Posted by Peter Boettke on June 16, 2009 at 01:03 PM
Posted on The Austrian Economists
When asked to sum up his contributions to public economics, James Buchanan jokingly suggested that “Don’t the the fox guard the chicken coop” might capture his basic point.
Among the many brilliant insights in Buchanan’s work, his insistence on behavioral symmetry in the analysis markets and politics must rank at the top. Neither pure sinner, nor pure saint, but instead man as he is, interacts in the context of the marketplace, and in the context of politics. Same players, different games.
In his critique of Keynesian fiscal policy, Buchanan explained the possibility of the emergence of permanent deficit financing and accumulating public debt once the old time fiscal religion was abandoned. He provided the microeconomic explanation for this policy outcome, and a constitutional remedy as the only way to fix the situation. The constitutional remedy was ignored, and the facts of policy making since the time of his warning has illustrated his point about public finance and public policy making.
The Economist now reports that our current spending behavior has led us to the biggest bill ever. As I have repeatedly stressed throughout this crisis, the two most important books that explain the dire consequences of the policy path we are on are Buchanan and Wagner’s Democracy in Deficit, and Hayek’s Tiger by the Tail. And if you really want to diagnosis what is going on, synthesize both books and see why the logic of the situation in economic policy as currently structured links fiscal and monetary irresponsibility.
