by Filip Palda
It would be petty to denigrate one school or raise one above another. Despite their differences they both have done something no other thinkers have managed since the time of Plato. Chicago political economy and public choice are the first serious efforts to unite economics and politics into an equilibrium model, using consistent, mathematical logic. We are only beginning to appreciate what a revolution in thought their efforts have wrought. Yet the scarcity of published research on this revolution reminds one of the lengthy interval between Leeuwenhoek’s observation of bacteria and Pasteur’s discovery of a cure for rabies.
Further reading
Becker, Gary S. and Casey B. Mulligan (2003). “Deadweight Costs and the Size of Government.” Journal of Law and Economics. 46:293-340.
Black, Duncan (1948). “On the Rationale of Group Decision-making.” Journal of Political Economy. 56:23-34.
Brennan, Geoffrey and James M. Buchanan (1977). “Towards a Tax Constitution for Leviathan.” Journal of Public Economics. 8:255-273.
Coase, Ronald H. (1974). “The Lighthouse in Economics.” The Journal of Law and Economics. 17:357-376.
Downs, Anthony. An Economic Theory of Democracy. Harper. 1957.
Düppe, Till and E. Roy Weintraub. Finding Equilibrium: Arrow, Debreu, McKenzie and the Problem of Scientific Credit. Princeton University Press, 2014.
Harsanyi, John C. (1995). “Games with Incomplete Information.” American Economic Review. 85: 291-303.
Hotelling, Harold (1929). “Stability in Competition.” The Economic Journal. 39: 41-57.
McNeill, William H. Plagues and Peoples. Anchor. 1976.
Mueller, Dennis C. Public Choice III. Cambridge University Press. 2003.
Niskanen, William A. Bureaucracy and Representative Government. Aldine-Atherton 1971.
Olson, Mancur (1996). “Big Bills Left on the Sidewalk: Why Some Nations are Rich, and Others Poor.” The Journal of Economic Perspectives. 10:3-24.
Rowley, Charles K. “Public Choice and Constitutional Political Economy”. Pages 3-31 in The Encyclopedia of Public Choice. Edited by Charles Rowley and Friedrich Schneider. Springer. 2004.
Tideman, T. Nicolaus and Gordon Tullock (1976). “A New and Superior Process for Making Social Choices.” Journal of Political Economy. 84: 1145-1159.
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Table of Contents
Why
Levers of Power
Why Chicago political economy is important
Coase and the structure of power
The dragon’s den
Public choice
Mechanism design
A roadmap to this book
Further reading
Pigou vs. Coase
A mild case of interventionism?
What is economic efficiency?
The creation of economics
Social accounting
Pareto’s big idea
Pigou has a thought
Enter Coase
Coasians and government
The next wave
Further reading
Regulation
What is government?
A mixed bag
The orthodox economic view of government
First of the realists
Government as a wealth-grab
Asymmetry in costs
Asymmetry in gains
Interaction of economics and politics
Are we all predators?
Bonum publicum emergit ex iniquitate
Summary
Further reading
Total Model
The rise of Uber
Fundamental equation a mix of pressure and pain
Pain-gain function
Maximizing the returns from pressure: opening move
Reaction to being preyed upon: countermove
Non-linearity and equilibrium
A quick summary
Efficiency of politics
Becker’s model applied to history
Deadweight and rent-seeking loss are the crux
So what is Becker saying?
Policy impotence
Summary
Further reading
Public Choice
Background to a conflict
Public Choice
Stirrings of political equilibrium and efficiency
Samuelson’s result
A summary of differences
Enter Buchanan and Brennan
Efficiency through inefficiency?
So who wins?
Game theory
Mechanism design
Conclusion
Further reading