… is from page 54 of Douglass North‘s 2005 book, Understanding the Process of Economic Change (footnote omitted):
Imperfect models of the complex environment that the politician (and constituent) is attempting to order, institutional inability to get credible commitment between principal and agent (voter and legislator, legislator and policy implementer), the high cost of information, and the negligible payoff to the individual constituent of acquiring information all conspire to make political markets inherently imperfect.
Of course, private-property markets are also inherently imperfect. The question, therefore, is this one: Which institution – private markets or political markets – is generally better at dealing in socially beneficial ways with its imperfections? For a variety of reasons – many of which have been covered here at the Cafe during our (so far) almost ten-year-long run – private markets are far superior to political markets.
