AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |
Back to Blog
Rider problem economics definition1/20/2024 ![]() ![]() While NATO is a formal alliance, nations also can cooperate implicitly in informal alliances, sharing defense responsibilities and burdens without the trappings of an international organization. Nations facing a common threat often pool their defense efforts in alliances such as NATO. Again, taxes on wealth, income, or consumption may be appropriate, particularly if the revenues yielded by such tax instruments are earmarked for defense purposes. ![]() Similarly, individual preferences for political freedom, for protection of the political system, and for foreign policy maneuverings are likely to be correlated positively with individual wealth. Taxes on income or consumption may provide good approximations for such a tax. In any event, a rough surrogate for individual valuation of defense services may be individual wealth accordingly, an important component of a tax system designed to yield appropriate democratic choices on the size of the defense sector is a tax on wealth. Some kinds of assets are more vulnerable (or more threatened) than others: American-owned assets located overseas may be more vulnerable than identical ones in the United States, and ocean tankers that can be moved may be more vulnerable to confiscation but less vulnerable to destruction than office buildings. residents owning assets threatened by foreign aggressors lives ( human capital) are foremost among them. ![]() ![]() Accordingly, a substantial part of the demand for national defense reasonably can be attributed to those U.S. Nonetheless, the protection of domestic wealth from confiscation or destruction by foreigners is a large part of the service provided by national defense policy, particularly in an era characterized by important threats from international terrorists. Alternatively, defense spending can be bundled with such nondefense transfer programs as agricultural subsidies or water projects to induce majorities to fund sufficient amounts of such collective goods as defense. The strong resistance from Congress that Defense Department officials encounter when they wish to close military bases-a resistance partly circumvented in recent years through the Base Realignment and Closing (BRAC) Commission process-illustrates the private benefits derived from such defense spending. National defense spending does yield such ancillary benefits to special interests defense contractors, defense-related workers, and communities with military bases are examples. If, however, the collective goods that government provides can be transformed into private ones-that is, if provision of collective goods yields ancillary benefits that some majority coalition of voters views as particularly beneficial to them-then the problem of governmental underprovision of collective goods can be at least partially offset. Such transfer programs as Social Security and agricultural subsidies are examples of government spending on private goods. noncollective) goods that benefit the majority (or members of the majority coalition) but not the minority. The reason, in brief, is that the political majority can impose taxes on all citizens-or disproportionate taxes on the political minority-and then reduce spending on collective goods, such as national defense, while increasing spending on private (i.e. Just as economists have shown that individuals acting alone have incentives to provide too few collective goods, public choice economists (see public choice) have shown that a democratic government acting under a majority decision rule also has an incentive to provide too few collective goods. It states that government can eliminate free-rider behavior-that is, achieve “ efficiency” in the allocation of resources-but is silent on whether government has enough incentive to do so. The traditional rationale for government taxation and spending on national defense is incomplete. ![]()
0 Comments
Read More
Leave a Reply. |