Buchanan is the cofounder, along with Gordon Tullock, of public choice theory. Buchanan once described public choice theory as:
Public choice, as an inclusive research programme, incorporates the presumption that persons do not readily become economic eunuchs as they shift from market to political participation. Those who respond predictably to ordinary incentives in the marketplace do not fail to respond at all when they act as citizens.Buchanan also believed that because costs are subjective, much of welfare economics—cost-benefit analysis, and so on—is wrongheaded. He spelled out these views in detail in the book, Cost and Choice.
He was awarded the 1986 Nobel Prize in economics specifically for “his development of the contractual and constitutional bases for the theory of economic and political decision making.”
Sad, but an opportunity to reflect and appreciate. Here's a great article exploring Buchanan's work on public debt.
ReplyDeletehttp://www.independent.org/pdf/tir/tir_11_03_06_templeman.pdf
The conclusion includes:
"From the preceding survey of Buchanan’s writings on public-debt finance, the following seven propositions may be distilled:
1. The burden of public debt falls on future generations.
2. Public debt constitutes negative capital formation.
3. Ricardian equivalence does not hold because of fiscal illusion.
4. Keynesian macroeconomics is the principal cause of the disappearance of the unwritten balanced-budget norm that existed prior to the 1930s.
5. Barring constitutional constraints, public deficits will be a permanent phenomenon.
6. Public debt is immoral because future generations bear a financial burden as a result of spending and borrowing decisions in which they did not participate.
7. A constitutional balanced-budget amendment is required to remedy the tendency in elective democracy for government to borrow and spend rather than to tax and spend, and to spend much rather than little."
It was indirectly through Tullock that I first read Mises' Human Action. Tullock recommended Human Action to my good friend. Tullock said he agreed with Mises on most things but not on quantitative methods. He also said that Mises gave him a huge advantage as a Masters Econ student at the University of Chicago.
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