Copy-of-Analyzing-Authors-Perspectives_20240915_093607_0000.pdf

PRESENTATION

1. Public Choice
Theory

4. Public Choice Theory
Public choice refers to the behavior and process of what public goods are provided,
how they are provided and distributed, and the corresponding matching rules are
established.

5. What is actually the
case ?

6. People are rational beings who look for their own self-interest. it comes to
politics, the case is the same.
They don't such become benevolent, they strive for their own self-interest.

7. Meaning of Public Choice Theory
Developed by James Buchanan and Tullock, the concept of applying economic theories to analysis the concepts of
politics is the basic idea of public choice theory. It disagrees with the idea that the people working for the
government are public interest oriented or have a benevolent deposition. In simple words, it mentions that people
are the same but the institutions are different so if a person is placed in a political environment then that person will
behave the same as any other person in his place.

8. The most valid example of government intervention could be the controlling of drug prices by the government
through the DPCO (Drugs Prices Control Over) 2013.
The government aimed to control the prices of the drugs which were essential to the people. But according to surveys instead of
price decreased, the price increased about 2 times the earlier price. Comparatively other drugs which were not regulated by
DPCO were more cheaper and the price increase was much lesser.
In the agriculture sector especially in food grains, the government has become a monopoly due to its various policies. This has
lead to it hoarding rice and wheat which has caused inefficiency in the market and has affected the competition severely.
Real life scenarios

9. Public Choice theory asks some important questions which are crucial to understand the political dynamics:
If the legislators are indeed guided by their own self interest then how can they make policies which will benefit the
public interest?
How will the people know which candidate's self interest is akin to theirs so that they can vote for them?
If the policies are made by looking at the majority, are the minorities always exploited?
Questions related to Public Choice Theory:

10. The very concept of public interest is flawed as the theory disagrees with the concept of groups or communities.
It instead focuses on individuals as they are the ones who have ideas or interest, a group has members of
conflicting ideas. Hence coming to a collective decision is not possible.
In this dilemma, Kenneth Arrow had spoken about the impossibility theorem where he states that only a
dictatorship will solve the problem of coming to a particular decision as it will convert a community with diverse
ideas to a single oiled machine. But of course dictatorship is never the solution.
A new theorem called the "median-voter theorem" by Duncan Black came into the picture. Assuming that people
ate well-informed and all the voters have a preferred outcome and there is a majority rule then this theorem will
be successful. Median voter is one whose in the middle of the spectrum. The spectrum has a left side and a right
side, if a proposal is closer to the median voter then that will he considered rather than other proposals which are
in the extreme sides. This will determine the popular decision among the people.
Public Interest

11. The best example of median voter spectrum could be the wining of AAP in 2015 elections. In this theorem, every
candidate will like to be in the middle as that's where the person is going to secure the maximum votes. In this, the party
also has to keep in mind the rival positions and make decisions accordingly. In this situation not only is the position of the
party considered but also his core believes are taken into account.
In the 2015 elections in Delhi, there were two major parties AAP and BJP. They both had equal chances of winning but the
core believes of the parties played a major role in deciding the victor.
The BJP party spoke mainly about Hindus and their superiority, creating an image that were against other religions.
Whereas AAP did neither, they did not showcase themselves as anti-Hindu or anti-Muslim, So excluding the Hindu ardent,
every other voter voted for AAP. It was predicted by applying this theorem 54 per cent for AAP and 32.5 per cent for BJP
and the rest were for other third parties. This was exactly what happened and AAP won the elections.
Real life Scenario

12. Even though "your vote matters" has been the propaganda during elections, scholars suggest that that's not the case. The chances
of one vote changing the outcome of elections is so minute, that if it happens then there are high chances of some foul play and re-
elections might take place. This is the case because the population is large and the votes of the voters are not evenly split. Hence if
one analysis the voting system then it will become increasingly clear that it the cost of voting far exceeds the benefits of it.
Votes

13. So why do people vote? Most of the people vote because they think its there due to societal pressure
or the feeling of expressing their opinion. Voting is cheering your favourite cricket team.
Even though people vote, many of them are ignorant about basic facts related to their candidates.
This is rational as even if there were aware it won't do them any good. This is called rational ignorance
which was first introduced by Antony Downs.
It can't be assumed that every voter is ignorant, the informed voters are essential too. The Miracle of
Aggression suggests that the votes of the ignorant people are cancelled out by the votes of informed
people. For instance if 80 per cent of the voters are ignorant and they randomly choose any candidate
then according to this theory the votes will be split among the two candidates and the remaining
informed individuals will add their votes hence the person who deserves the most will win.

14. In a political scenario unlike the market, the choice of the person is not taken into account.
While buying a good or a service a person can easily say no to a certain good and get the
good that he/she wants but in a political situation a person is forced to abide by the policies
made by the legislators. If a person doesn't abide by it then he/she is punished. This can
lead to people getting oppressed by the decisions of the many.
In this case not only can a majority not exploit a minority, it has been witnessed that the
minority groups team up to get their objectives fulfilled by the government and make the
majorities pay the cost of it.
Minorities or Interest Groups

15. India being a diverse country has faced the problems of interest group quite often. The protest by Gujjar
communities in Rajasthan demanding reservations is a important example of interest groups.
The gujjar communities used violent methods to get the 5 percent reservations that wanted but the end
result remains that it is going affect the community. Reservations have always been debated in our
country, few calling it the downfall of our country.
Real life Scenarios

16. Even though it has been evidenced that government consists of people motivated by their own self-interest. The
role that a government plays cannot be played by a market.
Public goods are goods which are enjoyed by everyone but few pay for it, this is also called the free-rider problem.
They consist of cleaning the pollution or building hospitals or a park. The market cannot or does not help in
providing these goods and hence we need the government to produce them.
Bunchanan and Tullock regard government as "means by which rational, self-interested individuals combine to
promote their personal interests through collective action."
Government

17. Virginia School of Public Choice-by Bunchanan and Tullock
Rochester School - by William H. Riker and Kenneth Shepsle
Chicago School by George Stigler
School of Public Choice Theory

18. It was founded by James Bunchanam who is regarded as the Father of Public Choice, he received
a Nobel prize for his contributions. This school was co-founded by Tullock whose part in public
choice theory is indeed commendable.
This school focus on the real world politics and the relation between public choice and
constitution.
This school has done a major part in discovering various theories under public choice theory. Few
of them have already been discussed. The crucial part of this school is the emphasis that it put on
role of the constitution.
Virginia School of Public Choice

19. William Riker played a major part in developing Rochester School, he focused on the interest
group forming coalitions to better its chances against the majority. He realised that
coalitions do not last for a long time as it is difficult to maintain the group.
He came to a conclusion that best plan for a minority group could be to form a group with
enough members to win but not too large that it becomes difficult to manage. He coined this
strategy as minimum winning coalition.
Rochester School

20. This school focus more on the pure economics ie, the logical aspect of economics. It takes the basic concept
of supply and demand and uses them to analysis the political situation.
It talks about the need to make a collective decision which can be the price which keeps the need of the
government who are suppliers and hence laws are the demand by the people which are fulfilled by the
supply of the government.
George Stigler was the frontier in the Chicago school, he spoke about the interest groups. He emphasised
that it won't be long before the government starts to work for the interest of this minority special interest
groups rather than the public interest.
Chicago School

21. Professor Daniel A. Farber and Philip P. Frickey analyzed the relation of law and public choice theory
in their book "Law and Public Choice: A Critical Introduction".
They adopted a wait and see response to public choice theory. There approach is based on the fact
that a unplanned reaction to a threat even of large magnitude might lead to even higher cost for the
society.
The professors do not agree with the fact that changes should be made in the government due to the
results of the analysis of public choice theory. Instead they want to wait and confirm the findings of
this theory as it might lead to some concreate applications with promising results in the future.
Law and Public Choice Theory