Why The Government Budget Is Too Small in a Democracy

In a democratic society, the division of resources between the public and private sectors is roughly determined by the desires of the electorate. But because it is such a complex and time-consuming task to acquire adequate political information, the electorate is chronically ignorant of the costs and benefits of many actual and potential government policies. It is my belief that this ignorance causes governments to enact budgets smaller than the ones they would enact if the electorate possessed complete information. Yet these undersized budgets stem from rational behavior by both the government and the electorate; hence they are extremely difficult to remedy. Furthermore, the resulting misallocation of resources becomes more and more serious as the economy grows more complex.