James d. Gwartney

economic efficiency
(?)
means getting the most value from the available resources. Courses in
economics generally explain why markets will fail to achieve ideal efficiency for certain
categories of activity and highlight what the government might do to improve the situation. We
follow this convention—we consider the potential of idealized political action, but we also
apply the tools of economics to the operation of the political process.
Government expenditures now constitute 40 percent or more of national income in the
United States and several other countries. Given its size and scope, understanding how
political allocation works is vitally important. During the past half century, this topic has

---

138
become an integral part of economics. Economists use the term public choice
(?)
 when referring
to this area of study.
(53)
 Part 3 will incorporate this analysis.
Governments often use taxes and borrowing to provide some individuals and
businesses with transfers, subsidies, and other forms of favoritism. We will analyze this
process and explain why the impact of these programs is different, and often substantially
different, than most believe. Part 3 will also outline a set of constitutional rules that might
improve the operation of government and its potential to enhance the quality of our lives. We
hope you find our approach stimulating and that it will challenge you to think more seriously
about both the potential and limitations of the political process.

---

139
Protect Rights and Produce Limited
Goods and Services
A wise and frugal Government, which shall restrain men from
injuring one another, which shall leave them otherwise free to
regulate their own pursuits of industry and improvement, and shall
not take from the mouth of labor the bread it has earned. This is the
sum of good government, and this is necessary to close the circle of
our felicities.