PUBLIC ECONOMICS: DISCUSSION QUESTIONS
Question 1
Part One: “Investment in building highways should be undertaken by the central government, whereas road maintenance should be the responsibility of local governments.”
Basing on this statement, it is quite clear and accurate that the construction of new highways should remain the responsibility of the national governments. According to Sandford (2015), the national government collects vast resources and voluptuous capital to finance and undertake such projects. At the same time, road maintenance should be overseen by the local governments since they have the necessary reserves to service such activities (Wilson and Game 2011). It is also worth noting that the national government cannot adequately distribute its services everywhere. Hence local authorities need to step up to such more straightforward projects. More importantly, this alliance derives numerous developments in the economy, thereby maintains a continuum of development.
Part Two: “Defence spending should be organised centrally, and education organised at the local level.”
Research indicates that defense expenditure is a role always mandated by the central government. Due to the sensitivity of this section and the requirement of a mutual organization to assume such a task, the central authority acts as the last resort to decision-making and planning on defense strategies (Sandford 2015). On the other hand, Wilson and Game (2011) argue that the educational spectrum should be handled at the local level since such authorities are conversant with the necessities of the field. Further, the local authorities are aware of the resources that students may require and may transform the educational systems as per the locality conditions.
Question 2
Consider the study of Karabarbounis (2011), “One dollar, one vote.”Explain why the author deviates from the rest of the literature by introducing three inequality statistics () in the empirical specification instead of one.
Karabarbounis (2011) introduces three inequalities since he feels that there is no prevailing paradox in the outcome of one dollar, one vote in the long-run equilibrium. Also, the author expresses the existing simplicity of interpreting an inter-state difference in income redistribution. More so, Karabarbounis (2011) argues that it is difficult to determine the disputing differences about the welfare of a country more particularly due to the prevailing contradictions on income objectives concerning the redistribution of resources. In this light, since income is dependent on myriads of political strategies, he feels that the single inequality statistic is not adequate to address the prevalent income conflicts. Karabarbounis (2011) also notes that in cases of evolving political leverage, there is a probability of variance in inequality distribution, which depends entirely on the specific changing section of income. Additionally, his three variables stipulate three areas of concern, which depict a correlation of both redistribution and the relative incomes. In this light, Karabarbounis (2011) highlights his consensus that the elision of necessary constructs is a severe issue than emphasizing reverse causations while trying to assess the underlying relations from inequality to redistribution.
References
Karabarbounis, L., 2011. One dollar, one vote. The Economic Journal, 121(553), pp.621-651.
Wilson, D., and Game, C., 2011. Local government in the United Kingdom. Macmillan International Higher Education.
Sandford, C.T., 2015. Economics of public finance: an economic analysis of government expenditure and revenue in the United Kingdom. Elsevier.