I submit the simple game theory explanation of why democracies fail: the relative perceived importance of a targeted transfer of resources to a small subset of voters is usually much higher than the perceived importance to "everybody" of the average (over the whole taxpayer base) cost of that transfer. So it's only at the very special moments in history like now, when the ship is sinking, that people wake up to the cumulative cost of all those transfers. It also "helps" when the times get so desperate that the targeted transfers go to relatively large groups.

Victor Niederhoffer shares this with Tyler Cowen:

A non-economic analysis by a chip designer.

Tyler Cowen replies:

I fear, however, that it is too late, there is a status quo bias to government expenditure, plus population…


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