A Public Choice Perspective
Edited by Giuseppe Eusepi and Friedrich Schneider
Chapter 4: The political economy of regulation: a prolegomenon
4. The political economy of regulation: a prolegomenon Geoﬀrey Brennan 1. BACKGROUND The point of departure for the current chapter can be said to consist of ﬁve Ps: a perception; a proposition; two predictions; and a prejudice. The perception is that in virtually all Western economies over the last 30 years tax dollars have become increasingly scarce. What I mean by this observation is that the political price of increased taxes has risen. Or to put the same point in equivalent terms, the political rewards from reduced taxes are now greater than they were, relative to alternative political actions, of which spending increases and debt are the two most notable. The reasons for this development are various. It partly reﬂects independent shifts in political theorizing at the academic level, partly changes in the marginal excess burdens of taxation associated with reduced tax compliance and scope for avoidance activities, and partly a general increased scepticism about what the public sector can deliver. These various factors are, of course, reﬂected in shifts in what passes as prevailing ideology. Pretty well all parties of whatever stripe have moved somewhat ‘to the right’ in relation to ﬁscal matters. And this move has, among other things, placed the ﬁscal system under considerable pressure: tax dollars have become increasingly scarce. The ﬁrst prediction is that this pressure on the ﬁsc will intensify. My grounds for believing so are not based on predictions of shifts in public opinion as such. I have no crystal...
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