I recently posted number 17 of my short YouTubes in the “Economics is Fun” series. This one is about what happens when we choose others to act for us. In business when we appoint company directors, it is called the ‘principal/agent’ issue, and we must not be surprised if those directors sometimes act in their own interest rather than those of the shareholders.
In government or civil service, we must recognise that our representatives or officers will maximize their advantage just like everyone else, and that this will sometimes stop necessary and useful reforms from being made. This effect is called ‘Public Choice Theory’ and shows how those in politics and policy try to better their condition just as those engaged in commercial activity do.
Filed under: Updates |
Madsen Pirie 