paulwilkinson.com

Economic Choice vs. Political Choice

Some choices are better made economically, with individuals able to decide for themselves how to maximize their own utility by allocating their own resources as they see fit. Other choices are better made politically, with groups deciding how to allocate their collective resources to maximize their collective utility.

Other things being equal, it’s pretty obvious that more people are happier making more decisions themselves and fewer decisions collectively. We’re more likely to get closer to what we want if we make decisions for ourselves instead of simply being dragged along by the crowd.

One might think that over time, as wealth increases, we could afford to make more decisions economically and fewer decisions politically. But then there’s this:

The chart was published by Tim Iacono here and republished today as businessinsider.com’s “Chart of the Day” (with comment author “Barry Ritholtz” knocking the latter for failing to credit the former). One might think government, as primarily a service industry, would be getting more efficient along with the rest of the world, but that does not appear to be the case. There are all sorts of nits one might pick about comparing “goods producing” jobs with government jobs, so suffice it to say for the moment that the trend fails to obviously favor utility maximization.