Re: Government intervention

[Herbert Gintis <gintis@xxxxxxxxxxxxxxx>]

Eric Nilsson writes:
>
>A question which I don't have an answer to:
>
>Do those heterodox economist who have models that indicate laissez-faire
>policies are suboptimal -- and who argue for government guidance of the
>economy -- what explicit or implicit theory of the State do they have?  How
>would they counter the argument that, though they are right that capitalism
>needs a good amount of help to performed well (or fairly), no government can
>be trusted to follow these policies due to the information/rent seeking
>problems the mainstream invokes?
>
	Well, history shows that sometimes governments do what their
'spozed to do. But more pertinently, I think 'heterodox' people should
be severe critics of the way governments perform, and propose forms of
state accountability. I am doing a paper on that, which I expect to
write in mid-December. Epstein and I argue in our forthcoming book on
macro policy that those who would like more government intervention
should be the ones working hardest to develop new forms of state
accountability. In the U.S. the first issue is I believe campaign
finance reform. The second is developing better incentives for
lawmakers and administrators to perform well.

	To give an example, however, I wrote an article on school
choice this summer (forthcoming in Teachers' College Record),
suggesting that under the proper conditions competitive delivery of
educational services should be a superior alternative to public
schools. In general, we should fight bitterly against government
waste, and even government production (unless the government is forced
to compete with private producers).

	I think the theory of rent-seeking and directly unproductive
activity is one of the most important contributions to political
economy in recent years, by the way, and we should vigorously take up
the theme.

Herb gintis@xxxxxxxxxxxxxxx