These notes are from the lecture Economics of the Public and Semi-Public Sector, given at the Mises University. Any errors are mine, feel free to point them out so that I can correct them. This lecture was given by Prof. DiLorenzo.
Standard View of Democracy (Classical)
- Perfectly competitive political system, very analagous to perfect competition.
- Economists devote their lives to showing how perfect Democracy is.
- In reality, politicians are experts at evading the will of the people.
Rational Ignorance
- Most people spend most of their time on private affairs, and none on public affairs. The larger the State becomes, t he more difficult it becomes to keep track of the State, and the less beneficial it becomes.
- Benefit of voting = robability your vote wins ´ potential benefit
- There is a cost of voting:
- Explains why so few people vote.
- Explains why special interests dominate decision-making:
- Concentrated benefits.
- Disbursed costs.
- Concentrated benefits.
- Explains why so few people vote.
- Even if you are a political genius, you can only know 1/1000 of what the State does.
- Also, there is a large propaganda effort to explain why we need all of these Interventions.
- Government itself is a relentless propagandist:
- Government has the ability to drown out other voices:
- State Universities.
- Libertarian views drowned out by the State.
- State Universities.
- The State tells us that farmers are poor group who needs subsidies.
- Argue farmers are pooer than the rest of us.
- This is a lie: Farmers earn 140% the income of ubran- dwellers and have lower costs of living.
- Argue farmers are pooer than the rest of us.
- The State also argues that subsidies go to small farmers:
- This is also a lie.
- Large corporate farms get most of the subsidies.
- This is also a lie.
- The State publishes bogus statistics on povery:
- Doesn’t include the welfare poor people get.
- Doesn’t subtract taxes from those with higher income.
- This allows them to expand welfare.
- Doesn’t include the welfare poor people get.
- Welfare Credit Card is called an “Independence Card”.
- Thus, every politicians and bureaucrat is a propagandist for his or her program.
- Government has the ability to drown out other voices:
- Rothbard said that even the most ruthless despot needs to get at least the tacit support of the people.
Logrolling
- In reality, what we get under Democracy is the will of the minority, not the majority:
Will Minority vs. Majority
Group Spending
Hospital? School?
Young No Yes
Old Yes No
Majority No No
- Logrolling — make deals, packaged, so you get what you want if another politician gets what he wants.
- We don’t get what the majority wants, but what a group of special interests decides they have to give up to get what they want.
Agenda Control
- Washington Monument Syndrome — threaten to take your ball and go home if you don’t get what you want
- Policemen don’t protect citizens unless they get what they want.
- When school didn’t get the tax benefits they wanted (an increased budget), they shut down the school buses.
- When special interests don’t get what they want, they control the agenda so as to extort a positive vote.
Incumbant Advantage
- 90-95% incumbant re-elected.
- Each member of Congress is on a very narrowly defined Committee, which means that you work to get the largest amount of taxes stolen and taken to your district as possible.
- System is rigged to be such, and is essentially a monopoly, with barriers to entry created by the State.
- Incumbants win vast majority of elections.
Semi-Public Sector
- Entire US Constitution was designed to eliminate special interests groups.
- Not only does the State not hinder the factionalism and special interest groups, but it promotes them:
- Gives special interests money.
- Special interests use that same money to lobby the State to give them more money.
- ONB Watch — watch to make sure Congressmen don’t criminalizing this lobbying humbug, or enforce laws against it.
- National Endowment for Democracy — funding element to lobby for Democratic Imperialism
- Legal Services Corporation — poor people who can’t afford a lawyer are given a lawyer for civil cases. 50% of that money was used for other purposes; e.g., operations for a sex change.
- Underground Government — how do politicians respond to tax- evolts?
- State/local governments, referendums would limit the growth of ending. How they respond is to say, “we won’t borrow money, won’t tax and won’t spend,” but instead created a whole bunch of shadow corporations.
- These corporations issue debt that is not voter-approved. They promise to pay off the debt by “profits” from a venture.
- Politicians say that these companies have a “moral”, not “legal”, obligation to pay off their bonds, a hint to the bond-market that the State will pay them off.
- Eventually, they dip into the trust fund to pay for this humbug.
The biggest bankruptcies have occured under these kinds of fraud. - State/local governments, referendums would limit the growth of ending. How they respond is to say, “we won’t borrow money, won’t tax and won’t spend,” but instead created a whole bunch of shadow corporations.
- Gives special interests money.
- These are some of the tricks politicians use to escape the will of the people.
- Books to read:
- H.L. Menckin essays; good to give to the worshippers of Democracy.
- Our Enemy, The State. Nock, Albert J.
- H.L. Menckin essays; good to give to the worshippers of Democracy.
{ 2 comments }
Thanks for posting all your Mises University notes. I couldn’t find time to attend it this year, but your notes are giving me a taste of what I missed. By the way, it’s H.L. MENCKEN and Albert J. NOCK.
Thanks for post….
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