Public Goods, Redistribution and Rent Seeking

Public Goods, Redistribution and Rent Seeking

The Locke Institute series

Gordon Tullock

Gordon Tullock, eminent political economist and one of the founders of public choice, offers this new and fascinating look at how governments and externalities are linked. Economists frequently justify government as dealing with externalities, defined as benefits or costs that are generated as the result of an economic activity, but that do not accrue directly to those involved in the activity. In this original work, Gordon Tullock posits that government can also create externalities. In doing so, he looks at governmental activity that internalizes such externalities.

Chapter 8: The Survey of the Existing System

Gordon Tullock

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

Extract

8. A survey of the existing system In this chapter, I concentrate attention primarily on a description of what, in fact, governments, and in particular the American government, do in responding to externalities. The work will to a considerable extent draw on the model I developed in my earlier book, The Economics of Income Redistribution (1997). In a way it will be merely descriptive rather than theoretical, but it is necessary to devote some space to why we do the things that we do. A modern welfare state is partly simply a continuation of the old-fashioned government activity to help people who are in a particularly bad state. In our own history, this was originally done primarily by churches, but it switched to local governments quite early. The modern system however involves a drastic series of changes, which, as I pointed out earlier, in essence were pioneered by Bismarck who was attempting to defeat the socialists in Imperial Germany. Ironically the whole program was taken over and expanded by people who call themselves socialist. Further, at the moment it is almost all that is left of socialism. Government ownership of economic facilities and the planned economy are not currently fashionable. All governments including socialist governments, are attempting to unload the economic enterprises which they own or operate. Predicting (as Sam Goldwyn said ‘particularly the future’) 1 is difficult and I do not want the reader to feel he or she can depend heavily on my predictions. Nevertheless I think...

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