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Public Interest Theory vs. Public Choice Theory

Professor Todd Zywicki discusses how Public Choice theory was developed as a critical response to traditional "public interest" theories of government regulation. Learn how this field examines the actual incentives driving political actors and regulatory agencies, challenging idealistic assumptions about government intervention in markets. Public Choice Theory can offer crucial insights for understanding modern regulatory frameworks. Todd J. Zywicki is George Mason University Foundation Professor of Law at George Mason University Antonin Scalia School of Law, Research Fellow of the Law & Economics Center, and former Executive Director of the Law and Economics Center. As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker. #no86 #law #economics https://youtube.com/watch?v=AU1KJu9oo6o

Transcript

Public choice arose right around the same time as law and economics and sort of as a parallel discipline. So if law and economics is the study of private law, public choice emerged as a study of public institutions. Why do they call it public choice? The idea is that private choice refers to choice in markets by private individuals. Public choice involves choices in groups and particularly among political actors in legislatures, the judiciary, and the like. And public choice really arose in a particular historical context to explain what was going on. Early in the 20th century, and kind of catching fire during the New Deal, the most popular way of thinking about government was through the lens of public interest theory. And the idea was that markets would sometimes fail and that where we saw that, government should step in and solve the problem. But what we soon discovered by the 1950s and 60s is that that's not how government actually operated. Often, government made problems worse, often government did not seem to be trying to solve public problems, but instead was just acting seemingly at the behest of private interests. So, for example, the Civil Aeronautics Board, which was supposedly set up to protect consumers. Instead, it became a vehicle for the airline industry to cartelize their industry and protect themselves from competition. The Interstate Commerce Commission did the same thing with railroads and trucking. So economists looked at this and they said, this public interest model of government doesn't seem to explain what's going on all the time. They came up with the idea of public choice, and they said, well, what if we looked at the incentives of politicians, what if we looked at the incentives of voters. Do politicians get votes by just providing public interest laws, or do politicians get votes by delivering discrete benefits to well organized special interests? And from that field came a study of how these public institutions actually act, what actually legislators do that help them to get elected and reelected, and what we found out pretty quickly was delivering benefits to special interests are often at least as important, if not more important, than providing dispersed public benefits. Public choice can also help us understand the dynamics of a very important issue that's at the heart of American law today, which is the logic of the administrative state. And so how courts think about the question of delegation and deference to agencies might be very different if you have a public interest model of how you think delegation works versus a public choice model of how you think that delegation works.

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