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1. Suppose every member of Congress genuinely believes that government expenditures are excessive and ought to be reduced by at least 10 percent. Why would this not be sufficient to assure a 10 percent reduction?
2. Why do so many members of Congress believe that the federal government should subsidize local projects, such as improvements in bus or subway systems in major cities?
A. Who would benefit from construction of a subway system in a large city?
B. Can you think of a public-interest argument for having taxpayers across the country pay for a local subway system?
C. If you knew that your taxes were going to go up $10 a year in order to finance a subway in some distant city, would you write a letter of protest to your legislator?
D. If your city were being considered for a large federal grant to subsidize an improvement in the local public transportation system, would you expect your local government officials to go to Washington and lobby actively for it? Would you expect your congressional representatives to support it? Would you form a more favorable opinion of local officials and congressional representatives if your city proved successful in its grant application?
3. Should countries with vast natural resources be required to help those with little-to-no natural resources? For example, oil-rich Qatar, which provides free health care to all its natural citizens, be required by law to provide health care to all of the citizens of Tanzania because its government doesnâ€™t have the same type of natural resources? Explain your answer.
4. How important is economic growth? Does it really make people better off in the long run? Or, as the question is sometimes misleadingly put, â€œCan money buy happiness?â€
A. Our desires and satisfactions are often relative not only to what others have but also to what we ourselves have become accustomed to. A small amount of tasteless food can be the source of immense satisfaction to a very hungry person. Is the marginal satisfaction gained by upgrading from codfish to jumbo prawns or from processed cheese to brie as great as the marginal satisfaction in going from one cup of rice per day to two? The marginal cost of the last improvement is surely far less.
B. Advocates of zero economic growth are principally concerned about the deleterious effects of economic growth on the environment. Does economic growth necessarily lower the quality of the environment?
C. The behavior of almost everyone indicates that people believe they will be better off if they earn a larger income, because a larger income means the ability to acquire more of what they want almost, but not quite, without regard to what it is that they want. But to what extent is this desire for more relative to what others have? If everyone else in the society is also acquiring more, how much satisfaction will I obtain from getting more? Will the marginal benefit exceed the marginal cost?