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

Chapter Fourteen: Decision-making in Democracy: Public Choice 340 be enacted if somehow the government can do this cheaper than the private markets already do. Since this is highly unlikely, we shouldn’t be surprised when we don’t have policies giving away “free” turkeys to everyone. Government “failure” is enabled by the political processes of logrolling and passing pork-barrel legislation. Logrolling is just another way of saying “vote trading.” Legislators may be willing to trade an individual vote to another legislator in return for that legislator’s support on their particular favored issues. Trading of votes enables passage of bills that on net are socially harmful (although trading may also help pass bills that are socially beneficial). Figure 14.5 illustrates how a series of projects that, individually, would never pass (each has only one of five members benefitting, with each having a negative total value to all); however, they may be pushed through by logrolling. Congressman A may have a bill in to create a new Veteran’s Administration (VA) hospital in his district, Congresswoman B may want a new spur on an interstate highway through her district, and Congressman C may want one of the four space shuttles delivered to his district to promote tourism. Members A, B, and C can agree to support each other’s bills, and those members could secure passage of their bill and, even with paying a portion of the others’ bill, will on net still receive $1 benefit. This can be seen in the payoffs in Figure 14.5 . Congressman A, for example, gets a $5 benefit if the VA hospital is built into his district. He loses $2 each for Congresswoman B’s highway and Congressman C’s space shuttle since his district gets none of the benefits, while his constituents will have to pay taxes. District A B C D E Total VA Hosp in Dist A +$5 -$2 -$2 -$2 -$2 -$3 Highway in Dist B -$2 +$5 -$2 -$2 -$2 -$3 Shuttle in Dist C -$2 -$2 +$5 -$2 -$2 -$3 Total +$1 +$1 +$1 -$6 -$6 -$9 Figure 14.5, “Log-Rolling” in Action. If congressional members are able to trade their votes, we can see from the notional payoffs above that congressional members A, B, and C can vote for each other’s bills to fund a pet project within their district. Even though members A, B, and C each lose on the projects outside their district, when you look at the net column on the right, each one slightly benefits. Congressional members D and E lose on each bill, and the net overall to the nation is negative (-$9). Logrolling: the practice of trading votes in a legislature (e.g., voting for a project that is not of benefit to your constituents) in return for a promise by other politicians to vote for your favored legislation subsequently.