Randy Simmons presents in this lesson the differences between markets and politics, which are parallel systems for achieving our goals. While in markets, individuals pursue their self-interests and goals, politics is the arena of collective action, where individuals choose with others and in some cases, for others.
Simmons makes a comparison between the private and the public arena. He assumes that in both, individuals have self-interests and act rationally. While voters and consumers are the same people, the incentives are different, he says; opportunity costs are real in markets. For consumers, both benefits and costs of their choices are visible; for voters, the benefits are visible but the costs are hidden.
“Incentives matter a lot, the incentives we face in public’s fair are very different from the incentives we face in our private lives.”
Consumers have strong incentives to gain good information about products; voters have little incentive to gain good information about candidates. They are “rationally ignorant”. Also, Simmons talks about the difference between private and political entrepreneurs. While private entrepreneurs weigh costs against benefits, the public entrepreneur emphasize benefits but not costs.
“Prices give information, they are clear signals to the consumer of what to do. In politics, we don’t have that signals that tell us how we are acting.”
Finally, Simmons presents how bureaucrats and interest groups, a group of people that pursue an specific goals with politics, act in the political arena. Democratic politics is an intense competition for power by means of votes, Simmons says, among contending politicians, voters, interest groups and bureaucrats.
Political economist and professor