No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter Fourteen: Decision-making in Democracy: Public Choice 336 to a negative net social benefit—reducing overall social welfare. The MSB corresponds to the demand for government services, while the MSC corresponds to the supply of government services—so this diagram follows convention with a downward sloping demand and upward sloping supply curve. The vertical axis is the cost or benefit; since this is conceptual, the units aren’t important, but they are the same for both. While this doesn’t answer the question of how big government should be, it does show that there is a limit—and beyond that point overall social welfare is reduced by allocating additional resources from the private sector to the public sector. Unfortunately, the theoretical possibility that government provision of goods may be superior to the private provision of goods doesn’t necessarily match reality. The public sector can “fail” in the real world just like the private sector. The assumption that government agents will act in the public interest instead of self-interest (when the two conflict) is often not the reality. Government supply of goods and regulations has its own share of failures, therefore, which we’ll review next. GOVERNMENT FAILURE “ 20 Pilate, wanting to release Jesus, addressed them again, 21 but they kept on calling out, saying, “Crucify, crucify Him!” 22 And he said to them the third time, ‘Why, what evil has this man done? I have found in Him no guilt demanding death; therefore I will punish Him and release Him.’ 23 But they were insistent, with loud voices asking that He be crucified. And their voices began to prevail. 24 And Pilate pronounced sentence that their demand be granted.” – Luke 23:20-24 The gospel of Luke records the greatest government failure in the history of the world; the greatest failure that ever was or ever will be. Jesus, who had lived a perfect, sinless life, was condemned by a government official who knew he was innocent. We can discuss both philosophically and religiously on why that happened, and we should! While it was a travesty of justice in the sense that an innocent man was pronounced guilty, the sacrifice was actually what justice required; propitiation was required for all of our sins, and the Father predestined it from the beginning of time in his glorious ministry of reconciliation. But we can also evaluate this outcome economically, from a public choice perspective. Why did Pilate pronounce guilt? He had been warned by his wife not to have anything to do with this issue (Matthew 27:19 ), and after hearing the facts, he knew Jesus was innocent (Luke 23:22 above). He also knew that Jesus was condemned by the Jews because they were jealous of him (Matthew 27:18) . Further, just a few days earlier the whole city had been praising Jesus (Matthew 21:9-11 ), considering him a prophet (Matthew 21:46) . If the public interest was conceived as a democratic outcome, that