"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist." -- John Maynard Keynes
The particular defunct economist who most dominates the minds of the Obama administration and the Democratic Party is Keynes himself. But events in Wisconsin and a few other states are bringing other economists -- some still very much alive -- to the fore.
In Wisconsin and other states facing severe budget crises, we are witnessing the clash of special interests versus the public interest. Though the term "special interests" is usually deployed as an epithet by Democrats and is meant to refer to oil companies, "the rich," or other undesirables, in fact, as economist James M. Buchanan and other "public choice" theorists explain, a special interest is any community that attempts to gain a particular advantage from government.
Buchanan taught that government officials -- office holders and bureaucrats alike -- respond to incentives and pursue their self-interest just as other economic actors do. So do "rent seekers." The classic example offered is that of protectionism. An industry -- say, the sugar growers -- lobbies the government to impose tariffs on imported sugar in order to keep prices high (they are the rent seekers). A tariff will benefit each and every sugar grower substantially. So it is in the sugar growers' interest to form a trade association, to make campaign contributions, and to pay close attention to the way office holders vote on the question.
The broad public, by contrast, is potentially disadvantaged by a tariff on imported sugar because prices for candy, soda, and other products that contain sugar will rise. But the incremental added cost, per consumer, is very small. It is therefore extremely difficult to organize the public to oppose sugar quotas, or a host of other measures. Thus does government spending ratchet ever upward.
Public employees in many states are classic rent seekers, but they do sugar growers and the like one better. Through collective bargaining, unions negotiate with elected officials for wages and benefits. (SET ITAL) They then get the state to collect union dues for them by withholding the dues from public employees' checks. (END ITAL) With the accumulated cash, the union then makes campaign contributions to the favored public officials. Neat.
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