Political realistJames M. Buchanan

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An economist, Buchanan was a leading proponent of a theory of economic behavior that now seems self-evident: “public choice theory”. He proposed that politicians and bureaucrats may not act in the public interest, but rather have their own interests in mind, such as enhancing their own power, becoming rich, or getting re-elected. Such was evident for hundreds of years, but “modern” politics was thought to be exempt from such self-interest. Buchanan showed that was not so, and analysis proved him correct — so much so that political self-dealing behavior could even be predicted. Voting for tax cuts before elections, for instance, “buys” votes even if it harms the economy long-term. And because the world has gotten so complex, that kind of behavior has filtered down to bureaucrats who control the more mundane aspects of rules and regulations, protecting their own power bases and budgets.

With that understanding, Buchanan argued for a smaller government, which would limit political power, since otherwise there would be “a permanent disconnect” between tax collections and government spending, leading to ever-larger deficits. That made Buchanan popular with conservatives, and the more so because he was right — and Buchanan was awarded the Nobel Prize in Economics in 1986 for his insights. The current system naturally leads to “institutionalizing irresponsibility in the federal government, the largest and most central institution in our society,” says George Mason University Economics Prof. Tyler Cowen. “As we fail to make progress on entitlement reform with each passing year, Professor Buchanan’s essentially moral critique of deficit spending looks more prophetic.” Dr. Buchanan never retired, writing papers and giving lectures until he died, on January 9, at 93.

From This is True for 13 January 2013