Public Choice - Overview
Prior to Public Choice:
Public Choice Economists Recognize (regarding democratic policy):
1. Efficiency consideratins are often secondary
2.
There are bureaucracy considerations
Government as a tool:
Focus of Attention by Public Choice Economists:
1. Legislative rules
2. Constitutional rules
3.
Bureaucrats
Public Choice and Related Fields: Some History of Economic Thought
Early Political Economy:
Adam Smith
(1776):
The "right" institutions will lead to prosperity.
Marx (mid-19th
century):
Neoclassical
reaction to Marx:
Emergence of Professional Economics
Professional
Economists:
Marxist
Followers:
A couple of examples of the Benevolent Despot Model View
Market Failure:
Macroeconomics:
The Emergence of Public Choice
Collective decision-making process:
Questions:
Bureaucracy:
Quesitons:
Rent Seeking:
Questions:
Political Science
Behaviorism:
Understanding:
Ethics in Political Conduct
Democracy Defined
Government:
Two fundamental characteristics of democracy:
1. Representation:
2. Rule of law:
Inefficiency of Democracy (Preview)
1. Rational ignorance
2. Personal gain over collective gain (individual voters)
3. Personal gain over collective gain (elected officials)
4. District voters interests over all others by politicians
(logrolling)
5. Interest groups
6. Bureaucrat's incentives (utility function)
7. Rent seeking
8. Resistance to privatization
Some of
these also exist in a dictatorship, like bureaucracy and rent-seeking.
Others are unique to democracy.
Some Methodology Issues:
Welfare
economics:
Pareto-optimality
(efficiency):
Efficiency
as a means, not an end:
Efficiency
must come down to ethics: