Archive for the 'Public Choice' Category
November 25, 2009
by Glen Whitman
As discussed in the previous post, the “experts” in charge of implementing new paternalist policies will have a tendency to simplify their own theories to make them useful for crafting policy. That alone creates slippery-slope potential. But that potential is magnified by the existence of rent-seekers – that is, interest groups whose agenda is to change policy for their own interests. Such interests can be ideological, monetary, or simply personal. In the paper, we illustrate the power of rent-seekers to distort the facts and confuse the debate with two issues: environmental tobacco-smoke (ETS) and obesity. With respect to ETS, however, we have to run off a potential objection: that ETS is not really a paternalist cause at all, because smoke harms non-smokers (p. 714):
We should note that although policies addressing exposure to secondhand smoke (“environmental tobacco smoke” or ETS) are not strictly paternalistic, inasmuch as secondhand smoke can potentially harm bystanders, paternalist arguments have played an important supporting role. Most importantly, many actual and proposed anti-smoking regulations limit the ability of individuals who may not be bothered by smoke to expose themselves voluntarily to secondhand smoke as customers or employees of restaurants and bars. Furthermore, by creating a hostile environment for smokers, the ETS argument easily slides into the paternalistic. Thus, even some ETS arguments must be regarded as partially paternalistic either in intention or merely in effect. Read the rest of this entry »
Posted in Public Choice, Slippery Slope, paternalism | Leave a Comment »
Tags: "Little Brother is Watching You", rent seeking, rule by experts
October 13, 2009
by Mario Rizzo
The work of Elinor Ostrom, the first woman to receive the Nobel Prize in economics, is not very well-known among economists. In fact, I would venture the guess than most economists had not heard of her before the prize was announced yesterday morning.
Two reasons for this are that her degree is in political science and she has written for publications outside of the mainstream economics journals. Additionally, her work, by and large, lacks the high degree of mathematical formalism now so characteristic of economics.
Yet the Nobel Prize Committee has done a great service to economics and the greater social-scientific community. Read the rest of this entry »
Posted in Economics, Institutions, Public Choice | 16 Comments »
Tags: Nobel Prize in Economics, rationality
October 13, 2009
by Chidem Kurdas
You’d think that the federal government wants Citigroup to return to financial health—if for no other reason to recoup the $45 billion of taxpayer money spent to shore up the bank in the credit freeze. You’d think the government wants a real effort to boost efficiency and profits. You’d be wrong.
What the Feds chose is a political charade. The pay czar objects to the $100 million compensation due to Citi’s star energy trader. Since the trader is contractually entitled to a share of the profits from Phibro, the phenomenally profitable energy trading subsidiary, there is no legal way not to pay him. So instead Citi is pressured to sell Phibro.
The bank complies. Occidental Petroleum snaps up the business at a bargain basement price. The WSJ quotes Occidental’s president as saying, “If you’ve got to sell, why should I pay a premium? What leverage does the seller have?” The lucky buyer added that Citi would never sell Phibro if it weren’t for pressure by the government.
Citi’s balance sheet is now in worse shape. It lost one of the few businesses that made money last year and had to sell under the worst possible circumstances, created by the government. Instead of slimming down by gradually getting rid of inefficient divisions so as to become a better-run company, the bank was forced to almost give away a valuable asset. And this to make it look like the government combated excessive pay. Read the rest of this entry »
Posted in Bailouts, Commodities Trading, Financial Markets, Public Choice | 11 Comments »
Tags: Citigroup. compensation
October 13, 2009
by Roger Koppl
Obama has been a bitter disappointment to me, though not really a surprise. He is skilled at signaling goodness while concentrating benefits and dispersing costs. That’s the norm for elected officials, especially at his level. Bush was an exception because he was only mediocre at signaling goodness and yet a genius at increasing state power. Still you gotta give Obama your props when he deserves them. His statement on the prize was beautiful. That’s the Obama I voted for! Too bad that’s not the Obama making real choices as this Toronto Star op ed by Haroon Siddiqui chronicles.
Posted in Public Choice, Rhetoric, political philosophy | 5 Comments »
Tags: Nobel, Obama
October 4, 2009
by Roger Koppl
It is better to signal goodness than to do good.
That’s it. That’s the lesson. (Thanks to Steve Horwitz for the title of this post.) Democratic politics is mostly about signals not substance. The lesson is simple, but somehow hard to learn. Read the rest of this entry »
Posted in Democracy, Public Choice, political philosophy | 24 Comments »
Tags: Bush, Obama, Politics, Public Choice, Republicans vs. Democrats
August 18, 2009
by Gene Callahan
In Chapter 5, “Organization of Human Activity,” Buchanan and Tullock discuss what constitutes a “rational” choice concerning social arrangements. They write, “We have assumed that the rational individual, when confronted with constitutional choice, will act so as to minimize his expected costs of social interdependence, which is equivalent to saying that he will act so as to maximize his expected ‘utility from social interdependence’.”
They then create three categories of costs, “(1) purely individualistic behavior, a; (2) private, voluntary, but jointly organized behavior, b; and (3) collective or governmental action, g.”
They then analyze all possible orderings of a, b, and g. This is all well and good, but it strikes me as rather empty of oomph. If these “costs” are defined narrowly, then the analysis is plainly false — I may use method b to organize my BBQ because I like socializing, despite the fact it would be far “cheaper” to just cook dinner for myself. But if one defines the costs broadly enough, so that we include the “cost” of not having friends around, the analysis becomes vacuous — all that is being said is that people pick the things they prefer, and all of the ordering business becomes pointless. Read the rest of this entry »
Posted in Public Choice | Leave a Comment »
Tags: Gordon Tullock, James Buchanan, Organization and human activity
August 16, 2009
by Mario Rizzo
President Obama is complaining that the “special interests” are threatening his as-yet uncertain healthcare proposals. (Recall there is no Senate bill and nothing says that House bill won’t change significantly.)
There is an interesting lesson here. What is meant by “special interests” and “general interests”? Read the rest of this entry »
Posted in Ethics, Public Choice, medical care, political philosophy | 11 Comments »
August 13, 2009
by Gene Callahan
I have a confession to make: I’m currently reading The Calculus of Consent for the first time. I thought it might be interesting and useful to post some of my thoughts on the book here. (And, please note, I’m posting to a blog, not writing a research paper — I am not doing a literature review to see if someone else has noted similar thoughts at some point.) First of all, consider this passage:
“For individual decisions on constitutional questions to be combined, some rules must be laid down; but, if so, who chooses these rules? And so on. Read the rest of this entry »
Posted in Public Choice, political philosophy | 7 Comments »
Tags: Gordon Tullock, James Buchanan, John Rawls