The Online Library of Liberty

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• Foreword
• Preface
• The Reason of Rules
• 1.: The Constitutional Imperative
• I.: Introduction
• II.: Reasons For Rules
• III.: Rules of Games
• IV.: Rules of the Road
• V.: Rules of the Market Order
• VI.: Rules of Political Order
• VII.: The Importance of Rules
• 2.: The Contractarian Vision
• I.: Introduction
• II.: Noncontractarian Constitutionalism
• III.: Individuals As Sources of Value
• IV.: Contract and Exchange
• V.: Politics In the Exchange Perspective
• VI.: Unanimity As the Contractual Ideal
• VII.: Agreement On Rules and the Veils of Ignorance and Uncertainty
• VIII.: Conclusions
• 3.: The Myth of Benevolence *
• I.: Introduction
• II.: Private Good and Public Good
• III.: Science, Truth, and Politics
• IV.: The Authoritarian Imperative
• V.: Majoritarian Democracy In the Noncontractarian Paradigm
• VI.: The Aim of Politics
• 4.: Modeling the Individual For Constitutional Analysis
• I.: Introduction
• II.: Homo Economicus In Politics: the Argument For Symmetry
• III.: Science and the Empiricist Defense
• IV.: A Methodological Defense of the Differential Interest Model of Behavior
• V.: Social Evaluation and Quasi-risk Aversion
• VI.: Gresham’s Law In Politics
• VII.: Summary
• 5.: Time, Temptation, and the Constrained Future *
• Preface
• Part 1.: Individual Private Choice
• I.: Introduction
• II.: The Ultimate Z ’s
• III.: Preferences For Preferences
• IV.: Past, Present, and Future
• Part 2.: Individual Public Choice
• I.: Introduction
• II.: Society With a History
• III.: Temporal Interdependence
• IV.: An Illustration
• V.: Moral Rules And/or Constitutional Commitment
• 6.: Politics Without Rules, I: Time and Nonconstrained Collective Action
• I.: Introduction
• II.: The Social Discount Rate
• III.: The High-tax Trap
• IV.: The Inflation Trap
• V.: The Public-debt Trap
• VI.: Other Examples
• VII.: Conclusions
• 7.: Rules and Justice
• I.: Introduction
• II.: Just Conduct and the Notion of Desert
• III.: Justice and Promise Keeping
• IV.: Justice Among Rules
• V.: Just Rules, Agreed-on Rules, and Just Conduct
• VI.: Conclusions
• 8.: Politics Without Rules, II: Distributive Justice and Distributive Politics
• I.: Introduction
• II.: Distributive Justice: the Conventional View
• III.: The Constitutional Perspective and Institutional Incidence
• IV.: The Incidence of Unrestricted Majoritarianism
• V.: Tax Rules and Distribution Under Majority Rule
• VI.: Direct Constitutionalism and Distributive Justice
• VII.: Summary
• 9.: Is Constitutional Revolution Possible In Democracy?
• I.: Introduction
• II.: Pareto-superior Change and Wicksellian Unanimity
• III.: Distributional Limits and Prospective Rules
• IV.: Status Quo Entitlements and Distributional Envy
• V.: Constitutional Change and Free Riders
• VI.: The Role of Norms
• VII.: Toward a Civic Religion

VI.

Other Examples

Through the analysis of three familiar policy issues from the macroeconomics of the 1980s, we have presented the public-private time discount disparity in stark and simple form. Many other examples could be examined outside the macroeconomic area of inquiry, but only a few will be noted in passing here.

The “punishment dilemma” and the “Samaritan’s dilemma” were examined by one of us in earlier writings.8 Neither of these focuses directly on the time discount discrepancy. Both, however, illustrate the temporal dimensionality issue and point to the need for imposing commitments. In the punishment dilemma, a short-term utility-maximizing strategy dictates weighting the disutility of the punishee or criminal much more heavily than any long-term maximizing strategy would suggest. As a result of short-term maximization, policy tends to “coddle criminals”; crime increases, and we suffer the long-term consequences. A genuinely long-term perspective would suggest increases in both the certainty and severity of punishment, but unless participants in democratic politics could be assured that future political coalitions would not reverse current reforms, the necessary costs of imposing such reforms would continue to outweigh the benefits promised in the longer term.

In the Samaritan’s dilemma, much of the problem of the modern welfare state is explained. A short-term maximizing strategy calls for heeding the obvious sufferings, here and now, of those observed to be needy. Such strategy calls for the financing of assistance, despite the recognition that increased transfer payments generate long-term increases in the number of indigents. A strategy of austerity with respect to eligibility for transfers would increase the ranks of the self-reliant in the long run. But unless the individual who participates in politics today can be assured that such a strategy will be adhered to in the future, the austerity policy applied today may seem unduly callous and cruel.

[8. ]See James M. Buchanan, The Limits of Liberty (University of Chicago Press, 1975), ch. 8; and Freedom in Constitutional Contract (College Station: Texas A&M University Press, 1977), ch. 12.