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Can we take it that public choice economics is now proven?

Summary:
Public choice economics is one of those observations that is truly hated by those who believe in the purity of government. For it is the observation that those who rule us are motivated, at least in part, by their own economic self-interest. Just like everyone else that is, simply because those who govern are indeed humans just like everyone else.In modeling the behavior of individuals as driven by the goal of utility maximization—economics jargon for a personal sense of well-being—economists do not deny that people care about their families, friends, and community. But public choice, like the economic model of rational behavior on which it rests, assumes that people are guided chiefly by their own self-interests and, more important, that the motivations of people in the political process

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Public choice economics is one of those observations that is truly hated by those who believe in the purity of government. For it is the observation that those who rule us are motivated, at least in part, by their own economic self-interest. Just like everyone else that is, simply because those who govern are indeed humans just like everyone else.

In modeling the behavior of individuals as driven by the goal of utility maximization—economics jargon for a personal sense of well-being—economists do not deny that people care about their families, friends, and community. But public choice, like the economic model of rational behavior on which it rests, assumes that people are guided chiefly by their own self-interests and, more important, that the motivations of people in the political process are no different from those of people in the steak, housing, or car market. They are the same human beings, after all. As such, voters “vote their pocketbooks,” supporting candidates and ballot propositions they think will make them personally better off; bureaucrats strive to advance their own careers; and politicians seek election or reelection to office. Public choice, in other words, simply transfers the rational actor model of economic theory to the realm of politics.

There is no special set of angels without said self-interest, no political faction free of it. That’s the claim at least.

But the true scandal is about the corruption of public service for private gain. It is about how public servants appear to have made decisions because of the prospect of personal advantage. It is about how private interests have been allowed into the heart of government as they pretended to be motivated by public service. And it is about an attitude towards public assets – including even NHS employment data and the wages of public sector workers – that sees those assets reduced to a commodity that can be bought and sold, at a profit, and not just without public benefit but at the cost of the taxpayer.

We seem to have proven the claim, in the sense of tested it, and we’re not finding the evidence to refute it.

It’s not necessary to go quite as far as Mancur Olsen here and insist that government is mere predation upon the populace. We can just observe that not all that is done by government is going to be motivated by our, the citizenry’s, self-interest, there will be at least some influence of that of those doing the governing.

Which then leads to the question of what we should do about it. Given that no grouping in power is going to be free of the temptations the answer has to be to limit what they may do. To reduce the areas of our lives over which they may exercise their, rather than our, self-interest.

The solution, as so often, is minarchy. We must insist that their droits de seigneur is only exercisable when we truly must lie back and think of England. The violation may be the same but it’ll be markedly less frequent.

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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