Michael Makovi starts by explaining some basic points of the typical view on economics before Public Choice, where people used to think that markets fail all the time and Government should fix it, capitalists are selfish and the politicians and bureaucrats are benevolent because they serve the public interest and know what to do and has the incentive to do it. Whereas in the other side....
Public Choice takes the other side, what about incentives? What reason would the government have to do good things?”
Michael describes the Theory of Public Goods - the typical justification for government intervention - and later the Theory of Externalities that says people impose costs on others without compensation. Both conclude that public goods lead to market failure and defend government intervention to fix economy.
Makovi says Public Choice, or “politics without romance” state important factors:
He also talks about what’s called Nirvana Fallacy in Public Choice. Discusses why will the government produce public goods, if in fact, it will under produce them, then talks about institutions, human nature, building blocks of public choice, and other related topics.
The general idea is that people are people, government officials are human too that are also flawed, and so you can’t magically assume that government will fix any problem in the market.”
Makovi then describes the characteristics of the building blocks of Public Choice: voters, interest groups, politicians and bureaucrats.
He concludes that politicians are humans, voters are ignorant, special interests create externalities, politicians are clones who don’t know what the public wants, bureaucrats maximize budgets and protect their jobs, and other interesting facts.
Understand the basics of Public Choice with Michael Malaki, who provides a detailed analysis of the theme. Now watch What Fields Is Public Choice Theory Being Applied To?
Research assistant, Free Market Institute
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Nuestra misión es la enseñanza y difusión de los principios éticos, jurídicos y económicos de una sociedad de personas libres y responsables.
Universidad Francisco Marroquín