Jean-Baptiste Colbert was the Minister of Finance under King Louis XIV of France. He famously observed, "The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing." How does his comment relate to the special-interest effect?

Short Answer

Expert verified

The government serves the special interest groups by providing services using the funds collected through taxation, which spreads the cost of such services across the entire economy. In this way, each person bears a small quantity of the higher cost, and overall nobody finds it oppressive.

Step by step solution

01

Meaning of Baptiste's observation

The government many times misuses the taxation authority. It procures money to fund its programs (some serving only the interest of a few powerful people) through taxes collected from its citizens. The money burden is spread in such a way that it creates the least disturbance or rebellion among the individuals.

Suppose the government imposes a water tax at $5 per month on each household. The cost seems negligible to the families, so they do not mind paying $5 per month. However, this would amount to a total of millions to the government. The government can use it according to its interest.

Therefore, the individuals (collectively public) are the goose from whom the largest possible amount of feathers, that is, the taxes are obtained with the smallest possible sound of hissing.

02

Relation with  the special-interest effect

Small groups with special interest collab with the government to gain some support fort a particular program or project, creating a special-interest effect. The benefit of the project may confine largely to the particular group, but the burden of cost is shifted to the entire economy, mostly through taxes or negative externalities.

As the tax is spread evenly over the large population, taxpayers do not create a buzz to resist the tax, and the special interest is served. As the entire economy suffers the tax deduction from their income without any resistance, the small groups receive the project's maximum benefit (feathers). The larger population bearing fragmented cost does not oppose.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Consider a specific example of the special-interest effect and the collective-action problem. In 2012, it was estimated that the total value of all corn-production subsidies in the United States was about \(3 billion. The population of the United States was approximately 300 million people that year.

a. On average, how much did corn subsidies cost per person in the United States in 2012? (Hint: A billion is a 1 followed by nine zeros. A million is a 1 followed by six zeros.)

b. If each person in the United States is willing to spend only \)0.50 to support efforts to overturn the corn subsidy, and if anti-subsidy advocates can only raise funds from 10 percent of the population, how much money will they be able to raise for their lobbying efforts?

c. If the recipients of corn subsidies donate just 1 percent of the total amount that they receive in subsidies, how much could they raise to support lobbying efforts to continue the corn subsidy?

d. By how many dollars does the amount raised by the recipients of the corn subsidy exceed the amount raised by the opponents of the corn subsidy?

"The problem with our democratic institutions is that they don't correctly reflect the will of the people! If the people—rather than self-interested politicians or lobbyists—had control, we wouldn't have to worry about the government taking actions that don't maximize allocative and productive efficiency." Critique.

Does traditional one-person-one-vote (1p1v) majority voting allow voters to directly express differences in strengths of preference? Does quadratic voting do any better? Discuss the differences and then explain which system you prefer, and why.

Critique: “Thank goodness we have so many government regulatory agencies. They keep Big Business in check.”

Explain: “Politicians would make more rational economic decisions if they weren’t running for re-election every few years.”

See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free