People who tell you that mainstream economists don't think about the nature of public decision making or the prospect of government failure are either trying to mislead you or simply not aware of the literature. All of the major market failure papers note this sort of thing - and it seems to me the point is obvious and implicit for those that don't. We've all known about this since Adam Smith and well before. And here's one more piece of evidence from the Cambridge Journal of Economics:
"Economists and the analysis of government failure: fallacies in the Chicago and Virginia interpretations of Cambridge welfare economics"
By Roger E. Backhouse and Steven G. Medema*
The theory of government failure was developed as a reaction against Pigovian welfare economics and the Cambridge approach to economic policy analysis generally, which ostensibly lacked a theory of governmental behaviour. We argue that the Cambridge tradition—as reflected in the writings of Henry Sidgwick, Alfred Marshall and A.C. Pigou—evidences a clear sense of the potential limitations and inefficiencies of the political process that were later developed, albeit in a more systematic fashion, in the government failure literature and at the same time bring out the ways in which the Cambridge and contemporary government failure approaches diverge, in spite of their strong similarities.
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