Political Economic Resource Transaction Policies (Perts)
National and private interest theories each have their appropriate areas in economics. In his examination of Australian agricultural policies 1983-88, Martin (1990, p.197) found a mixture of public interest, contractarian, and private interest theories. Rausser (1982,1989) believes that much of the implicit analysis on the market for policy reform is totally inappropriate because it incorrectly defines the relevant product. Most analyses of reform, particularly transparency analysis, focus only on political economic-seeking policies (Pests). These policies redistribute wealth from one social group to another and are ostensibly unconcerned with efficiency. Other policies in the market for reform are Pens. These policies correct market failures or provide public goods to promote economic growth and are meant to be neutral with respect to their distributional effects (Perts expand the size of the pie, Pests allocate the portions served).
Rausser takes the view that these extremes set the bounds of government behaviour. His framework accommodates both market failure and government failure. Rausser rejects transparency analysis. Transparency analysis addresses the limited information obstacles faced in supplying reform. Current policy positions and stances are composed of both Perts and Pests put in place by some past governing criterion function. Meaningful policy reform must start from the existing policy system that rationalised whatever Pens and Pests are in place.
Examples of Pens include all types of public goods, basic research expenditures, generation of information, taxes or subsidies on externalities, adjustment policies to counter macroeconomic shocks which generate over-shooting externalities and others.
Pests reflect political economic-seeking transfers which lead to government failure. In the formation of these policies, interest groups compete by spending time, energy and money on the production of pressure to influence both the design and tactical implementation of policy (Rausser 1989, p.10).
In this view, it is the responsibility of government to select an optimal portfolio of Pens and Pests, to balance economic possibilities with political demands. How governments weigh the welfare of different constituencies depends on many elements but essentially must reflect the underlying political-economic structure.
Rausser has been criticised for abstracting from the behaviour of political agents (Swinnen and van der Zee 1993, p.266). The underlying philosophy is very near to the conventional benevolent, omniscient government view. The government is still regarded as a single entity that acts according to some behavioural function. The abstract policy-maker is an artificial concept to circumvent the modelling of the political market. These authors suggest that the introduction of game-theoretic models could partly resolve these conceptual difficulties.
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