not invited to the "decision making table" of the new regime. At that point, they might see the errors of their ways. It's no fun at all becoming a discarded tool of a political movement no matter which direction that movement goes. A limited government ideology should not just be a goal of conservatives, libertarians, and true anarchists but for anyone who enjoys and values freedom.

This might surprise you, Stableness, but I'm in favour of small government and not just on typical lefty social issues, etc. Ideally, government should be carried out at as local a level as possible, with a basic overarching framework of principles as a guide (to ensure ethical work standards are met, etc).

You should see some of the slanging matches between 'Statists' and 'Anti-Statists' in the AntiCapitalist Alliance (in true People's Judean Front style). The left isn't all about planned economies.

DP

Nor is socialism about planned economies - or at least mild socialism. It's about providing everyone in the country with a basic standard of living (though I agree that a person should have to work for anything more than the bare necessities), proper education and cradle-to-grave health care. Pure capitalism doesn't do that, and communism, which controls private enterprise as well, often makes it so that people have a terrible standard of living and whatever help the government provides doesn't do them much good.

There's a good middle ground between capitalism and socialism, it doesn't have to be one or the other.

Nor is socialism about planned economies - or at least mild socialism. It's about providing everyone in the country with a basic standard of living (though I agree that a person should have to work for anything more than the bare necessities), proper education and cradle-to-grave health care. Pure capitalism doesn't do that, and communism, which controls private enterprise as well, often makes it so that people have a terrible standard of living and whatever help the government provides doesn't do them much good.

There's a good middle ground between capitalism and socialism, it doesn't have to be one or the other.
I don't agree with this, individuals have a responsibility to look after themselves and have no right to force others to help them if they are too incompetent, but it's really besides the point as far as public choice theory is concerned.

Public choice theory is not making any claim about what is good or bad, it simply outlines the internal workings of democratic govt and bureaucracies and what the consequences of this system are. The fact that legislators act in ways that are costly to citizens is inevitable for the reasons given in the short essay. Whether or not that is a price worth paying is a value judgement which comes later. Public choice theory simply allows us to make a more informed decision.

A careful analysis might lead you to conclude that govt bungling and interference causes more problems than it solves. Most people would be capable of looking after themselves and their families if the taxation/regulation burden were abolished and the rest could be taken care of by private unforced charity.

Nor is socialism about planned economies - or at least mild socialism. It's about providing everyone in the country with a basic standard of living (though I agree that a person should have to work for anything more than the bare necessities), proper education and cradle-to-grave health care. Pure capitalism doesn't do that, and communism, which controls private enterprise as well, often makes it so that people have a terrible standard of living and whatever help the government provides doesn't do them much good.

There's a good middle ground between capitalism and socialism, it doesn't have to be one or the other.
I don't agree with this, individuals have a responsibility to look after themselves and have no right to force others to help them if they are too incompetent, but it's really besides the point as far as public choice theory is concerned.

Public choice theory is not making any claim about what is good or bad, it simply outlines the internal workings of democratic govt and bureaucracies and what the consequences of this system are. The fact that legislators act in ways that are costly to citizens is inevitable for the reasons given in the short essay. Whether or not that is a price worth paying is a value judgement which comes later. Public choice theory simply allows us to make a more informed decision.

A careful analysis might lead you to conclude that govt bungling and interference causes more problems than it solves. Most people would be capable of looking after themselves and their families if the taxation/regulation burden were abolished and the rest could be taken care of by private unforced charity.

And yet Sweden has the highest standard of living in the world.

Nor is socialism about planned economies - or at least mild socialism. It's about providing everyone in the country with a basic standard of living (though I agree that a person should have to work for anything more than the bare necessities), proper education and cradle-to-grave health care. Pure capitalism doesn't do that, and communism, which controls private enterprise as well, often makes it so that people have a terrible standard of living and whatever help the government provides doesn't do them much good.

There's a good middle ground between capitalism and socialism, it doesn't have to be one or the other.
I don't agree with this, individuals have a responsibility to look after themselves and have no right to force others to help them if they are too incompetent, but it's really besides the point as far as public choice theory is concerned.

Public choice theory is not making any claim about what is good or bad, it simply outlines the internal workings of democratic govt and bureaucracies and what the consequences of this system are. The fact that legislators act in ways that are costly to citizens is inevitable for the reasons given in the short essay. Whether or not that is a price worth paying is a value judgement which comes later. Public choice theory simply allows us to make a more informed decision.

A careful analysis might lead you to conclude that govt bungling and interference causes more problems than it solves. Most people would be capable of looking after themselves and their families if the taxation/regulation burden were abolished and the rest could be taken care of by private unforced charity.

1) Wether you like it or not, but you need help from the moment you were born until you start working at age 18 ( or a 25-30 if you want to take a long specialised course). The idea behind giving most of the help you need to become a well-educated, healthy, law-abiding and productive worker through a system run by the government is:
-Not all parents will be able to give their children a proper education, keep them healthy, ... etc. If, let's say a new Einstein, is born in a poor folks home, would it be fair to deny him the right to go to university just because his parents are poor?
-All people should get the same chances in life. It's not an achievement to be born in a family that isn't poor.

2) some people can't work because they have a handicap, others can't work because they can't find a job that suits them. When i'm going to search a job in 7 or 8 years, i'll only accept one for which i am educated. You won't see me working in a factory or on a farm. I would not even be able to do it, repetitive work and/or work that doesn't require a large amount of thinking drives me crazy in less than a week. Low educated people on the other hand can only go for jobs that require almost no education, leaving them not much choice if they have one.
Not all the people that can't support themselves can change that situation and any civilised country has to make sure they get a basic income that allows them to live. 'The allowing them to live' part also consists of giving them (and the others) free healthcare. (it's not entirely free, yes, but the idea is that we let those that have enough money pay for those that don't have enough money).


3) There are cases in which the free market fails (i trust my professor on this one). In these cases government interference is an answer. taxation is a way to make sure companies pay for a few of the costs that they don't have to pay for otherwise (i'm thinking about things like polution). When a factory polutes an area, the wealth of the nation drops. taxation is a way these costs can get recovered.

4) About 80% of the people is incompetent in my eyes, but that doesn't mean i don't think all of those people, and the 20% that are more or less competent, should receive at least enough to be healthy, have enough to live and to get a proper education.

1) Wether you like it or not, but you need help from the moment you were born until you start working at age 18 ( or a 25-30 if you want to take a long specialised course). The idea behind giving most of the help you need to become a well-educated, healthy, law-abiding and productive worker through a system run by the government is:
-Not all parents will be able to give their children a proper education, keep them healthy, ... etc. If, let's say a new Einstein, is born in a poor folks home, would it be fair to deny him the right to go to university just because his parents are poor?
-All people should get the same chances in life. It's not an achievement to be born in a family that isn't poor.

2) some people can't work because they have a handicap, others can't work because they can't find a job that suits them. When i'm going to search a job in 7 or 8 years, i'll only accept one for which i am educated. You won't see me working in a factory or on a farm. I would not even be able to do it, repetitive work and/or work that doesn't require a large amount of thinking drives me crazy in less than a week. Low educated people on the other hand can only go for jobs that require almost no education, leaving them not much choice if they have one.
Not all the people that can't support themselves can change that situation and any civilised country has to make sure they get a basic income that allows them to live. 'The allowing them to live' part also consists of giving them (and the others) free healthcare. (it's not entirely free, yes, but the idea is that we let those that have enough money pay for those that don't have enough money).


3) There are cases in which the free market fails (i trust my professor on this one). In these cases government interference is an answer. taxation is a way to make sure companies pay for a few of the costs that they don't have to pay for otherwise (i'm thinking about things like polution). When a factory polutes an area, the wealth of the nation drops. taxation is a way these costs can get recovered.

4) About 80% of the people is incompetent in my eyes, but that doesn't mean i don't think all of those people, and the 20% that are more or less competent, should receive at least enough to be healthy, have enough to live and to get a proper education.

:shock: Holy cow :!:

I slogged through your post, will you return the favor and slog through this op/ed (http://www.townhall.com/columnists/georgewill/gw20040509.shtml)? And then, perhaps, add your commentary?

Nor is socialism about planned economies - or at least mild socialism. It's about providing everyone in the country with a basic standard of living (though I agree that a person should have to work for anything more than the bare necessities), proper education and cradle-to-grave health care. Pure capitalism doesn't do that, and communism, which controls private enterprise as well, often makes it so that people have a terrible standard of living and whatever help the government provides doesn't do them much good.

There's a good middle ground between capitalism and socialism, it doesn't have to be one or the other.
I don't agree with this, individuals have a responsibility to look after themselves and have no right to force others to help them if they are too incompetent, but it's really besides the point as far as public choice theory is concerned.

Public choice theory is not making any claim about what is good or bad, it simply outlines the internal workings of democratic govt and bureaucracies and what the consequences of this system are. The fact that legislators act in ways that are costly to citizens is inevitable for the reasons given in the short essay. Whether or not that is a price worth paying is a value judgement which comes later. Public choice theory simply allows us to make a more informed decision.

A careful analysis might lead you to conclude that govt bungling and interference causes more problems than it solves. Most people would be capable of looking after themselves and their families if the taxation/regulation burden were abolished and the rest could be taken care of by private unforced charity.

1) Wether you like it or not, but you need help from the moment you were born until you start working at age 18 ( or a 25-30 if you want to take a long specialised course). The idea behind giving most of the help you need to become a well-educated, healthy, law-abiding and productive worker through a system run by the government is:
-Not all parents will be able to give their children a proper education, keep them healthy, ... etc. If, let's say a new Einstein, is born in a poor folks home, would it be fair to deny him the right to go to university just because his parents are poor?
-All people should get the same chances in life. It's not an achievement to be born in a family that isn't poor.

2) some people can't work because they have a handicap, others can't work because they can't find a job that suits them. When i'm going to search a job in 7 or 8 years, i'll only accept one for which i am educated. You won't see me working in a factory or on a farm. I would not even be able to do it, repetitive work and/or work that doesn't require a large amount of thinking drives me crazy in less than a week. Low educated people on the other hand can only go for jobs that require almost no education, leaving them not much choice if they have one.
Not all the people that can't support themselves can change that situation and any civilised country has to make sure they get a basic income that allows them to live. 'The allowing them to live' part also consists of giving them (and the others) free healthcare. (it's not entirely free, yes, but the idea is that we let those that have enough money pay for those that don't have enough money).


3) There are cases in which the free market fails (i trust my professor on this one). In these cases government interference is an answer. taxation is a way to make sure companies pay for a few of the costs that they don't have to pay for otherwise (i'm thinking about things like polution). When a factory polutes an area, the wealth of the nation drops. taxation is a way these costs can get recovered.

4) About 80% of the people is incompetent in my eyes, but that doesn't mean i don't think all of those people, and the 20% that are more or less competent, should receive at least enough to be healthy, have enough to live and to get a proper education.

1) I'm not denying that people need help but I do deny that the best way to supply it is through forcing people to provide it. This is neither moral nor effective as a cursory glance at any modern welfare state will show. Most of the problems are a result of govt interference, inflation and unemployment are prime examples as well as the bulk of poverty, and the remaining problems can be soved via private charity which is much more effective as the focus is on "helping you to help yourself".

2) Your elitism aside, the vast majority of people can work. It is estimated every dollar spent by handicapped people on their rehabilitation brings in seven dollars worth of future earnings. If someone can't walk they can still type, for instance. Again, those who can't take care of themselves can be taken care of by charity.

3) Most economics professors have a real lack of imagination when it comes to public goods. Roads, police etc can all easily be provided by the market. The pollution problem stems from the government restrictions on legal actions against pollutors. If pollution damages you or your property you should be able to sue the pollutors. This is enough to keep pollution down to acceptable levels.

4) Well you can give them that if you want. I won't stop you. But you can't force me to if I don't want to. You're elitism is showing through again. Responsibility isn't required for freedom, freedom is required for responsibility.