¶ … Inefficient Redistribution" by Daron Acemoglu and James A. Robinson, the authors describe their theory about how inefficient redistribution of government funds may occur. The authors assert that very often policy cycles emerge that make inefficiency "a tool to sustain political power in situations where; (1) the political influence of a group depends on its size, and (2) political institutions cannot credibly commit to future policy."
Redistributive policies can be divided into two types: Inefficient Targeting, which promotes entrance into low productivity sectors; and Inefficient Conditioning which promotes production to a point where it is no longer efficient. Acemoglu and Robinson claim that politicians and policymakers exploit people's lack of economic expertise to target and condition them toward inefficient redistribution.
Acemoglu and Robinson have developed a theory to explain the reasoning of inefficient...
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