E-Book Content
The Ethics and the Economics of Minimalist Government To Colleen Jo Healy The Ethics and the Economics of Minimalist Government Timothy P. Roth, Ph.D. The University of Texas at El Paso, USA Edward Elgar Cheltenham, UK • Northampton, MA, USA © Timothy P. Roth 2002 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited Glensanda House Montpellier Parade Cheltenham Glos GL50 1UA UK Edward Elgar Publishing Inc. 136 West Street Suite 202 Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library ISBN 1 84064 676 4 Typeset by Manton Typesetters, Louth, Lincolnshire, UK. Printed and bound in Great Britain by Biddles Ltd, www.biddles.co.uk Contents Preface 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. vi A prior ethical commitment Ends vs. means: consequentialism vs. contractarianism The consequentialist approach to government Enter the economists The efficiency standard, corruption and the growth of government The indeterminacy of social welfare theory The contractarian approach to government The rules of the political game Playing by the generality rule Generality and minimalist government References Index 1 14 28 33 40 59 73 80 86 110 117 129 v Preface The economist’s theory of the state is grounded in consequentialist, procedurally detached and intendedly value-free social welfare theory. Reduced to its essentials, the ‘omniscient economist’ deploys the first and second fundamental welfare theorems in the service of a ‘benevolent despot’. The latter, in turn, is understood to be a ‘bifurcated man’; narrowly self-interested in his market behaviour, but attentive, in his public persona, to a supraindividual ‘public good’ (Chapters 3, 4 and 5). In their relentless pursuit of first-best Pareto-efficient outcomes economists seem to have ignored both an early admonition against ‘piecemeal’ welfare economics (Chapter 5), and a burgeoning literature which questions the empirical content and logical consistency of the neoclassical postulates which underlie their theory. As we shall see, once account is taken of some fundamental features of observable reality, the efficiency frontier and the social welfare function – whose ontological existence was questioned almost five decades ago – are indeterminate (Chapter 6). Granting this, the omniscient economist lacks the analytical tools by which, ‘scientifically’, to inform the policy deliberations of the benevolent despot who, ‘himself’, has no empirical counterpart. Inter alia, this admittedly convenient analytical fiction ignores the complexities of day-to-day, conflictual politics (Chapter 7). It follows that, while they proceed under the imprimatur of ‘positive’ or ‘scientific’ welfare economics, government interventions motivated by the fundamental welfare theorems must be regarded as ad hoc. Stated differently, neither ‘market imperfections’ nor presumed divergences between ‘competitive’ and ‘ethical’ equilibria can justify the implicit assumption that ‘government can do better’ (Chapters 4 and 5). There is, however, a more fundamental problem. While it is a part of the corpus of intendedly value-free positive economics, social welfare theory is, in fact, a hybrid moral theory (Chapter 2). Because it is utilitarian, it is goalbased. Yet, because unattenuated property and exchange rights are instrumentally important to the achievement of first-best Paretian optima, social welfare theory incorporates elements of right-based moral theories. Difficulties arise because utilitarian social welfare theory cannot accommodate the mo