Arye L. Hillman: Public finance and public policy: a political economy perspective on the responsibilities and limitatio
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Arye L. Hillman: Public finance and public policy: a political economy perspective on the responsibilities and limitations of government 3rd Edition, Cambridge University Press, Cambridge, UK, 2019, XIII + 642 pp, USD 130.00 (Cloth), 59.99 (Paper) Randall G. Holcombe1
© Springer Science+Business Media, LLC, part of Springer Nature 2020
The public choice revolution has been only partially successful. While public choice has been solidly established as an area of academic inquiry in its own right, public choice insights often are ignored outside the bounds of the subdiscipline. This is typically the case in public finance, and sadly so, because many of the economists who were instrumental in establishing the subdiscipline of public choice came to it through the study of public finance. The typical approach to public finance is to identify welfare-maximizing tax and expenditure policies under the assumption that “government” is both willing and able to implement them. They ignore the actual process by which public policies are created. Hillman’s textbook is an excellent alternative to the typical approach. This is an excellent textbook for graduate students and advanced undergraduates who want a solid and comprehensive exposition of the theory of public finance from a public choice perspective. The book is well-written and easy to follow, using mathematics when needed, lots of graphs, and a clear verbal explanation of the topics it covers. The book covers the standard public finance topics—expenditure theory, including public goods and externalities, and taxation—but goes beyond the market failure approach that appears in so many public finance textbooks. Hillman notes the opportunities for market solutions to address what are commonly labeled market failures, and, as would be expected in a public choice approach to public finance, explains why government action often falls well short of efficient resource allocation. The book takes a consistent public choice approach throughout. The first chapter, on markets and personal finance, includes a discussion of rent-seeking, and four of the book’s 15 chapters are explicitly devoted to public choice, analyzing voting, political bargaining, bureaucracy, corruption, and other public choice topics. One reason the book is well-suited as a graduate textbook is that each chapter ends with an extensive list of references. Thus, the chapters are not the last word on the topics they cover, but serve as an introduction and overview of the literature that appears in the * Randall G. Holcombe [email protected] 1
Department of Economics, Florida State University, Tallahassee, FL 32306, USA
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references. Readers interested in undertaking research on those topics will find the reference list to be a valuable resource. The chapters also have summaries and a list of questions, guiding readers’ thoughts and emphasizing key ideas. The chapters do a good job of laying out the basic theories of public finance, but also have many thought-provoking exte
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