Fw: [LAPD] Government Spending and Public Choice Theory

James Daugherty (daugh@home.msen.com)
Sun, 22 Feb 1998 13:56:03 -0500

-----Original Message-----
From: The Libertarian Alliance <LA@capital.demon.co.uk>
To: LAPD List <LA@capital.demon.co.uk>
Date: Sunday, February 22, 1998 1:13 PM
Subject: [LAPD] Government Spending and Public Choice Theory

|By Paul Marks
|Economic Notes No. 42
|ISSN 0267-7164
|ISBN 1 85637 091 7
|An occasional publication of the Libertarian Alliance,
|25 Chapter Chambers, Esterbrooke Street, London SW1P 4NN, England.
|Email: LA@capital.demon.co.uk
|Web: http://www.digiweb.com/igeldard/LA/
|ICQ: 8091240
|(c) 1992: Libertarian Alliance; Paul Marks
|Paul Marks is a freelance writer, researcher and security guard.
|The views expressed in this publication are those of its author, and
|not necessarily those of the Libertarian Alliance, its Committee,
|Advisory Council or subscribers.
|LA Director: Chris R. Tame
|Editorial Director: Brian Micklethwait
|Netmaster: Ian Geldard
|Government spending is going through the roof in western countries.
|All technological and other advance is proving vain, for government
|spending is growing so fast that its proportion of total output is
|becoming a crushing burden. In Western Europe thirty years ago,
|government spending averaged out at about 25% of output. Now it is
|about 50%, and rising fast. If this trend continues economic advance
|will be so undermined that economic collapse will occur.
|Why is this happening? The popular answer, among libertarians, is
|the Public Choice Theory answer that groups of people - "special
|interests" - benefit a lot per head from a particular item of
|government spending, whereas the general population are not hurt
|much per head.(1)
|If one hundred men benefit to the tune of one thousand pounds each
|from the building of a warship, they have a big incentive to
|campaign like mad, in public and by private lobbying, for this
|warship. But the tens of millions of voters are hardly hurt at all
|by the few pence each voter is forced to spend on this warship, so
|they have no incentive even to find out that the money is being
|spent, let alone to stop it being spent.
|So people press for the government spending that benefits them. The
|concentrated interests win at the expense of the diffuse general
|At first sight this seems a very good description of political
|activity. I remember from University days the antics of small groups
|of people which it was not worth the trouble of most students to
|oppose, as, per head, the demands of each group cost them little.
|And in local and national politics one seems to come across nothing
|but an endless series of groups asking for more money for their
|particular activity.
|However, I believe the Public Choice view to be fundamentally
|flawed. It does not fit the facts. For if Public Choice Theory is
|true, why do some items of government spending fall as a percentage
|of output over time, and others rise?
|In the United States in 1960, defence spending was 12.1% of total
|output and federal welfare spending (pensions, unemployment benefit,
|etc.) was 4.8%. In 1980 defence spending was 7.3% of total output
|and federal welfare was 12.6%.
|The wholehearted supporter of Public Choice might say that this is
|because more people believe that welfare spending will benefit them
|than believe that defence spending will. But the whole point of the
|libertarian economic case is that such things as the surge of "Great
|Society" welfare programs benefit no one with the possible exception
|of the people who administer them, that such spending increases the
|very poverty it is supposed to reduce.(2)
|If we are to believe that the reason welfare spending went up and
|defence spending down was that more people believed that it would
|benefit them, this begs the question of why the welfare bureaucrats
|and their allies were more successful than the defence bureaucrats
|and their allies in persuading people that more spending was in
|their interests. There is no evidence that the vast majority of
|voters in the U.S., let alone the politicians who actually voted for
|them, believed they would ever use any of the Great Society welfare
|programs (it is different in the case of 'Social Security' pensions
|of course) they were voting against their interests.
|I know of no western country, over the last thirty years, which had
|large scale defence spending where its share of output has not
|fallen and I know of no western country where welfare spending share
|of output has not risen and is not continuing to rise. In the United
|States the defence burden is less and the welfare burden is greater
|than it was in 1980. Overall Federal spending in the United States
|is now about 35% of output. In 1928, it was 3% of output.
|Such things as the road spending burden, by contrast, show no
|tendency to increase over time, in spite of having large scale
|interests behind them, who are able to make plausible (however
|false) claims that the mass of voters, as well as special groups of
|voters and campaign contributors, benefit from such spending.
|Government transport spending, subsidies to industry, agriculture,
|the arts, whatever you wish to name none of these show the dramatic
|rise that welfare spending does in every western country from the
|day welfare schemes are introduced.
|Partly, this is because these schemes increase the number of poor
|people, which in turn leads to even more welfare spending. It is
|like the rolling of a snowball down a steep slope.
|But it is not just this. If government spending on health,
|education, child care, the old, and so forth, is perceived as
|helping the poor resistance to it is fatally weakened.
|"Conservative" election victories are no counter argument
|"Conservative" governments increase welfare spending. (As British
|Prime Minister John Major said: "We have spent more than Labour even
|promised to spend.") Even if we assume that, for example, in the
|1992 British general election everyone who voted Conservative
|opposed higher welfare spending (which is nonsense) 57% of the
|voters supported a rise in the welfare state burden. And Britain is
|without doubt the least pro-welfare state country in the EEC.
|I do not believe politicians (at least, British Conservative Party
|politicians, who are the only ones I know) to be in the main the
|vote obsessed figures of Public Choice Theory, nor do I believe that
|the main problem is that they are deceived by special interest
|groups. Politicians have beliefs. The trouble is that their beliefs
|are the same as those of most other people. The politicians believe
|that the ever growing welfare state is morally good - 'holy', if you
|Well, we could try to persuade them that it is morally bad. I
|believe that part of what Michael Oakeshott tries to do in some of
|his writings(3) is to show that there are different traditions, and
|that by an unthinking acceptance of the planning, state activist
|tradition, of which the welfare state is part, we more away from the
|tradition of "civil society", which he believes that we also value.
|Ayn Rand tries to show that the dominant welfare state is against
|the whole nature of man.(4)
|The trouble is that neither of these approaches, of arguing that
|government welfare spending increases poverty, and arguing that it
|destroys civil society, has worked, or shows any sign of working.
|There is one approach left, which is to point out and ram home again
|and again, by all the means we can find, that the ever growing
|welfare state will lead to economic collapse. And I do mean true
|collapse. Eventually, unrestrained welfare spending will lead to
|mass starvation.
|Many have pointed this out, notably Rand. But in her case, this
|argument was part of a whole philosophy.(5) We have never had the
|simple message pounded away constantly. Now is the time to do this.
|Over the next few years the great slide will become clearly
|apparent, and the longer genuine action is put off the greater the
|horror will be, as there will be more and more poor people. As the
|economy slides, so, I believe will civility. There will be demands
|for 'emergency action', which will of course only make things worse.
|But if just one major country manages to turn its back on welfare
|statism, it will become an example.
|The failure of welfare statism will at first probably lead to more
|welfare statism, decline to more decline. But if we talk and write
|enough, we may be listened to. The hangman's noose concentrates the
|mind wonderfully, and with things visibly falling apart we will
|never have a better chance.
|If we succeed, then human beings cooperating together, free of
|seeing all that they do being taxed, borrowed and printed away to
|finance the welfare state, and free too of the maze of regulation
|that go with the welfare state, will accomplish great things.
|1. Those interested in the complexities of Public Choice theory
|might start with James M. Buchanan and Gordon Tullock, The Calculus
|of Consent, University of Michigan Press, Ann Arbor, 1962. But there
|are many other works by Nobel Laureate Buchanan, by the more
|'extreme' Tullock, and by their many followers. See for example
|Gordon Tullock, The Vote Motive, Hobart Paperback No. 4, Institute
|of Economic Affairs, London, 1976; or J. M. Buchanan et al., The
|Economics of Politics, Readings No.18, Institute of Economic
|Affairs, London, 1978. A nice recent book of essays is Democracy and
|Public Choice: Essays in Honour of Gordon Tullock, edited with
|contributions by Charles K. Rowley, Basil Blackwell, Oxford, 1987.
|2. See for example Charles A. Murray, Losing Ground: American Social
|Policy 1950-80, Basic Books, New York, 1984; or Henry Hazlitt, The
|Conquest of Poverty, Arlington House, New Rochelle, New York, 1971;
|or John Rospers, Libertarianism, Nash, Los Angeles, 1971, especially
|chapter 7, "Welfare and Government". But there are so many hooks and
|articles by so many authors.
|3. For example see "On Being Conservative" in Rationalism in
|Politics, Methuen, 1962; or the whole of Oakeshott's On Human
|Conduct, Clarendon Press, Oxford, 1975-1990, particularly the second
|and third essays.
|4. The obvious example is Rand's novel Atlas Shrugged, New American
|Library, New York, 1957.
|5. I am not saying Rand's philosophy is right or wrong, only that it
|is not simple. It is concerned with how we live, and not just
|whether we will live.

James Daugherty, Internet Postmaster for A-albionic Research (POB 20273,
Ferndale, MI 48220), a ruling class/conspiracy research resource for the
entire political-ideological spectrum. Quarterly journal, book sales,
rare/out-of-print searches, New Paradigms Discussion List, Weekly Up-date
Lists & E-text Archive of research, intelligence, catalogs, & resources.
To Discuss Ideas:
mailto:lloyd@a-albionic.com http://msen.com/~lloyd/
For Ordering Info & Free Catalog:
mailto:james@a-albionic.com http://a-albionic.com/
**FREE RARE BOOK SEARCH: <http://a-albionic.com/search.html> **
Explore Our Archive: <http://a-albionic.com/a-albionic.html>