Friday, December 10, 2004

The reaction to Chief Justice Rehnquist’s illness is a perfect demonstration of how interest groups can increase the efficiency of public choice. Because of his illness, there may be a seat open in the Supreme Court. He has not announced retirement, but already both Democrats and Republicans are organizing their campaigns. Money is being raised and lawyers are advertising their services to advocacy groups. This can be viewed as a form of rent seeking. The interest groups are trying to purchase the political resources that could be enjoyed if their candidate wins. Harberger notes that some rent seeking is socially optimal. However, is the current flurry of fundraising and polling and advocating socially optimal? After all, this money and these lawyers are not being productive, only protective of specific interests. This diversion of funds is significant. One individual conservative group says it has already committed $3-5 million to the fight. Despite these expenditures, I argue that the campaign preparation is socially efficient. Even if Rehnquist maintains his seat, the campaign expenditures will not be wasted. They will make the utility functions of the different groups clear. Senator Schumer (D-NY) commented in the article that he responds rationally to changes in the candidates’ positions. He is willing to accrue greater costs if more is at stake. A step towards more perfect information can only help increase the efficiency of government.

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