Tuesday, July 19, 2005

Incentives, incentives ...

In my previous post regarding the incentives for politicians to behave in a manner which benefits the few at the expense of the many (concentrated benefits & diffuse costs -- a politician's goal is to maximize votes after all!), note that I am neither advocating the abolition of special interests nor politicians -- although I may be persuaded of the latter.

Special interests, regardless of our opinion of them, cannot be eliminated. Nor should we try to eliminate them. For more thoughts on special interests, consult Federalist Paper #10. As James Madison so eloquently stated, "By a faction [special interest], I understand a number of citizens, whether amounting to a majority or a minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adversed to the rights of other citizens, or to the permanent and aggregate interests of the community. There are two methods of curing the mischiefs of faction: the one, by removing its causes; the other, by controlling its effects. There are again two methods of removing the causes of faction: the one, by destroying the liberty which is essential to its existence; the other, by giving to every citizen the same opinions, the same passions, and the same interests. It could never be more truly said than of the first remedy, that it was worse than the disease. Liberty is to faction what air is to fire, an aliment without which it instantly expires. But it could not be less folly to abolish liberty, which is essential to political life, because it nourishes faction, than it would be to wish the annihilation of air, which is essential to animal life, because it imparts to fire its destructive agency ... The inference to which we are brought is, that the causes of faction cannot be removed, and that relief is only to be sought in the means of controlling its effects."

There will always be groups of people who are willing to take the rights of others to benefit themselves. Do we want a government that is able to assist them in so doing?

Think about this some more ... remember from my earlier post, it's not the "employee handbook" that makes a difference in terms of observed behavior, it's the incentives. If special interests give their money to politicians who have no power to make laws which give those interests protected monopoly power, tariff protection, subsidies and other handouts, they've wasted their time and money -- and you, Mr. Taxpayer, get to keep yours.

This is a pretty involved topic and there are no easy answers in terms of implementation. But Capital Freedom has a few more ideas on how to accomplish this and preserve liberty.

to be continued ...

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