Economics Dictionary of ArgumentsHome
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| Rules, philosophy: rules are restrictions of a domain of possibilities for subjects, communities or functionaries, or generally for acting individuals or groups. Rules may be implicit or explicit, and may be implemented by ordinance or by jointly developing equally authorized participants, e.g. in a discourse. In another sense, rules can be understood as actual regularities that can be discovered by observation. These rules can be discovered not only in action, but also in the nature of objects such as linguistic structures. See also norms, values, rule following, private language, language rules, discourse, ethics, morality, cognitivism, intuitionism, society, practice._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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James M. Buchanan on Rules - Dictionary of Arguments
Boudreaux I 85 Rules/Buchanan/Boudreaux/Holcombe: Buchanan’s approach to constitutional economics had a heavy normative slant. He sought to identify the contents of desirable rules, as well as the most desirable (what we might today call the most “inclusive”) means of implementing rule changes. >Constitutional economics. His criterion for identifying desirable rules is that they should be able to garner unanimous agreement by everyone who is to be governed by them. Desirable rules are ones that potentially work to the advantage of everyone, and desirable rule changes are those that are endorsed by everyone, that is, unanimously. >Unanimity/Buchanan. Unanimity: Buchanan’s ideal was for all constitutional rules to be agreed to unanimously. He understood, though, two important features of reality: First, unanimity is impractical for all policy decisions to be approved unanimously; second, individuals who are considering constitutional rules also understand the impracticality of having all policy decisions approved unanimously. Therefore, Buchanan reasoned, when choosing constitutional rules, individuals would agree unanimously to conditions under which policy choices made within these rules may be approved with less than unanimous consent. >Constitution/Buchanan. Majority rule: Majority rule is common, with other qualified majorities (such as two-thirds) sometimes used. These less-than-unanimous decision rules can be desirable given that reaching unanimous agreement is quite costly. Unanimity rule: A rule of unanimity, (…) entails very high decision-making costs. Boudreaux I 86 Government would do very little if every action it proposed to take required unanimous agreement from all of its citizens, or even from all of their elected representatives. Costs of decision-making: “Decision-making costs” are costs that people expect to bear in the process of negotiating to arrive at collective decisions. Decision-making costs are not the costs that each individual incurs to decide his or her preferences for collective action. Rather, decision-making costs are those that individuals incur as they participate with fellow citizens in the actual process of reaching collective agreement. External costs would be zero if all decisions had to be approved unanimously. The requirement of unanimous approval gives to every member of the group veto power, so a collective decision could never be made that harms the interest of any group member. The lower the threshold for agreement - that is, the smaller the portion of voters who must agree to the policy change - the more likely it is that a decision will go against a particular group-member’s interest. Thresholds: The problem with a high approval threshold is that the cost of negotiating an agreement rises the larger is the portion of voters needed for approval. In other words, the greater the proportion of the group required to agree, the higher are the decision-making costs. It will be more difficult, and hence costlier, to arrive at an outcome requiring 90 percent approval than one requiring two-thirds approval, and it will be more difficult to arrive at an outcome requiring two-thirds approval than one requiring the approval of a simple majority. >Collective actions, >Voting/Buchanan. Post-constitutional decisions: Following this framework, the voting rule to be used for making day-to-day “post-constitutional” decisions should, Buchanan argued, be chosen at the constitutional stage. Boudreaux I 87 Constitutional decisions: At the constitutional stage of decision making, the opportunity exists to make post-constitutional choices as easy or as onerous as constitutional decision-makers choose. For example, a common constitutional rule for facilitating approval of a government budget is that the proposed budget be approved by a majority of the legislature. Cf. >Society/Rawls, >Constitution/Rawls. Problem: But, argued Buchanan and Tullock(1), at the constitutional stage people will treat government activities that threaten to impose unusually high external costs differently than they treat activities that likely will impose low external costs. For example, a collective decision to seize people’s homes is more ominous - has higher “external costs” - than does a collective decision to restrict the number of billboards along a stretch of highway. Boudreaux I 88 And so people at the constitutional stage will likely require that decisions to seize residential property receive a higher percentage of votes than is required for decisions about whether or not to change the policy about highway billboards. Assessment of rules: Buchanan was well aware that rules cannot be properly judged by how they operate in any particular circumstance. The very nature of a rule is that it is a guide to action under conditions of uncertainty. To explain the importance of judging rules by their performance over time and in many situations (rather than in any one situation), Buchanan often used a simple but revealing example that he took from the Nobel-laureate economist Ronald Coase (1910–2013) (…). The example is of a traffic light to regulate the flow of automobile traffic at intersections. Boudreaux I 89 Example/Coase: If a driver arrives at an intersection when the light is red and there is no other traffic in the vicinity, the requirement is that the driver nevertheless remain stopped until the light turns green. In this particular instance, the driver suffers a cost with no offsetting benefit. Ignorance: However, “the reason of rules” (…) is grounded in human ignorance. If the rule instead were to let motorists drive through red lights whenever they believed that there was no on-coming traffic, too many motorists would err. Traffic accidents and fatalities would be higher than otherwise. And so the small cost of requiring that motorists always obey traffic signals is a rule that, over the long run and over many instances, improves the welfare of all motorists. >Generality/Buchanan. 1. Buchanan, James M., and Gordon Tullock (1962/1999). The Calculus of Consent. Liberty Fund._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconBuchan I James M. Buchanan Politics as Public Choice Carmel, IN 2000 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014 |
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