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In their efforts to analyse the behaviour of households and firms, economists have traditionally assumed that each of these units maximizes an index, such as a utility function, a profit function, or a present value function, which is taken to characterize its own interest. However, in analysing government policies these same economists have generally shied away from the maximization-of-own-interest assumption and have instead assumed that governments maximize a social welfare function or the common good; or they have proceeded by developing ad hoc hypotheses for each different problem. This is regrettable, for the returns to the maximization-of-own-interest assumption in the analysis of household and firm behaviour have been impressive, even when due consideration is given to the simplification of reality that is involved. One cannot help suspecting that they might also be high in the analysis of government behaviour.In consequence, in the present paper, following the lead of Schumpeter and Downs, I suppose that governments are not primarily interested in maximizing a social welfare function, or the common good, or the public interest—whatever these may be—but that instead they seek to maximize their own interest. Specifically, following Downs and Wilson, I assume that governments maximize the probability of their re-election, a probability which is dependent on the policies that are implemented as well as on the degree to which they are implemented. This relationship rests on the view that governments and their electorates are engaged in a sort of exchange in which policies are traded for votes; to maximize the probability of their re-election, governments endeavour to "produce" those policies which can be exchanged for the largest possible quid pro quo, that is, for the largest number of votes. Thus an analysis of government behaviour following a change in the preferences of consumer-voters, for example, would be to a large extent an analysis of changes in government policies. The potential number and variety of these policies, however, is so large that at first glance it seems impossible to proceed with a systematic analysis.

Government grants in federal countries account for a small share of the national product of these countries. I suppose that this, and the fact that federal arrangements are relatively flexible, explains why no well-organized body of economic doctrine deals with the issues raised by the existence of these grants. In terms of general principles, I venture the opinion that the consensus among economists—though perhaps not among students of public administration—holds that these grants can be defended with ethical and distribution arguments, but that on grounds of efficiency (in the economist's sense) and resource allocation they are to be condemned. Further, I would guess that majority opinion would favour unconditional over conditional grants on the ground that the latter do not respect the sovereignty of the "consumer" or of the spender.These principles seem to have been accepted and even defended by economists like Bhargava, Buchanan, and Scott and to have received the support of Dehem and Wolfe among others. Dissenters, like Buchanan—on the question of efficiency versus ethics—have dissented only in part.

A study of ";economic imperialism"; based on a theoretical inquiry into the most important research frontier in the scholarly field: the analysis of constitutions. The book evaluates constitutional arrangements by the degree to which they economize on the scarcity of resources available in any society, demonstrating a preference for constitutions that make governments efficient.