February 22

Power and Influence

Friday’s Big Idea

Pareto optimal improvements

Given the objectives of the two major parties in Washington, budget negotiations should result in the following outcomes: that wasteful government spending would be curtailed, and more socially useful spending would occur. 

So argues Richard O. Zerbe in today's lesson. And yet, Zerbe, a professor at the Evans School of Public Affairs at the University of Washington, points out the problem: 

Despite the rational logic, why isn’t this happening?  

To this question, Zerbe offers a simple, yet dispiriting explanation: it all comes down to politics. In other words, Congressmen are looking out for the narrow interests of their own districts, even if it means supporting projects that are wasteful. This too often comes at the expense of the greater good. 

So can we apply Pareto improvements -- the idea that at least someone should gain and no one loses -- to the budget discussions? According to Zerbe, objective measurements such as Benefit-Coast Analysis can help lawmakers practice fiscal prudence in a way that not only increases the value of government spending, but increases equity as well.  

 

  1. 1 Are We Spending Our Limited Fisca...
  2. 2 Sequester Politicians’ Salaries, ...
  3. 3 Why Do Americans Prefer Cockroach...
  4. 4 Taxes and Justice: It is Your money
   
  1. Are We Spending Our Limited Fiscal Resources Wisely?

    Are We Spending Our Limited Fiscal Resources Wisely?

    Using benefit-cost analysis (or its equivalent, cost-benefit analysis) to evaluate projects not only increases the value of government spending, but increases equity as well.  

    Read More…
  2. Sequester Politicians’ Salaries, Not the Economy’s Future

    Sequester Politicians’ Salaries, Not the Economy’s Future

    Perhaps if the penalties for reneging hurt the politicians themselves – not the American people – then they would comply more readily.

    Read More…
  3. Why Do Americans Prefer Cockroaches to Congress?

    Why Do Americans Prefer Cockroaches to Congress?

    Jean-Jacques Rousseau might say that Congress has become more and more unpopular as Americans have begun to appreciate its basic illegitimacy as a law-making institution.

    Read More…
  4. Taxes and Justice: It is Your money

    Taxes and Justice: It is Your money

    It's just willful silliness to argue that questions about how much of "our money" the government can take is logically incoherent. 

    Read More…