Decisions Have An Opportunity Cost That Require Tradeoffs

Free or Fair Government?

by Elaine Schwartz    •    Apr 16, 2012    •    579 Views

I live in a town where I have to pay for garbage pick-up and recycling or I can dispose of it myself. The fire department is voluntary. Because there is no local high school, the town pays other school districts to educate our teenagers. In our town, government provides less and our property taxes are relatively low.

Harvard professor N. Gregory Mankiw might use my town as an example of competition among governments. People who want a local high school would not choose to live here. Using the same reasoning, Massachusetts might attract people who want universal health care while New Hampshire is for those who do not.

Dr. Mankiw said that municipal differences can elevate the quality of government because they lead to competition.  Concerned that its households and businesses are leaving, then a town, a city or a state will improve its services or lower its taxes.

By contrast, those of us who believe government is responsible for more services and a more equal society have to reject municipal competition. In order to give more to everyone, governments have to redistribute income. Then though, as Dr. Mankiw explains, When you… “take from Peter to pay Paul, Peter may well decide to leave.” How to prevent Peter’s departure? Make everyone more equal everywhere.

Do I want a national government that gives me what my town does not provide? The next U.S. presidential election will probably let me express my opinion.

To read more about the free and fair visions of government, you might enjoy this column by H. Gregory Mankiw.  For each side, “free” is defended in this econlife post while the opposite position is in this obituary for Harvard economist John Kenneth Galbraith. Also, you might want to see what Mitt Romney and President Obama have said about the debate.


Leave a Reply

Your email address will not be published. Required fields are marked *

« »