An Introduction to Public Finance

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Public Finance

2009-2010 spring semester

Chapter 1 - Introduction

1.
a. McCain’s statement is consistent with an organic conception of government. Individuals and their goals are less important than the state.

b. Locke makes a clear statement of the mechanistic view of the state in which individual liberty is of paramount importance.

c. Chavez’s statement is consistent with an organic view of government. The individual has significance only as part of society as a whole.

2. Libertarians believe in a very limited government and are skeptical about the ability of government to improve social welfare. Social democrats believe that substantial government intervention is required for the good of individuals. Someone with an organic conception of the state believes that the goals of society are set by the state and individuals are valued only by their contribution to the realization of social goals.

a. A law prohibiting receiving compensation for organ donation would be opposed by libertarians, as they would want the market to decide who buys and who sells organs and at what price the organs would be sold. Social democrats also might oppose the law if they consider that such a law would prevent organ donation from happening as frequently. However, they are likely to support the law on the grounds that paying for organ donation would coerce financially desperate people to sell their organs. The law would protect the individual from making a poor decision. The organic view might also oppose the law because the society might become healthier if more individuals received transplants, although they would believe that individuals should donate for the good of society, rather than for compensation.

b. Libertarians oppose the law mandating helmet use for motorcyclists, arguing that individuals can best decide whether or not to use helmets without government coercion. Social democrats take the position that the mandate saves lives and ultimately benefits individuals. The organic view would probably lead to favoring the mandate on the grounds that reduced health care costs caused by fewer injuries benefit society.

c. Libertarians oppose the law mandating child safety seats, arguing that individuals can best decide whether or not to use child safety seats without government coercion. Social democrats take the position that the mandate saves lives and ultimately benefits individuals. The organic view would probably lead to favoring the mandate on the grounds that reduced health care costs caused by fewer accidents benefit society.

d. Libertarians would probably oppose a law prohibiting prostitution, while social democrats would likely favor such a law. The organic view depends on the type of society policymakers are attempting to achieve. The law would probably be favored on moral grounds.

e. Libertarians would probably oppose a law prohibiting polygamy, while social democrats would likely favor such a law. The organic view depends on the type of society policymakers are attempting to achieve. The law would probably be favored on moral grounds.

f. Libertarians would likely oppose the ban on trans fats in restaurants, believing that consumers will demand restaurants remove trans fats if they believe that is important. Social democrats would probably support the ban because consumers might not understand how bad trans fats are for their health. Those with an organic view would probably favor the ban because the scientific literature suggests that people who avoid trans fats are healthier, therefore the ban would reduce health care costs.

3. The mechanistic view of government says that the government is a contrivance created by individuals to better achieve their individual goals. Within the mechanistic tradition, people could disagree on the obesity tax. Libertarians would say that people can decide what is best for themselves - whether to...
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