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Quotation of the Day…

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… is from pages 222-223 of my teacher Randy Holcombe’s superb 1985 book, An Economic Analysis of Democracy [2]:

When a government is small, it can provide very limited benefits to special interest groups, so there is a small incentive for special interest groups to lobby the government.  The successes of those that do lobby the government will cause the government to grow.  This occurs because the great majority of voters and taxpayers are rationally ignorant about most government activity, making it easy to increase everybody’s taxes a small amount to provide a sizable benefit to a few.  Most people do not have an incentive to  investigate in detail the allocation of their tax dollars, but the special interest groups with the sizable benefit will repay the representatives with political support.  Thus, special interest groups cause government growth.

The growth of government, in turn, raises the payoff available to special interest groups.  With a higher payoff to special interest groups, this encourages the formation of new special interest groups to share in the payoff.  A larger government can support a larger number of special interest groups.  Thus, as government grows, more special interest groups form.  The formation of special interest groups in turn increases the demand for special interest legislation, cause a further growth in government spending.

DBx: The growth of government is further fueled by an ideology that springs from a widespread failure both to see the reality that Randy describes and to understand just how robust free markets really are.

Distressingly, “Progressives,” who worry about the power and influence of corporations and rich people, are among the most ardent proponents of larger and more intrusive governments.  “Progressives” are almost universally blind to the inconsistency of their fear of the influence of corporations and the rich with their faith in the wonders that they pray, with great confidence, will be granted by a large, intrusive, and powerful state.

Many modern conservatives are no better.  Their pleas for the state to control international trade, immigration, the ingestion of certain substances, and world affairs are irreconcilably at odds with conservatives’ stated aversion to high taxes and bloated government budgets, as well as with their proclaimed allegiance to the rule of law.

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