Instructor’s Manual to accompany
Public Finance, Eighth Edition, by Harvey S. Rosen and Ted Gayer
Suggested Answers to End-of-Chapter Discussion Questions
Some of the questions have no single “correct” answer – reasonable people can go
off in different directions. In such cases, the answers provided here sketch only a
few possibilities.
Chapter 1 - Introduction
1. a. Putin’s statement is consistent with an organic conception of
government. Individuals and their goals are less important than the
state.
a. Locke makes a clear statement of the mechanistic view of the state in
which individual liberty is of paramount importance.
2. Libertarians believe in a very limited government and are skeptical about the
ability of government to improve social welfare. Social democrats believe
that substantial government intervention is required for the good of
individuals. Someone with an organic conception of the state believes that
the goals of society are set by the state and individuals are valued only by
their contribution to the realization of social goals.
a. A law prohibiting gambling would probably be opposed by a
libertarian and advocated by a social democrat. Someone with an
organic conception of the state would first decide whether gambling
would help to achieve the state’s goals before taking a position on this
, issue. If the view is that gambling keeps individuals from being
productive, then someone with an organic view would probably be in
favor of prohibiting it, but if gambling is considered a good way to
raise more revenue for the state, then they might oppose the
prohibition.
b. Libertarians oppose the law mandating seat belt use, arguing that
individuals can best decide whether or not to use seat belts without
government coercion. Social democrats take the position that the
mandate saves lives and ultimately benefits individuals. The organic
view would probably lead to favoring the mandate on the grounds that
reduced health care costs caused by fewer accidents benefit society.
c. Libertarians oppose the law mandating child safety seats, arguing that
individuals can best decide whether or not to use child safety seats
without government coercion. Social democrats take the position that
the mandate saves lives and ultimately benefits individuals. The
organic view would probably lead to favoring the mandate on the
grounds that reduced health care costs caused by fewer accidents
benefit society.
, d. Libertarians would probably oppose a law prohibiting prostitution, while
social democrats would likely favor such a law. The organic view
depends on the type of society policymakers are attempting to
achieve. The law would probably be favored on moral grounds.
e. Libertarians would probably oppose a law prohibiting polygamy, while
social democrats would likely favor such a law. The organic view
depends on the type of society policymakers are attempting to
achieve. The law would probably be favored on moral grounds.
f. Libertarians would likely oppose the law, believing that individual
business owners should make the decision about which language is
used for their signs. Social democrats would also probably oppose the
law in order to foster a more inclusive society. Those with an organic
view would probably favor the law if they hold the view that every
member of the society should speak the native language.
3. The mechanistic view of government says that the government is a
contrivance created by individuals to better achieve their individual goals.
Within the mechanistic tradition, people could disagree on the obesity tax.
Libertarians would say that people can decide what is best for themselves -
whether to consume high calorie food - and do not need prodding from the
government. In contrast, social democrats might argue that people are too
short sighted to know what is good for them, so that government-provided
inducements are appropriate.
4. a. If the size of government is measured by direct expenditures, the
mandate does not directly increase it. Costs of compliance, however,
may be high and would appear as an increase in a “regulatory budget.”
b. This law would not increase government expenditures, but the high costs
of compliance would increase the regulatory budget.
, c. It’s hard to say whether this represents an increase or decrease in the
size of government. One possibility is that GDP stayed the same, and
government purchases of goods and services fell. Another is that
government purchases of goods and services grew, but at a slower
rate than the GDP. One must also consider coincident federal credit
and regulatory activities and state and local budgets.
d. The federal budget would decrease if grants-in-aid were reduced.
However, if state and local governments offset this by increasing taxes,
the size of the government sector as a whole would not go down as
much as one would have guessed.
Public Finance, Eighth Edition, by Harvey S. Rosen and Ted Gayer
Suggested Answers to End-of-Chapter Discussion Questions
Some of the questions have no single “correct” answer – reasonable people can go
off in different directions. In such cases, the answers provided here sketch only a
few possibilities.
Chapter 1 - Introduction
1. a. Putin’s statement is consistent with an organic conception of
government. Individuals and their goals are less important than the
state.
a. Locke makes a clear statement of the mechanistic view of the state in
which individual liberty is of paramount importance.
2. Libertarians believe in a very limited government and are skeptical about the
ability of government to improve social welfare. Social democrats believe
that substantial government intervention is required for the good of
individuals. Someone with an organic conception of the state believes that
the goals of society are set by the state and individuals are valued only by
their contribution to the realization of social goals.
a. A law prohibiting gambling would probably be opposed by a
libertarian and advocated by a social democrat. Someone with an
organic conception of the state would first decide whether gambling
would help to achieve the state’s goals before taking a position on this
, issue. If the view is that gambling keeps individuals from being
productive, then someone with an organic view would probably be in
favor of prohibiting it, but if gambling is considered a good way to
raise more revenue for the state, then they might oppose the
prohibition.
b. Libertarians oppose the law mandating seat belt use, arguing that
individuals can best decide whether or not to use seat belts without
government coercion. Social democrats take the position that the
mandate saves lives and ultimately benefits individuals. The organic
view would probably lead to favoring the mandate on the grounds that
reduced health care costs caused by fewer accidents benefit society.
c. Libertarians oppose the law mandating child safety seats, arguing that
individuals can best decide whether or not to use child safety seats
without government coercion. Social democrats take the position that
the mandate saves lives and ultimately benefits individuals. The
organic view would probably lead to favoring the mandate on the
grounds that reduced health care costs caused by fewer accidents
benefit society.
, d. Libertarians would probably oppose a law prohibiting prostitution, while
social democrats would likely favor such a law. The organic view
depends on the type of society policymakers are attempting to
achieve. The law would probably be favored on moral grounds.
e. Libertarians would probably oppose a law prohibiting polygamy, while
social democrats would likely favor such a law. The organic view
depends on the type of society policymakers are attempting to
achieve. The law would probably be favored on moral grounds.
f. Libertarians would likely oppose the law, believing that individual
business owners should make the decision about which language is
used for their signs. Social democrats would also probably oppose the
law in order to foster a more inclusive society. Those with an organic
view would probably favor the law if they hold the view that every
member of the society should speak the native language.
3. The mechanistic view of government says that the government is a
contrivance created by individuals to better achieve their individual goals.
Within the mechanistic tradition, people could disagree on the obesity tax.
Libertarians would say that people can decide what is best for themselves -
whether to consume high calorie food - and do not need prodding from the
government. In contrast, social democrats might argue that people are too
short sighted to know what is good for them, so that government-provided
inducements are appropriate.
4. a. If the size of government is measured by direct expenditures, the
mandate does not directly increase it. Costs of compliance, however,
may be high and would appear as an increase in a “regulatory budget.”
b. This law would not increase government expenditures, but the high costs
of compliance would increase the regulatory budget.
, c. It’s hard to say whether this represents an increase or decrease in the
size of government. One possibility is that GDP stayed the same, and
government purchases of goods and services fell. Another is that
government purchases of goods and services grew, but at a slower
rate than the GDP. One must also consider coincident federal credit
and regulatory activities and state and local budgets.
d. The federal budget would decrease if grants-in-aid were reduced.
However, if state and local governments offset this by increasing taxes,
the size of the government sector as a whole would not go down as
much as one would have guessed.
