James Buchanan (1919–2013 )
Hello Kinkaid: I am not the 15th president of the United States, but the leading founder of the Public Choice School of economics (also known as the Virginia School of Political Economy). Our contribution has been to show that real-world government refutes the textbook “romantic” view of selfless public servants serving the public interest. [2013 update: Public Choice predicts the more government activism, the higher the stakes and the more unseemly the behavior.]
When I won a Nobel Prize in economics, the Royal Swedish Academy described my work as “transfer[ing] the concept of gain derived from mutual exchange between individuals to the realm of political decision-making.” My “realistic view,” they opined, overthrew the notion that “public authorities could apply relatively mechanical methods to correct different types of so-called market failures.” The announcement concluded, “Individuals who behave selfishly in markets can hardly behave wholly altruistically in political life.” (Also see here.)
I was not part of your curriculum in my lifetime but would love to be part of both Government and Economics, your senior year offerings. If your class can just add government failure (or “policy failure”) to your now-studied concept of market failure, government in action will make more sense.
Might an enterprising student or whole class ask your textbook author(s) why “government failure” and “public choice economics” are missing? And might I be so bold as to suggest that “government failures” vastly outnumber “market failures” (where there are markets) in the U.S. and around the world? At any rate, these questions are worth debating in class.
I wrote a book in the early 1980s, Democracy in Deficit, explaining why our system of government has left you youngsters with a pile of federal debt (see the homepage’s ticking debt clock), as well as expensive, currently unsustainable social programs. It gets back to Keynesian economics (‘government spending brings prosperity’) and politicians being self-interested—and inherently wanting to “kick the can down the road,” so to speak, for their successors to deal with. A term for this involuntary (to you) intergenerational wealth transfer (from you) is the tragedy of the fiscal commons.
Always remember: government is just a collection of individuals who have their own set of issues and incentives, not wholly different from you and me.
Believe it or not, I began my intellectual life as a ‘libertarian socialist.’ I wanted to be personally free but thought the collective called government had to run the show. I was pretty mixed up, but I think I have sorted it out since. Good luck in your intellectual adventure!
“Public choice rejects the notion that the state is wiser than individuals.”
“Government policy emerges from a highly complex and intricate institutional structure peopled by ordinary men and women, very little different from the rest of us.”
“I can’t figure out if people are bitching about the market because it works or because it doesn’t work.” (a favorite quote from my teacher Frank Knight)
“How would the U.S. be different today if people coming off the boat were greeted with a welfare check instead of a shovel?”
“Precisely because it has divorced itself from the central proposition relating to human behavior, modern macro-economic theory is really no theory at all.”
“It is only through an understanding of, and appreciation for, the animating principles of the extended order of the market that an individual may refrain from nonsensical political action. Those who advocate minimum wage laws, rent controls, price supports, or monetary inflation simply do not have an understanding of the individual or the marketplace.”
“The whole of the Keynesian and post-Keynesian theory of macroeconomic management (including monetarism) depends critically on the presumption that political agents respond to considerations of “public interest” rather than to the incentives imposed upon them by constituents. Once these agents are modeled as ordinary persons, the whole policy structure crumbles.”