“The passing of Nobel laureate economist James M. Buchanan, one of the greatest proponents of limited government and free markets in the 20th century, leaves a giant void at a time when Western democracies are expanding the size and scope of the government and threatening the future of liberty,” wrote James A. Dorn, a vice president of the libertarian Cato Institute, on Thursday.
Buchanan himself called his area of economic focus “politics without romance.” It’s not groundbreaking to look at governance with a morally critical eye, of course: That’s what Machiavelli was all about. Buchanan’s contribution involved examining modern democratic government structures to see what factors pushed them to keep growing and growing, even under leaders supposedly committed to spending control.
His conclusion was that the rules of the game often favored just such an expansion. Once constitutions established how such governments were to be run, everyone tried to maximize his or her own gains within that system. But even if individuals got what they wanted, this would inevitably produce results that were less than optimal for society at large.
In this view, politicians tend to not choose between spending and lower taxes; they often opt for both. Buchanan also felt that traditional Keynesian economics, which holds that deficit spending can boost a slumping economy, aided and abetted spiraling debt. The Keynesian theory allowed politicians to comfort themselves that they were doing the right thing at the moment and would surely do better in the long run. They seldom did.