Limits to Public Intervention: Government Failures

Definition: Government failures arise when government has created inefficiencies because it should not have intervened in the first place or when it could have solved a given problem or set of problems more efficiently (Winston, 2006, p. 2~3).

Types of government failures:

Problems inherent in direct democracy (直接民主的問題)

Problems inherent in representative government (代議政府的問題)

Problems inherent in bureaucratic supply (官僚供給的問題)

Problems inherent in decentralization (分權化的問題)

The paradox of voting (投票弔詭) : A social choice may not be the result of aggregating individual choices.

Example: A school board holds referenda to determine the size of the budget for its schools. It proposes to base the budget on the results of pairwise voting among three possible budget alternatives:

Low: No frills

Medium: Similar to other public schools in the region

High: Best of everything

Rent seeking (尋租): Since most people pay little attention to their representatives, the politically active few have an opportunity to wield influence disproportionate to their number.

Rent seekers would lobby for adopting policies that concentrate economic benefits on themselves but diffuse economic costs to the public.

Geographic representation: The consideration of reelection encourages legislatures to pay special attention to the interests of their districts rather than the best interests of the entire country. The following two situations are likely to occur:

Pork-barrel legislation (肉桶立法): To secure reelection, a legislator is inclined to promote the appropriation of government spending for localized projects that are secured solely or primarily to bring money to his/her district.

Logrolling process (滾木立法): Logrolling is the process by which politicians trade support for one issue or piece of legislation in exchange for another politician's support, especially by means of legislative votes. As a result, both bills can attain a simple majority.

Implementation...