James Buchanan passed away the other day. He was a big deal that business majors should know about.
Buchanan won the Nobel Prize in Economic Science in 1986. He won for being one of the first, and certainly the biggest exponent of a field known as public choice.
In short, public choice is the idea that we need to apply the same ideas of constrained optimization to the choices of politicians and bureaucrats, rather than just to consumers and firms.
Among the key insights of public choice theory are that:
- Special interests gain power in democracies by focusing benefits on the few and spreading costs across the many.
- Politicians will focus on elections rather than the needs of voters.
- Bureaucrats will focus on job preservation rather than helping those in need.
- Government will find it easier to impose costs on those that can’t vote. This is why social programs operate in reverse-Robin-Hood fashion by taking from the young/poor to give to the old/rich. This is also why governments run deficits: they are deferring taxes from those that vote to those that aren’t born yet.
Here’s his obituary in The New York Times. You should also take a look at Stephen Miller, Donald Boudreaux (of Café Hayek), and the editorial that appeared in the January 9 issue of The Wall Street Journal.