Page:Indian Journal of Economics Volume 2.djvu/267

 It is people their ordered burden obtaining PI{NOPLH$ OF FINNOE merely the supreme executive themselves, and exists solely will. Consequently the 'public and arranged as the people of taxation is self-imposed the bnefits of the organ of the to carry out expenditure is with communal desire and the a view to expenditure. The public expenditure, whether of the state or of local authorities, thus obeys the same laws a.s the expenditure of individuals. The only difference s that public expenditure is ordered by the majority. of electors for the time being, the majority often being composed of different persons for each kind of ex- penditure. Consequently it is the average ratio of the marginal utility of the benefit of public expenditure to the marginal disutility of its cost in taxation for the majority for the time being, which is in equili- brium with the average ratios of marginal utility to cost of the prsons composing this majority for all their various kinds of prixte expenditure. All person derive some benefit from almost every kind of public expenditure, but a favorable vote of anl rujoittl decides the marginal expenditure of the commnnity. We have arrived then at the important conclusion that in a perfect democracy there is a margiual equilibrium maintained between public and private expenditure precisely analogous to_ the equilibrium between a person's expenditure in different directions. There are certain wants which all persons of a certain town have in common, such, for example, as for roads wih good surface, and for sree lamps o lgh hem al nigh, for drains, for schools, and so forth. People canno supply hese wants individually, as he cos in proportion o heir marginal uilRy would be far high. When supplied by communal organization, how- ever, he cos is so much reduced ha is rio to he marginal uiliy of such expenditure is lower han hs