Quotation of the Day…

by Don Boudreaux on July 24, 2013

in Budget Issues, Debt and Deficits, Other People's Money, Politics

… is from page 18 of James D. Gwartney’s and my colleague Richard E. Wagner’s 1988 essay “Public Choice and the Conduct of Representative Government,” which appears as chapter 1 in Gwartney & Wagner, eds., Public Choice and Constitutional Economics:

The democratic process put the majority in a position to send at least a part of the bill to the minority.  Suppose your uncle was willing to pay 49 percent of anything you purchased.  You would tend to spend more on housing, clothes, food, and transportation than if you alone were paying the bill.  It is the same with the budgetary choices of majorities.  Since the majoritarian process does not force the majority to consider the costs it imposes on the nonconsenting minority, the majority supports wastefully large government as a by-product.

This proposition about overly-large budgets is not affected by recognition that people who win on one issue lose on others, with the income effects of winning and losing approximately offsetting one another.  Someone who wins on subsidized education may lose on auto import quotas or restrictions on agricultural output.  Even though the income effects of the various transfers may aggregate to zero, the substitution effects will bring about economic waste and excessive government.

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