ECO 481:Public Choice Theory

Week 2 - Part II:Week 2 - Part II:

The Idealized StateThe Idealized State

Dr. Dennis Foster

““Poli Sci” view of Gov’t.Poli Sci” view of Gov’t.

Benign & Fair:Benign & Fair:• Motivation in public sector differs.

• Political participation is inspiring.– is it religious?

• Authors - at least at local level this seems true.–Or, is it? Bell example.

Visions of the PolityVisions of the Polity

Pluralism:Pluralism:• We are not governed by “common” men.• Promote competition of political interests.• Federalist #10 and factions.• Dahl: “Because one center of power is set

against another, power itself will be tamed, civilized, controlled and limited to decent human purposes, while coercion, the most evil form of power, will be reduced to a minimum.”

• (Truman) Gov’t shouldn’t be judged by efficiency; other criteria here.

Visions of the PolityVisions of the Polity

Elitism:Elitism:• Upper socioeconomic status.• Want to preserve the system.• May not rule directly - politicians as “agents.”– People have illusion of control.– Soros, Koch versus Kennedy’s and Bush’s.

• Are they concerned with overcoming market failure?

Countervailing power:Countervailing power:• JKG - need large gov’t to offset corps. &

unions.

Scientific ManagementScientific Management

• Rise of “public administration.”• Scientific research will show us the way.–Determining what people want.–Determining what people should want!

• The rise of the regulatory state.– Internet, sugar & fat & salt, toys, DDT.

• “Satisficing” outcomes.

• Hayek critique - the worst geton top.–MMS case.

The Idealized StateThe Idealized State

• State planning requires depoliticizing decisions.• Gov’t planning to make “good markets.”– Is it really market failure that pre-existing conditions

don’t (usually) get covered by insurance?

• Economic growth makes us poorer (!)– Stossel in India.– Erlich vs. Simon bet.–Competitive economy generates winners and losers.

• Need for centralized information to create policy.–DDT? Global Warming?

What is missing?What is missing?

““Those who argue that market failure Those who argue that market failure justifies government action don’t stop to justifies government action don’t stop to ask certain questions: What incentives ask certain questions: What incentives exist in government? Who wins and exist in government? Who wins and loses? Are the actual outcomes different loses? Are the actual outcomes different from those we hope for? Do good from those we hope for? Do good intentions in government produce good intentions in government produce good results?”results?”

ECO 481:Public Choice Theory

Week 2 - Part I:Week 2 - Part I:

The Rationale for The Rationale for

GovernmentGovernment

Dr. Dennis Foster