Beyond Politics: Markets, Welfare, and the Failure of Bureaucracy

This book provides a good, accessible introduction to the study of "public choice" - essentially, the study of government using economic techniques. The book is admirably clear, and if you haven't seen this approach at work before, I heartily recommend this book as an introduction to the field. It helps explain in a simple framework many of the dysfunctions of politics and public policy that might otherwise seem mysterious, or a failure of "political will." Like many (or most) economists, they assume that behavior in markets its ethically better than behavior in politics. On the one hand, that's a useful corrective for those people who think that politics consists of the noble pursuit of the public interest. On the other hand, this sort of economist unrealistically idealizes the market. For example, Chapters 5-10 all have the same title - "Political Pursuit of Private Gain" - with different subtitles. Mitchell and Simmons act as if pursuing private goals through the political system is odd or reprehensible. Yet they would applaud people who pursue private goals through the market. It's not at all clear to me that there is an ethical distinction to be made here. Shouldn't the problem of the public and private good in both economics and politics be the real subject of political economy? As another example, they count as "perverted incentives" the fact that politicians aks "how many people" want something, not "how badly do they want something" (which is what the market does). Is it so obvious that one of these two standards is better than the other? I'll conclude with a final example. Mitchell and Simmons assume uncritically that defense, law and order are truly public goods. If they had thought more carefully about dictatorships, they would see ways in which law and order can be private goods, paid for by taxpayers. Even if national defense is public (which I doubt), it is produced by contractors that receive private benefits from its production. They might also think about what makes some politicians run for office on law and order or defense platforms. It's not obvious to me what the answer is, but I think the method here could be helpful when applied in a nonpartisan, nonideological way that recognizes imperfections in both politics and economics. Mitchell and Simmons don't quite achieve that.

The traditional response to apparent failures of the free market is to create new government policies, as well as bureaucracies to implement them. Mitchell and Simmons explain why the usual result is "government failure."Simply put, transferring an issue from the market to government does not eliminate self-interested behavior. Those who have the most at stake will make the necessary effort to have the most influence. Government policies frequently confer large benefits on a small number of people, while spreading the costs among many. Those many, therefore, each have too little at stake to make large investments in influence. The result is rent-seeking - the economists' term for using government to create markets that are distorted in favor of producers.The other crucial problem with government policymaking is that decision-makers do not have to compare costs and benefits and make economically wise decisions. In fact bureaucrats have a strong incentive to overstate the magnitude of problems and to avoid seeking real solutions, because doing so allows them to continue to request funding - thus creating job security.My view is, of course, somewhat biased, because I am Bill Mitchell's student. But knowing him personally, I also know that his intent is not to demonize government employees (who are all acting rationally in response to the distorted incentives they face). Nor is he a right-winger intent on helping businesses oppress consumers and destroy the environment. In fact the best parts of the book, in my opinion, are the chapters showing how the incentive structure in government results in policies that actually hurt consumers and the environment.Parts of this book are easy to read, but other parts, including the opening chapters, are likely to be difficult for anyone without some background in economics. If the book has one flaw, it is that the authors assume the reader will understand the more technical terms. The book is brief enough that they could have easily included vivid examples to make the meanings clear.Nevertheless, this book is by far the best available on the problem of government policy failure. Most are either interminably long and academically complex, or shallow and polemical. This book is that rare blend of true intellectual analysis in a readable format.