04 August 2011

Bad News for Libertarians & Conservatives - If Only They Cared

I've spent some time lately thumbing through an interesting survey of recent work in political economy: Timothy Besley. 2006. Principled Agents?: The Political Economy of Good Government. Oxford UP. Besley is a professor of economics at the London School of Economics. He provides a nice tour of political-economic models motivated by the difficulties that infect principle-agent relationships. And here is the very last paragraph (page 233) of the book:
"The material in this book shapes broad thinking on the competence of government. We have begun from a position that while markets have their limits in allocating resources, so do governments. It is evident that the economics profession is now providing tools to meet the challenge of deciding where the boundaries lie between public and private responsibility. There is a section of opinion that equates good government to small government. Moreover, this has been a dominant tradition in political economy in the past. However, there is nothing in modern political economics to support this claim even if attitudes toward government intervention are more cautious than in the past. A political-economy approach can also fuel optimism - if we can understand the logic of good government, then perhaps this is the first step toward creating it" (stress added).
Please note the italicized phrases. Nothing.

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