Nobel prize winner and Public Choice theory co-founder James M. Buchanan passed away yesterday at the age of the age of 93 yesterday. Gordon Tullock has been Mr. Buchanan's partner in developing Public Choice.
I join the exponents of free markets in paying tribute to Mr. Buchanan with this resonant quote on “government failure”, which Mr. Buchanan embellished as Politics without Romance:
Public choice then came along and provided analyses of the behavior of persons acting politically, whether voters, politicians or bureaucrats. These analyses exposed the essentially false comparisons that were then informing so much of both scientific and public opinion. In a very real sense, public choice became a set of theories of governmental failures, as an offset to the theories of market failures that had previously emerged from theoretical welfare economics. Or, as I put it in the title of a lecture in Vienna in 1978, public choice may be summarized by the three-word description, 'politics without romance'.
“Politics without romance” included Mr. Buchanan’s strident aversion to public debt finance as summarized by the Independent Institute’s Jeremy H. Tempelman (italics mine)
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.
Such lessons have increasingly been valid and or applicable in today’s world which has been undergoing tremendous friction from the ongoing collision between deepening politicization and the forces of decentralization from the information age.
Thanks for the wonderful insights.
Rest in Peace.