3.5 — Government Failures and Introduction to Political Economy — Readings
Highly Recommended
- Buchanan, 1984, “Politics Without Romance”
- Baumol, 1990, “Entrepreneurship: Productive, Unproductive, and Destructive”
- Mitchell, 2013, “The Pathology of Privilege: The Economic Consequences of Government Favoritism”
Buchanan was the 1986 winner of the Nobel Prize in Economics for his pioneering work in public choice theory. This work by him is a good summary of the economic analysis of politics using basic principles we use to study markets: equilibrium resulting from exchanges and interactions between optimizing individuals pursuing their own interests.
The second paper by William Baumol (who, if he lived longer, might have won the Nobel prize — he definitely earned one) is one of my favorite papers that I love to teach in classes that cover political economy. Everyone tries to better themselves, and entrepreneurship is a fundamental force in human society, the differences in outcome come from the institutions that channel entrepreneurship into productive, unproductive, or destructive outcomes.