by Sukrit Sabhlok

Created on: May 12, 2008   Last Updated: May 13, 2008

A range of philosophers, from John Locke to Thomas Hobbes, have written about the relationship between government and individuals. But there was almost no empirical analysis of the incentives facing the political class, until economists James Buchanan and Gordon Tullock wrote their seminal work, "The Calculus of Consent". Today their book forms the foundation of something called public choice theory.

What is public choice theory? It's a branch of economics that attempts to see the world from the perspective of politicians, bureaucrats, pressure groups and voters. Essentially, it's a discipline that studies the motivations of political actors using the techniques of economic science. For the most part, public choice models have assumed that individuals rationally pursue their self-interest within a specified set of constraints. This conception of self-interest is not to be equated with a hedonistic and narrow "greed". Indeed, some economists, such as Gary Becker, have modeled utility functions that take altruism into account.

No, it's not greed, but a deep suspicion of government that sets public choice apart from other disciplines. It's said that a person who makes a transition from the private to the public sector does not lose their desire to maximise individual utility merely because their job description has changed. This insight shatters the traditional view of government as a benevolent force for good.

First, it is strongly sceptical of the belief that democratic governments act consistently with moral imperatives to serve the best interests of society. In practice, politicians zealously pursue re-election without regard to the public interest. Public choice theorists contend that politicians concentrate the benefits of their policies towards a small number of special interest groups, while spreading the costs across taxpayers as a whole. For example, a subsidy to the sugar industry comes at the expense of those citizens who don't grow sugar. Interest groups have an incentive to engage in "rent-seeking" behaviour by spending large sums of money to extract privileges from the legislators who depend upon them for campaign funds and votes. This rent-seeking imposes "deadweight costs" on the economy as resources expended on lobbying could have been put to more productive uses elsewhere.

Second, public choice challenges the notion that the bureaucracy is an impartial entity diligently serving the public good. Even where a politician, in good faith, tries to work

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