Equilibrium impotence
Subtitle: why the states and not the American national government financed economic development in the antebellum era
By: John Joseph Wallis, Barry R. Weingast.
Contributors: Weingast, Barry R.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11397; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11397.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Infrastructure (Economics) -- United States -- States -- Finance -- History -- 19th century.; Taxation -- Benefit theory.
Description: "Why did states dominate investments in economic development in early America? Between 1787 and 1860, the national government spent $54 million on promoting transportation infrastructure while the states spent $450 million.  Using models of legislative choice, we show that Congress could not finance projects that provided benefits to a minority of districts while spreading the taxes over all.  Although states faced the same political problems, they used benefit taxation schemes -- for example, by assessing property taxes on the basis of the expected increase in value due to an infrastructure investment.  The U.S.  Constitution prohibited the federal government from using benefit taxation.  Moreover, the federal government%u2019s expenditures were concentrated in collections small projects -- such as lighthouses and rivers and harbors -- that spent money in all districts.  Federal inaction was the result of the equilibrium political forces in Congress, and hence an equilibrium impotence"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 6/20/2005.
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Mode of access: World Wide Web.