States, Citizens, and Public Choices
Collective interests, of course, are not the only units of analysis for understanding the formation of public policy as it affects inflation, growth, and stability. Governmental institutions deserve close scrutiny, on one hand. The voting public is important, on the other. In this part the focus switches from potential interest groups to the interaction between the state and individual citizens. The contributors have tested and modified many of the generalizations usually offered.
Rudolf Klein, in chapter 8, considers the oft-cited connection between high public expenditure and a tendency toward inflation. While the link is often asserted, it is difficult to prove; and Klein's argument is that the connection has conceptual difficulties as well. Douglas Hibbs and David Cameron, in chapters 7 and 9, respectively, examine the way that public opinion is influenced by economic outcomes and in turn shapes the priorities of policymakers. Taken together these three contributions force some rethinking of positions often taken for granted. Why should public spending have inflationary consequences if it merely replaces what the private sector would consume in the way of goods and services? How might it be said that government is responsible for inflation? Indeed, might not officials in the United States have provided less inflation than public opinion was sometimes willing to risk? What fiscal structures are more or less likely to have inflationary consequences? The conventional answers, these chapters suggest, are inadequate.