To conclude, you may think
that what I am saying from all of this, and what other economist
are saying then is that democracy is a bad idea. I am not saying
this at all, however, (nor do I think that other economists are
either). What I am saying is that regardless of whether democracy
is efficient in correcting or supplementing for the market, it
at least allows the citizens the chance to keep a little control
over the government. Even though a democracy is likely to be inefficient,
the alternative may be worse. We need protection over property
rights and to protect the people from invasion and confiscation
by other powers. But always keep in mind that government powers
can also be abused. In other words, just as the market may be
inefficient, so too may the government be inefficient.
I also think that improvements and
reforms need to be completed to lessen the inefficiencies.
Lack of information always seems to be a big problem in most anything.
Therefore, the availability of information needs to be changed,
so that judging efficiency is easier. It is hard to figure out
ways in which information can be supplied in larger quantities
and of the kinds that we want, however, ways need to be discovered.
One such way is of course to continue allowing freedom of speech
and the press, etc... Also, demanding that cost-benefit analysis
be made available to the public before politicians vote on policies
and the budget, might be another method. Or perhaps requiring
politicians to compare the supply of services from other places
so that they know what an average amount should be-some governments
would have more efficient bureaus than others.
Furthermore, it really has been observed that government bureaus
are almost never efficient, so it is obvious that steps need to
be taken to correct for this. Sever penalties should be put in
place if anyone tries to hinder the availability of the information.
Professional monitors could be installed. However they might be
bribed, and of course they add extra costs.
Decentralization is another
possibility for reducing the inefficiencies that seem to exist.
This means that if it is the national government that was supplying
things, it should be turned over to the local governments. Many
times if the national government is supplying things, consumers
will overstate their demands because their share of the tax burden
is smaller than if local governments supplied it, and yet their
benefits will still exist. This overstatement means that inefficient
quantities will be supplied.
User fees might also be
used as a way to lessen any inefficiencies in the quantity of
public goods being supplied. This would require shifting some
of the burden of financing from taxpayers to consumers (when people
can then be excluded from paying if they don't use something).
It helps to reduce the waste of resources that result from the
formation of pressure groups. If users are required to pay then
they will have less of an incentive to join pressure groups to
increase the supply of the service beyond its optimal quantity.
If, when a user fee is instated less people appear to use the
facility, this can serve as a signal that less of the service
should be supplied to be efficient.
Rationing and or first-come-first-serve
could also be used. However these methods add to the cost
of extra time and inconvenience. Therefore to estimate the true
cost of rationing you'd have to take all this into account and
weigh it against the benefits. Plus there is likely to be inefficiency
and inequity in distribution. This means that even those who value
something the most may not be allowed to use it. People through
the market tend to get rid of this by retrading, but then this
of course means that the government misses out on getting the
extra money. Plus time was wasted in having to carry out these
added transactions. (So it would seem that the government should
have charged the high price in the first place).
The key is getting the state to act when it should and refrain
when it should not. We need to induce the agents to behave in
a collectively beneficial manner. Citizens must be able to control
the governments. Properly designed institutions could improve
on market allocation, and it would of course be wonderful if citizens
could get politicians to act in the interest and the welfare of
society rather than in their own self-interest. Politicians also
need to be flexible to changing conditions. Of course this is
all an ideal, and it is all much easier said than done. Have no
doubt in your mind that democracy is obviously very hard, but
there are at least some conditions in which citizens can control
governments a bit better (such as what I have just mentioned).