Autocratic, Democratic, and Optimal Government

Autocratic, Democratic, and Optimal Government

Fiscal Choices and Economic Outcomes

The Locke Institute series

William A. Niskanen

This book presents simple models of the major alternative types of political regimes, estimates of the parameters of these models, and quantitative estimates of the fiscal choices and economic outcomes of these regimes. William Niskanen provides valuable analysis of the effects of the voting rule, the progressivity of the tax structure, and the length of the fiscal horizon in democratic governments and interesting insights of the effects of alternative regimes on policies, such as war and immigration, that affect the number of people subject to the regime.

Preface

William A. Niskanen

Subjects: economics and finance, public choice theory, politics and public policy, public choice

Extract

How is the level of government spending or the average tax rate related to the type of government? How much of the differences in economic conditions among nations are attributable to the differences in the basic structure of their governments? How much are these fiscal decisions and economic outcomes dependent on the progressivity of the tax structure, the voting rule in a democracy, or the fiscal horizon of the government? Only a few economists have even addressed these conditions. Conventional public finance addresses the effects of fiscal decisions but not their causes. For the most part, the new field of public choice addresses the second-order characteristics of democratic government. Joseph Schumpeter was one of the few economists with the intellectual breadth and curiosity to address the broader choice among the several major types of political regimes, most importantly in his classic 1942 book on Capitalism, Socialism, and Democracy. The modern classic in this tradition is Mancur Olson’s 1982 book on The Rise and Decline of Nations. In the end, for somewhat different reasons, both Schumpeter and Olson were pessimistic about the longterm viability of the combination of capitalism and democracy. The analysis in these two classics, however, was developed in a literary form that is not a sufficient basis for quantitative estimates of the effects that they describe. Later, Francis Fukuyama revived the concept of “universal history” in a 1992 book, The End of History and the Last Man, which concludes that a market...