Book contents
- Frontmatter
- Contents
- Preface to the Second Edition
- 1 MARKETS AND GOVERNMENTS
- 2 INSTITUTIONS AND GOVERNANCE
- 3 PUBLIC GOODS
- 4 PUBLIC FINANCE FOR PUBLIC GOODS
- 5 MARKET CORRECTIONS
- 6 VOTING
- 7 SOCIAL JUSTICE
- 8 ENTITLEMENTS
- 9 CHOICE OF TAXATION
- 10 THE NEED FOR GOVERNMENT
- TOPICS FOR DISCUSSION
- Author Index
- Subject Index
- References
2 - INSTITUTIONS AND GOVERNANCE
- Frontmatter
- Contents
- Preface to the Second Edition
- 1 MARKETS AND GOVERNMENTS
- 2 INSTITUTIONS AND GOVERNANCE
- 3 PUBLIC GOODS
- 4 PUBLIC FINANCE FOR PUBLIC GOODS
- 5 MARKET CORRECTIONS
- 6 VOTING
- 7 SOCIAL JUSTICE
- 8 ENTITLEMENTS
- 9 CHOICE OF TAXATION
- 10 THE NEED FOR GOVERNMENT
- TOPICS FOR DISCUSSION
- Author Index
- Subject Index
- References
Summary
A society's “institutions” determine norms and incentives of personal conduct. Legal institutions determine how or whether the rule of law is provided. Political institutions determine political behavior and how voters' collective decisions are made and implemented. Social institutions determine whether people make long-term commitments to one another. The market is an institution. Private property is an institution, as is collective property.
Institutions persist independently of the identity of individuals: congress or parliament is independent of the identity of incumbent political representatives; a government bureaucracy is independent of the identity of incumbent bureaucrats; and a judiciary or court system is independent of who the judges happen to be at any time. When incumbent judges, political representatives, or bureaucrats depart, the institutions remain. The market is independent of who buys and who sells, and the institution of private property is independent of who owns the property.
Governance is the activity of governing and exercising the authority of government. When taxpayer and voter interests are well served by governments, governance is described as good. Conversely, governance is inadequate or bad when the authority of government is exercised in ways that benefit the people in government, their family, and their friends rather than the taxpayers and voters.
Through consequences for the quality of governance, institutions determine whether public finance and public policy can improve on market outcomes when societies seek efficiency and social justice.
- Type
- Chapter
- Information
- Public Finance and Public PolicyResponsibilities and Limitations of Government, pp. 71 - 134Publisher: Cambridge University PressPrint publication year: 2009