Blacksburg, VA – James Buchanan was the 1986 Nobel Prize winner in economic sciences. It could be said that this scholar shaped a generation of conservative thinking about deficits, taxes and the size of government. James Buchanan had been living at his 400-acre farm outside Blacksburg, and he died on Wednesday at the age of 93 in a hospital. His wife of 60 years, Anne Bakke Buchanan, died in 2005. Survivors include two sisters.
James Buchanan was a leading proponent of public choice theory, which assumes that politicians and government officials are motivated by self-interest and do not necessarily act in the public interest when crafting the national budget or legislation like Obamacare. Bloomberg gives an example of how this theory translates into reality in the halls of Congress:
“More than any of the rest of America’s great modern economists, Buchanan stressed the primacy of interest groups. Interest groups, he said, rather than ideas or even men, shape our modern political and economic life. High-minded politicians might speak of ‘the public interest,’ and claim a special authority over the rest for their work. As Buchanan and his colleagues showed, a public interest is often just another special interest in disguise.”
The New York Times explains how these special interests could lead to the harm of nations:
“[James Buchanan] contended that the pursuit of self-interest by modern politicians often led to harmful public results. Courting voters at election time, for example, legislators will approve tax cuts and spending increases for projects and entitlements favored by the electorate. This combination can lead to ever-rising deficits, public debt burdens and increasingly large governments to conduct the public’s business.”
Tyler Cowen, an economics professor at George Mason, said his colleague James Buchanan had accurately forecast that deficit spending for short-term gains would evolve into “a permanent disconnect” between government outlays and revenue:
“We end up institutionalizing irresponsibility in the federal government, the largest and most central institution in our society. 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.”
James Buchanan himself said that his struggle to make these economic theories widely understood underscored his “sometimes lonely and mostly losing battle of ideas for some 30 years now in efforts to bring academic economists’ opinions into line with those of the man on the street.” He believed his task was to “uneducate the economists” who followed the Keynesian economic theories that claimed that “budget deficits were not only unavoidable but in fiscal emergencies were even desirable as a means to increase spending, create jobs and cut unemployment.” In the long run, Keynesian economic theories only gave rise to politicians who rationalize deficits under many circumstances and over long periods, which leads to the type of national debt crisis now faced in Europe and the United States.