Monday, January 30, 2012

A very interesting looking article on Cambridge Public Choice Theory

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.

5 comments:

  1. I like Backhouse, I read a book on economic history from him.

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  2. To me public choice theory has smacked of tripping a runner ahead of you in order to win a race. If your free market is faster than public services, then prove it by running faster, not cheating.

    Fun Fact:

    "The term “Age of Austerity” was popularized by British Conservative leader David Cameron in his keynote speech to the Conservative party forum in Cheltenham on April 26, 2009, when he committed to put an end to years of excessive government spending."

    http://en.wikipedia.org/wiki/Age_of_austerity

    If, perchance, this comes up later.

    Invisible Backhand

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  3. "To me public choice theory has smacked of tripping a runner ahead of you in order to win a race. If your free market is faster than public services, then prove it by running faster, not cheating."

    This is just wrong. The fact of the matter is, it has been too easy for advocates of a government program to do just the opposite: show a market outcome is desired, posit a program that, in their mind will fix the problem, and then say, "So, the program must be implemented."

    The point of Daniel's post is not that Buchanan and Tullock are wrong in saying government failure must be considered (which is all they claim -- they do not, as you imagine, say "Because government failure is possible we must never have government programs"), but that others considered the possibility long before them, as far back as Plato, in fact.

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  4. Daniel,

    Have you read any of the Political Science literature on Public Choice Theory?

    Critical Review's latest issue is a special that covers just that.

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    Replies
    1. Jeffrey Friedman, in general, is critical of public choice theory (he is not so much opposed to everything considered in public choice theory, but more critical of the economistic approach and some of the conclusions drawn). Critical Review generally has quite a bit on public choice theory, and has had other special issues in the past.

      Delete

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