Politics and privatization decisions in four American cities

Public choice theory has emphasized economic explanations of privatization decisions, while often neglecting the politics associated with the decision-making process. This research finds that the political context is important in understanding why American municipal governments decide whether or not to privatize a service. Four case studies reveal that the degree to which the decision-making process is politicized is a factor warranting our attention.     

Politics, Altruism, and the Definition of Poverty

The history of poverty lines suggests that they are determined jointly with poverty policy in the same political game. If the definition of poverty is endogenous, however, why do altruistic voters allow poverty to persist indefinitely, as seems to be the case in real life? A simple redistribution model shows that the persistence of poverty imposes fairly strong restrictions on the nature of voter altruism. Specifically, a voter's compassion for the poor must rise as the defined severity of the poverty problem worsens. Given such preferences, political actors face incentives to define poverty as a severe problem and then to use redistribution to reduce it significantly. There is no direct incentive to eliminate poverty, however; indeed, voters may prefer a state in which policy always attacks poverty vigorously and yet never defeats it. It follows that social policy should not be judged by its success in eliminating poverty, which may be directly counter to voter interests and therefore practically impossible. Rather, we should ask whether poverty policy provides enough help to people whom voters currently consider to be poor.