ABSTRACT
This chapter analyzes the political process and how it connects with economic issues. The political process is simply an alternative method of making economic decisions. The chapter focuses on a system in which voters choose legislators, who in turn institute public policy. It explores what the tools of economics reveal about the political process. The chapter discusses the relationship among intercommunity mobility, voluntary community formation, and the efficient provision of public goods. It considers the situation in which residents in a small town are voting in a town meeting on the size of the school budget and explains the more general world of representative democracy. The concept of economic efficiency applies to each and every possible income distribution, although a change in income distribution may alter the precise combination of goods and services that is most efficient. The voting model describes a situation in which voters keep voting for public-service levels until a dominant outcome is reached.
