Write a response to the following: Especially because I was previously unfamilia

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Write a response to the following:

Especially because I was previously unfamiliar with public finance, I think it’s important to first go into the theory of public good before analyzing the importance of the theory in the public finance of our government. The theory of public good come from Paul Samuelson, who stated that goods that are collectively consumed are non-rival and non-excludable. There’s a lot that goes into public goods, but they are something that would be provided from the government for free, whether its something that is for everyone (roads, state park), or something that is meant to help certain people that are in need of it (public healthcare, Welfare). With most public goods, everyone has equal access to the specific place or item no matter their economic class or background. Public goods “are usually made available politically through the ballot box as people vote to decide how much to supply rather than through the marketplace, where those who care to pay the price can buy as much as they like for their own exclusive use” (132-133).

When it comes to decisions in public finance and public policies, there are many reasons why it’s important to think of public good. For one, taxes are a big funder of public goods, yet the amount of taxes and price are always something that is debated and changing. Do you do it on a program where you pay based on your income level to be fair, does everyone get their taxes raised? Tax shares are “preannounced levies assigned to citizens and are equal to a portion of the unit cost of a good proposed to be provided by the government” (161-162). The cost that public good is going to influence the amount of taxes citizens pay for the production of that good.

A big struggle is that politics will always play a part in public policy and finance, even if the policies and programs are meant to serve the public with not politics in mind (such as public administrators or “bureaucrats”. They don’t like to consider themselves politicians in any way, but politics is still apart of what they do.). It’s also important to reach a political equilibrium, which is an agreement of the level of production of one or more public goods given a specified rule for making the public choice and the distribution of tax shares. Public choice is often done my majority rule of course, which greatens the chances of the policy to benefit the majority. The biggest and most obvious part I have taken in the fact that public good is a huge influence on public finance decisions is because in a private market, those businesses can charge whatever they want for their private product and can control a market. With a public good, it is made to benefit the general public despite any background equally, but the decisions on funding can definitely be hard due to the politics that go into the bureaucracy. There are many public programs that benefit the public good but are directly influence by finances. Our Department of Defense deals with our armed forces, which is extremely important to have funding to for the safety of our country. Education is a public, tax-funding program available to all people so we can grow our economy through education. Roads and highways are our transportation and while taxes may fund them as well, they are extremely important to be kept up with. All of these things have issues and discussions all the time about their funding, but they are generated through their importance to the general public.

Hyman, D. N. (2014). Public finance: A contemporary application of theory and policy(11th ed.). Stamford, CT: Cengage Learning.

Explanation / Answer

The given passage tries to establish a relation between public good and public finance. Public goods are goods or services that are available to the public at no extra cost. The aim is to provide the goods or services to the public for free or at no extra cost. Public Finance deals with the usage of the public funds by the government to provide these goods and services to the people of the country. The passage states that the government has to take decisions about the public finance and allocate adequate amount of resources to provide the public goods. But, in doing this, politics plays an important role. Since the election of the government is possible only through the practice of politics, so the public funds usage and provision of public goods is possible only after politics is involved in it. However, it should be kept in mind that the main purpose of public good is the welfare of the people of the country. Hence, there should be a sincere attempt to keep politics away from public goods and public finance.

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